Chip Stocks — Geopolitical Uncertainty Heightens in China; ASML, QCOM Still Strong Long-Term Considerations, But Expect Near-Term Fundamental Weakness
October 24, 2022
Image Source: The U.S. Department of Commerce By The Valuentum Team The global economic environment continues to reel from heightened inflation, which is pressuring consumer discretionary spending, but geopolitical uncertainty remains at a fever pitch. Russia’s invasion of Ukraine has unsettled investors, but the back-and-forth between the U.S. and China has chipmakers in the crosshairs. On October 7, 2022, the U.S. Department of Commerce released the following report aimed to restrict China’s ability to attain advanced computer chip technology: The Department of Commerce’s Bureau of Industry and Security (BIS) is implementing a series of targeted updates to its export controls as part of BIS’s ongoing efforts to protect U.S. national security and foreign policy interests. These updates will restrict the
Must Watch: MPT Failures and High Yield Dividend Breakdown Spiral!
October 23, 2022
Did you know that Valuentum’s income ideas are holding up great this year, far better than the traditional 60/40 stock/bond portfolio and what some call “sucker” yields, those companies with 8% dividend yields or higher? — The 60/40 stock/bond portfolio is down ~20% so far in 2022 and some high-yield stocks like mortgage REITs are down nearly 40%, but Valuentum’s income-oriented simulated newsletter portfolios, the Dividend Growth Newsletter portfolio and High Yield Dividend Newsletter portfolio, are estimated to be down just 8.4% and just 10.1%, respectively, in 2022. — Preventing huge drawdowns in retirement is the name of the game, and those pursuing modern portfolio theory (MPT) have been caught by surprise, while income investors reaching for 8%+ yields may have just experienced permanent
AT&T’s Free Cash Flow Coverage of Its Dividend Is Looking Better But Economic Malaise Awaits
October 20, 2022
Image: AT&T’s dividend obligations have been substantially reduced, aiding in its coverage of the payout with free cash flow. Image Source: AT&T. By Brian Nelson, CFA AT&T Inc. (T) has taken investors on a wild ride the past couple years, first saying it would support its payout as recently as early 2021, and then cutting it as it pulled a 180 on its strategic vision. However, in the communication giant’s third-quarter report, released October 20, AT&T showed robust free cash flow generation ($3.84 billion) that nearly doubled cash dividends paid in the period ($2.01 billion). We liked this a lot as it reveals marked improvement in coverage on a year-over-year basis. However, the uncertain economic climate coupled with inflationary pressures
Philip Morris Is One of Our Favorite High-Yielding Income Generation Ideas
October 20, 2022
Image Shown: Philip Morris International Inc expects alternative nicotine products will grow at a robust pace over the coming years, with an eye towards heated tobacco units and oral nicotine products. By capitalizing on those opportunities, the company aims to diversify its revenues away from traditional cigarette sales. Image Source: Philip Morris International Inc – 2021 Investor Day Event Presentation By Callum Turcan The tobacco company behind international sales of the Marlboro cigarette brand and the IQOS heated tobacco offering, Philip Morris International Inc (PM), is one of our favorite high-yielding income generation ideas. Philip Morris is a stellar cash flow generator with ample pricing power, and management has laid out a sound strategy for how the firm intends to
PepsiCo May Be A Rare Winner in This Inflationary Environment
October 20, 2022
Image Source: PepsiCo Inc – Third Quarter of Fiscal 2022 Earnings Press Release By Callum Turcan On October 12, PepsiCo Inc (PEP) reported third quarter earnings for fiscal 2022 (period ended September 12, 2022) that beat both consensus top- and bottom-line estimates, primarily due to the enormous price increases the consumer staples giant pushed through. The company also raised its full-year guidance for fiscal 2022 in conjunction with its latest earnings report, which sent shares of PepsiCo sharply higher during the following trading days. We assign PepsiCo a fair value estimate of $164 per share and the upper end of our fair value estimate range stands at $197 per share. With shares trading at ~$173 each, we think the company’s
High Yield Dividend Newsletter Portfolio Continues to Deliver!
October 19, 2022
Image: The year-to-date simulated performance of the High Yield Dividend Newsletter portfolio, which continues to hold up well during 2022, while offering an attractive forward estimated dividend yield. Data retrieved interim session October 19. By Brian Nelson, CFA Valuentum’s newsletter product suite continues to deliver in good times and bad. For those of you interested in high dividend paying stocks, we offer a High Yield Dividend Newsletter and a simulated High Yield Dividend Newsletter portfolio, which has been holding up well amid the weakness across both the stock and bond markets this year. Based on our calculations, the simulated High Yield Dividend Newsletter portfolio now boasts an estimated forward dividend yield of ~5.44% and is down only approximately 10% on
Johnson & Johnson Reports Mixed 3Q Results, Plans to Spin Off Consumer Health Division Mid-to-Late 2023
October 19, 2022
Image Source: Johnson & Johnson By Brian Nelson, CFA On October 18, Johnson & Johnson (JNJ) reported mixed third-quarter results that showed adjusted operational sales growth of 8.2%, but adjusted earnings per share falling 1.9%. Negative currency impacts posed a stiff headwind to its ‘International’ operations, and we would expect this to be a recurring theme across multi-nationals during third-quarter earnings season. We’re sticking with Johnson & Johnson as one of the top weightings in the simulated Dividend Growth Newsletter portfolio. On an adjusted operational basis (i.e. excluding currency headwinds and any acquisitions and divestitures), the company’s business remained resilient in otherwise what can be described as a very uncertain economic backdrop. Its ‘Consumer Health’ division experienced adjusted operational sales
