Following up last Friday’s jobs report, the US employment trends index (ETI) per Conference Board dipped in January to 109.38 from 109.47 in December of last year. The index stands 2.7% higher vs. a year ago. The Conference Board stated that the ETI implies moderate improvement in labor market conditions. but the pace of more recent improvements in hiring may last for coming months. Jan’s ETI dip was driven by 6 out of 8 index components, led by percent of consumers who said jobs were hard to get. On an interesting note, Friday’s January jobs data showed payrolls averaged a revised 181K per month last year vs. a rough 150K clip before BLS revisions. Pace of hiring picked up to 200K monthly in 2012′s final quarter, from about 150K in Q3.
Both the Economist and the Telegraph use a new International Monetary Fund paper entitled “Chronicle of a decline foretold: Has China reached the Lewis turning point?”, as the basis of articles that foresees a material weakening of the Chinese economy starting between 2020 and 2025, as the reserve of peasant workers runs dry. The IMF says that the glut of labor peaked in 2010, and as the population ages, the supply of workers will dry up forcing wages up and putting severe constraints on profits, with this having “far reaching implications for both China and the rest of the world” according to the IMF. The Telegraph put it succinctly, saying that the “Lewis Point is the great test for catch-up economies as they can no longer rely on cheap labor, copied technology and export led growth to keep the economy going.” The move back to domestic production in the US continues apace, but may accelerate in the years ahead.
With the equity markets at multi-year highs and more folks becoming skeptical of the fortitude of the recently rally, picking safe and stable companies may be the way to go over the next few months. Let’s face it; with unemployment and debt still a major hurdle for most developed economies, the world is a very challenging place. Finding companies that have provided stable dividends over a long period of time will allow many investors to sleep at night. Investor money will never totally be safe; however, choosing less risk-adverse companies at this time may be the correct approach.
MiddleSex Water Company (NASDAQ: MSEX), formed in 1897, provides wastewater and water utility services in New Jersey, Delaware and Pennsylvania through various subsidiary companies. MiddleSex Water recently declared a quarterly cash dividend of $0.1875 per common share. The dividend remains unchanged from the previous quarters and keeps in-tact its strong reputation of giving back to its shareholders. Since 1912 (that’s before World War 1), the company has consistently paid cash dividends to its shareholders. MSEX has increased its dividend payment to investors for 40 consecutive years, offering stability in a very uncertain financial marketplace.
The company’s stock currently trades at $19.41 in a nice yearly channel that ranges from about $17.75 to $20.00. MSEX has a nice dividend of 3.85 percent, which is not expected to go lower anytime soon. The uncertainty in the financial markets is heightened by how far and fast the equity markets ran up in January. Adding MSEX to the portfolio can offset some of the high beta names that are expected to fluctuate over the next 4-8 weeks, as volatility is expected to pick up. With political uncertainty regarding the sequester, along with Euro zone debt worries back in the headlines, MSEX is a safe place to park one’s cash.