Consuelo Mack’s WealthTrack last week had Jason Trennert of Strategas Research Partners discussing the new sovereigns. Meaning stocks who have better CDS spreads and less risk to default than the US government. The theme of the broadcast is “Something’s Got To Give”.
Since the March 2009 market low we’ve seen:
- Total government debt increase by +42%
- Yield on 10 year Treasury note down 30% (more since the broadcast)
It doesn’t take a rocket scientist to know this isn’t sustainable for the long term. Jason goes over some possible investment strategies in the current economic climate.
I’ve included video from the broadcast.
Top 50 U.S. Companies with Lowest 5-Year CDS Spreads
Consider Jason Trennert’s list of “New Sovereigns”. You’ll notice many of the stocks on this list are also dividend aristocrats. Data is accurate as of May 21st 2012. So not only are they considered less risky than the US government, but they have increased their dividends over the past 25 years. Do keep in mind since the government has a printing press, it can print it’s own money, technically never defaulting.
| Stock | Company | CDS | Div Yield |
|---|---|---|---|
| MRK | Merck & Co | 21.2 | 4.47% |
| MMM | 3M Co. | 29.0 | 2.79% |
| BAX | Baxter Intl | 29.8 | 2.57 |
| MCD | McDonald’s | 30.4 | 3.07% |
| BMY | Bristol-Myers | 32.1 | 4.16% |
| XOM | Exxon Mobil | 34.0 | 2.78% |
| INTC | Intel | 37.1 | 3.21% |
| TXN | Texas Instruments | 38.0 | 2.31% |
| HON | Honeywell Intl | 38.3 | 2.61% |
| IBM | IBM | 38.6 | 1.72% |
| MCK | McKesson | 39.5 | 0.92% |
| DIS | Walt Disney | 39.8 | 1.35% |
| CVX | Chevron | 40.0 | 3.61% |
| JNJ | Johnson & Johnson | 40.3 | 3.84% |
| GOOG | 40.6 | - | |
| GIS | General Mills | 41.0 | 3.16% |
| MSFT | Microsoft | 42.1 | 2.69% |
| PGN | Progress Energy | 45.2 | 4.57% |
| CL | Colgate-Palmolive | 45.3 | 2.51% |
| INTU | Intuit | 46.3 | 1.09% |
| NKE | Nike | 47.0 | 1.34% |
| UNP | Union Pacific | 47.5 | 2.18% |
| NSC | Norfolk Southern | 47.5 | 2.79% |
| GD | General Dynamics | 48.8 | 3.16% |
| WMT | Wal-Mart | 49.6 | 2.52% |
| TGT | Target | 49.7 | 2.15% |
| COST | Costco | 49.9 | 1.31% |
| KMB | Kimberly-Clark | 50.4 | 3.76% |
| ABT | Abbott Laboratories | 50.5 | 3.30% |
| UPS | United Parcel Service | 50.5 | 3.05% |
| RTN | Raytheon | 50.6 | 3.98% |
| NOC | Northrop Grumman | 51.0 | 3.73% |
| HSY | Hershey | 51.9 | 2.25% |
| PG | Procter & Gamble | 52.1 | 3.55% |
| AGN | Allergan | 52.3 | 0.22% |
| SYY | Sysco | 52.3 | 3.95% |
| CAH | Cardinal Health | 52.5 | 2.30% |
| ORCL | Oracle | 55.5 | 0.91% |
| MMC | Marsh & McLennan | 56.5 | 2.88% |
| HD | Home Depot | 57.4 | 2.44% |
| DE | Deere & Co. | 58.0 | 2.44% |
| ED | Consolidated Edison | 58.5 | 4.11% |
| OXY | Occidental Petroleum | 59.0 | 2.67% |
| DD | E.I. DuPont de Nemours | 59.5 | 3.52% |
| KO | Coca-Cola | 59.5 | 2.74% |
| CVS | CVS Caremark | 59.8 | 1.45% |
| NU | Northeast Utilities | 60.0 | 3.84% |
| LLY | Eli Lilly & Co. | 60.2 | 4.82% |
| KFT | Kraft Foods | 60.3 | 3.01% |
| CPB | Campbell Soup | 62.0 | 3.54% |
Disclosure: Long GOOG, MCD, XOM, JNJ, KO, & KFT
