Brian Nelson

Dividend Increases/Decreases for the Week Ending July 7

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Below we provide a list of firms that raised/lowered their dividends during the week ending July 7. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Bank of the Ozarks (OZRK): now $0.18 per share quarterly dividend, was $0.175. Enterprise Products Partners (EPD): now $0.42 per share quarterly dividend, was $0.415. Highway Holdings (HIHO): now $0.10 per share quarterly dividend, was $0.07. HopFed Bancorp (HFBC): now $0.05 per share quarterly dividend, was $0.04.        Medtronic (MDT): now $0.46 per share quarterly dividend, was $0.43. NetApp (NTAP): now $0.20 per share quarterly dividend, was … Read more

MLP Speak: A Critique of Distributable Cash Flow

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–> Handout 1: Pitfalls of Distribution Yield Analysis (pdf) –> Handout 2: Linking P/DCF to Enterprise Free Cash Flow Valuation (pdf) Let’s talk about a controversial metric that is used in master limited partnership (MLP) reporting. Just how useful is it, and should it be allowed? By Brian Nelson, CFA It’s been a few years since the fallout in the prices of most master limited partnerships (AMLP), but to me, it still feels like yesterday. We continue to have many concerns about the longevity of the business models of MLPs, and we maintain our view that the operating structure will be challenged over the long haul. New equity and debt funding (issuance) continues to, in part, fuel the distributions of most MLPs, … Read more

Our Reports on Stocks in the Specialized Semiconductor Industry

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Image Source: Bernard Goldbach Structure of the Specialized Semiconductor Industry The specialized semiconductor industry is intensely competitive and has been characterized by price erosion and rapid technological change. Participants compete with major domestic/international semiconductor companies and often have to defend intellectual property rights against entities that have copied proprietary product lines. Firms are exposed to the global economic cycle, wide supply/demand fluctuations, and continuously face the risk of excess or obsolete inventories. Constituents must introduce new products with more features at higher prices to maintain margins. We don’t like the group. Please click on a company name below to view the corresponding equity report: << Our Dividend Reports

Walgreens Builds Out Its Network

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Image Source: Mike Mozart Walgreens continues its quest to build out its network of pharmacies. The goal is to maintain the largest network in the US, which would make exclusion from a payer’s network very difficult. Let’s review the recently-revised terms of the deal to acquire a portion of Rite Aid, the third-largest pharmacy chain in the US. By Alexander J. Poulos The Quest to Expand the Network Walgreens Boots Alliance (WBA), under the very capable leadership of Stefano Pessina, is attempting to transform into a global pharmacy-led health and wellbeing provider. The genesis of the idea was initiated with the combination of Boots Alliance, a predominately UK-based pharmacy chain with Walgreens. Upon the consummation of the deal in 2014, … Read more

Dividend Increases/Decreases for the Week Ending June 30

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Below we provide a list of firms that raised/lowered their dividends during the week ending June 30. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week 8point3 Energy Partners (CAFD): now $0.2642 per share quarterly dividend, was $0.2565. China Southern Airlines (ZNH): now $0.638 per share annual dividend, was $0.53. Commerce Union Bancshares (CUBN): now $0.06 per share quarterly dividend, was $0.055. Darden Restaurants (DRI): now $0.63 per share quarterly dividend, was $0.56. First Bancorp (FNLC): now $0.24 per share quarterly dividend, was $0.23. General Mills (GIS): now $0.49 per share quarterly … Read more

Prepared Remarks From Nelson Exclusive Conference Call June 30

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Read President of Investment Research Brian Nelson’s prepared remarks for the yearly roundup conference call, held for Nelson Exclusive members. If you would like to subscribe to the Nelson Exclusive publication, please learn more about the publication here. The Nelson Exclusive publication does not reflect real performance. Performance is hypothetical and does not represent actual trading. Ladies and Gentlemen, Thank you very much for joining us on the first conference call for members of the Nelson Exclusive publication. The first year of the publication has surely been an exciting one for all involved. When I first wrote the introductory letter of the Nelson Exclusive on July 1, 2016, we were well-aware the market had laid down the gauntlet for this publication. … Read more

Malkiel Balks, Yellen Talks

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Let’s first address how research in the financial industry is becoming more and more open to combining value and momentum considerations. We’ll also cover a few takeaways from the stress tests and some ‘strong’ talk from Fed Chair Janet Yellen. By Brian Nelson, CFA It was 1973, and a Princeton economist by the name of Burton Gordon Malkiel had just published A Random Walk Down Wall Street, a book that would turn into one of the most influential studies in support of the efficient markets hypothesis. The book would suggest that asset prices typically exhibit signs of a “random walk,” and as a result, an investor could not consistently outperform market averages in part due to powerful reversion-to-the-mean tendencies. Three … Read more

The Financially-Healthiest Dividend Payers Yielding Over 2%

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By Brian Nelson, CFA There are a number of ways to evaluate the health of a company’s dividend. We think a minimum threshold for a company’s yield is par for the course in any income-oriented screen, and we think a reasonable dividend yield hurdle rate for this screen may be 2%. For stocks that make this cut, we want to find those that generate free cash flow at a pace that is far larger than the cash paid out as dividends and have a strong balance sheet to boot, or companies that have high Dividend Cushion ratios.   Enter stocks that have the highest multiplicative combination of their dividend yield and Dividend Cushion ratio. To develop this screen, consider excluding … Read more

The Biosimilar Revolution Remains Stymied

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Image Source: Express Scripts We remain intrigued by the potential of the upcoming wave of biosimilar versions of well-established specialty drugs. Even though we have been disappointed by recent FDA decisions, we feel it is inevitable biosimilars will enter the market. Let’s update readers on our thoughts. By Alexander J. Poulos Specialty Drug Spending The specialty drug space remains the fastest-growing portion of the overall drug spend in the US. In Medicare plans, however, the total dollars spent grew at a pace on par with inflation. The main reason for the subdued growth is the well-defined process of lower cost generic utilization. The average consumer is well-educated on the cost effectiveness of a generic alternative and shows little resistance to … Read more