We keep hearing about artificial intelligence (AI).  My focus is not on AI, it is about IA. That’s IA, as in investment advice.  The stock and bond markets, to the extent they factor AI into IA, see a net benefit for us as individuals, as groups, as employees, owners, and on the whole for the economy.  Just like the early days of the internet, be prepared to be surprised about AI.  Now for some IA:

Investors are rediscovering energy stocks amid a rally in crude and record global demand for oil.  The fundamental case for oil and natural gas is compelling, but still not reflected in the prices of producers and pipelines, nor in the price of crude itself.  Texas crude was $67 a barrel two months ago.  Now it is $78.  That’s why pump prices are rising.  Within this sector I like Exxon Mobil (XOM) and for income investors my choice is Williams Cos. (WMB).  Williams is a natural gas pipeline company with steady earnings and dividends that rise about 5 percent annually.

Another attractive stock for income investors is Ares Capital (ARCC), the leading business development company.  Ares Capital originates loans to small and mid-sized businesses and the security yields 9.8 percent.  For growth investors, I like Visa (V).

Now to the income side.  Several times in my career investors and traders acted when rates were high as if rates would never fall.  When rates were low, as they were 18 months ago, they acted as if they would never rise again.  No one, including Jay Powell, knows where rates are headed so I prefer to have assets that will do well if rates rise, others if rates fall and some that will offer good returns if rates go sideways (a good bet).  Most large banks have preferreds with yields of just over 6 percent.  I’ve written about my favorite adjustable rate preferred, Annaly Capital Management Pfd ‘F’ (NLY.F), but it has rallied and is trading above par so I’d buy the ‘I’ issue instead.  It yields 7.1 percent and will until it floats next year.

The overall environment is a good one for stocks.  Not great, just good.  The mild earnings recession has passed, growth is picking up a little and the trend for core inflation is encouraging even though prices for energy and most commodities are now on the rise.  Valuations for stocks other than the top technology issues are reasonable at 17 times earnings.  In this environment dividends become increasingly important.  And especially dividend growth.

David Vomund is an Incline Village-based Independent Investment Advisor.  Information is found at www.VomundInvestments.com or by calling 775-832-8555.  Clients hold the positions mentioned in this article.  Past performance does not guarantee future results.  Consult your financial advisor before purchasing any security.