3 Dividend Growth Stocks for the Long Run
April 8, 2024
Image Source: Mike Mozart By Brian Nelson, CFA Stock prices and returns are in part a function of a company’s net cash position on the balance sheet and the free cash flows that it will generate in the future for shareholders. We call net cash and future expected free cash flow generation the two primary cash-based sources of intrinsic value in determining a company’s fair value estimate. When it comes to assessing dividend health, we examine these two cash-based sources of intrinsic value, too. For example, a company with a strong net cash balance has greater financial flexibility than a firm with a large and prohibitive net debt position. Entities that generate strong free cash flows in excess of their
Geopolitical Risks Driving Crude Oil Prices Higher
April 7, 2024
Image: Crude oil prices have staged a strong advance to start 2024. By Brian Nelson, CFA Geopolitical tensions continue to be elevated as concerns grow that the war in the Middle East could further escalate, and as the war in Ukraine continues to rage on. On April 1, Israel apparently staged an attack on an Iran embassy in Syria that killed several military officials, including three senior Iranian commanders. Iran has indicated that it would retaliate, and many are speculating that the possible attack may be on Israeli soil, which would further increase global tensions. Ukraine has also been actively targeting Russian energy infrastructure, cutting into Russia’s refining capacity. Many are positioning in energy markets for a potential spike
Crown Castle Under Activist Fire
April 6, 2024
Image: Crown Castle’s shares have been under pressure the past couple years. By Brian Nelson, CFA Back in January, Crown Castle (CCI) reported better-than-expected results for the fourth quarter of 2023, capping off an eventful year. Site rental revenues advanced 4% on the year, while net income dropped 10% for the full year 2023. Adjusted EBITDA nudged 2% higher on the year, however, while adjusted funds from operations (AFFO) increased at a similar pace, with the measure reaching $7.55 per share for the year, well in excess of its run-rate $6.26 per share in annual dividends. Shares yield ~6.2% at the time of this writing. Management had the following to say about the performance: Crown Castle delivered 2023 results in
The Dividend Cushion Beats the Aristocrats
April 5, 2024
Please select the image below to download the report. Backtested results are hypothetical and do not represent actual trading. Actual results may differ from backtested information being presented. —– Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies. Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a
ConAgra’s ESG Initiatives Noble; Near-5% Dividend Yield Supported By Free Cash Flow
April 4, 2024
Image Source: ConAgra By Brian Nelson, CFA On April 4, ConAgra Brands (CAG) reported decent third quarter fiscal 2024 results, with revenue coming in-line with expectations and the company’s bottom line numbers beating out the consensus estimate. Net sales fell 1.7% from the prior-year period, while organic net sales declined 2%. Its weak organic net sales were driven by both a negative impact from price/mix and lower volumes. ConAgra’s adjusted gross profit margin increased 52 basis points in the quarter as higher productivity more than offset inflationary pressures, but higher advertising and promotional spending weighed on performance. The company’s operating margin faced some headwinds in the period, falling 49 basis points on an adjusted basis, to 16.4%. Adjusted diluted earnings
Gilead’s 4%+ Dividend Yield Covered Nicely with Free Cash Flow
April 3, 2024
Image: Gilead’s coverage of its dividend with free cash flow remains rock-solid. By Brian Nelson, CFA On February 6, Gilead Sciences (GILD) reported mixed fourth-quarter results with revenue coming in better than expected, despite a decline, and non-GAAP earnings per share coming in a bit light relative to expectations. Our fair value estimate of Gilead Sciences stands at $96 per share, well above where they are currently trading, and Gilead’s 4%+ dividend yield is backed by a healthy Dividend Cushion ratio of 1.9. The company’s fourth-quarter revenue fell 4% on a year-over-year basis as COVID-19 related sales faded as the world has largely moved past the global pandemic. The weakness in that area, however, was partially offset by higher oncology
Phillips 66 Raises Dividend 10%!
April 3, 2024
By Brian Nelson, CFA Refiner and High Yield Dividend Newsletter portfolio idea Phillips 66 (PSX) declared on April 3 a quarterly dividend of $1.15 per share on its common stock, reflecting a 10% payout increase. Management had the following to say about the payout hike: The dividend increase reflects the confidence we have in our growing mid-cycle cash flow generation and disciplined approach to capital allocation, including a secure, competitive and growing dividend. Since our formation in 2012, we have steadily raised our dividend, resulting in a 16% compound annual growth rate. We are well-positioned to continue delivering significant shareholder value through the successful execution of our strategic priorities, including returning $13 billion to $15 billion to shareholders through dividends
PVH’s Weak Guidance Sends Shares Tumbling
April 3, 2024
By Brian Nelson, CFA On April 1, PVH Corp. (PVH) reported better than expected fourth quarter results, but the company’s cautious outlook sent the stock tumbling. Fourth quarter revenue fell 1% on a constant currency basis, better than the company’s guidance calling for a decline of 3%-4%. On a non-GAAP basis, PVH earned $3.72 per share, which compared to guidance calling for ~$3.45 per share. The company noted that the macro environment in Europe remains challenging, which negatively impacted its wholesale business. The executive team of the maker of Tommy Hilfiger and Calvin Klein brands had a lot to say about the quarterly report: We delivered a strong fourth quarter and fiscal 2023, generating high single-digit direct-to-consumer growth, with growth
Best Buy’s Free Cash Flow Comes Up Short in Covering Dividend
April 2, 2024
Image Source: Mike Mozart By Brian Nelson, CFA Back in late February, Best Buy (BBY) reported better than expected fourth quarter fiscal 2024 results, despite revenue pressures. Enterprise comparable store sales fell 4.8%, but the drop was lower than what consensus had been expecting and represented a marked improvement over the same 13-week period last year. Though Best Buy is not immune to the challenges in retail these days, the company continues to hold its own, despite a heated competitive environment. Domestic revenue fell 0.9% due to a decline in comparable store sales, with management pointing to weakness in home theater, appliances, mobile phones and tablets, but strength in gaming-related revenue. Though revenue was under pressure in the period, the
RTX Ends Year with Record Backlog, Shares Yield ~2.4%
April 2, 2024
By Brian Nelson, CFA Back in late January, RTX (RTX), formerly Raytheon Technologies, reported solid fourth-quarter results, beating on both the top and bottom lines. Adjusted sales advanced 10% from the prior year, while adjusted earnings per share edged 2% higher, to $1.29. For the fourth quarter, the company hauled in $4.7 billion in operating cash flow and generated $3.9 billion in free cash flow. RTX ended the year with record company backlog of $196 billion, with $118 billion attributable to commercial and the balance to defense. Image Source: RTX Management noted the firm is off to a good start in 2024 in the press release: RTX reported solid full-year results, delivering 11 percent organic sales growth and $5.5 billion in
