Divided Government Is Good News For This High-Yield Stock

As I flipped between news channels last week, I found something every analyst agreed on – no one is happy with the election results.

It seems likely that Congress will be divided.

I touched on some of the implications of this outcome last week (including winners and losers) in this piece last week.

But one other large group that is not happy with the election results that’s worth mentioning is income investors.

The reason for unhappiness is shown in the chart below. It’s the yield on 10-year Treasury notes and the yield fell sharply after the election.

Source: CNBC

Rates had been moving higher as traders priced in a blue wave. Under that scenario, Democrats would control the House of Representatives, the Senate, and the White House. Traders were acting under the assumption that there would quickly be agreement on a multi-trillion-dollar stimulus package along with other expensive programs.

All of the spending would require the Department of the Treasury to issue bonds and notes to fund the government. To sell more Treasuries, the government would need to pay higher rates.

With Republicans likely to retain control of the Senate, this scenario changed, and rates fell. Income investors now face years of minimal interest on Treasuries.

How I’m Trading This News

A split Congress also reduces risk in some sectors, especially in the energy sector. This sector will still face risks of regulation, but large programs like the Green New Deal are no longer a threat. This should limit the downside of oil and gas companies.

That’s one reason I recently recommended a trade in ONEOK, Inc. (NYSE: OKE).

The stock appears to be forming a bottom after dropping more than 70% in a one-month selloff during the height of the Covid-19 selloff. And there could be considerable upside for investors in the months ahead…

Here’s how my colleague Nathan Slaughter described Oneok’s business a few months ago:

“Oneok is primarily involved with natural gas gathering and processing. It helps feed natural gas liquids (NGLs) via pipeline to new petrochemical plants on the Gulf Coast.”

Analysts at Wells Fargo turned bullish on the stock last month, upgrading OKE to an overweight rating and announcing a price target of $36 a share. The analysts expect a recovery in North Dakota’s shale fields, and OKE will benefit from that.

Fundamentals appear to be improving. When the company announced its latest quarterly results, earnings and cash flow increased by more than 10%. Cash flow was equal to about 130% of the dividend, a bullish indicator for the stock, which yields more than 12%.

Management indicated they expect earnings to increase about 8.5% this year and that they believe the dividend can be maintained.

Action To Take

Now, OKE looks like it could be a long-term winner for most investors. But I’m recommending a short-term trade in the stock that could enable us to collect much more than traditional income investors.

In fact, if everything goes according to plan, we have the potential to collect several income payments from this stock… before it even pays the next dividend, which should be in January.

It’s all thanks to a shocking legal “loophole” that allows everyday Americans (including you) to get paid up to $3,630 instantly — from the same income sources used by elites in Hollywood and elsewhere.

I just issued a brand-new report that shows how you can benefit from this simple strategy, too.

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