Brian Nelson

Dividend Growth Newsletter Portfolio Idea Lockheed Martin Continues to Power Ahead in 3Q 2022, Showcases Strong 3% Dividend Yield

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  Image: Lockheed Martin F-16CM 55th Fighter Squadron. Image Source: Tomas Del Coro By Brian Nelson, CFA Lockheed Martin (LMT) was added to the simulated Dividend Growth Newsletter portfolio in January 2020, a couple months before the worst of the COVID-19 crisis, and while its share price hasn’t kept pace with a broad market index since then, the stock has held up quite well since the beginning of this year. Lockheed Martin put up decent third-quarter 2022 results October 18.   There were a number of things that we liked about the defense giant’s quarter. For starters, revenue nudged up on a year-over-year basis, reversing weakness witnessed through the first nine months of this year, while backlog advanced to $139.7 … Read more

BIN Portfolio ALERT: Removing META, Adding to XLE, Adding MCD and PEP

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Image Source: Valuentum Summary Removed META Added to XLE: now 4%-6%, was 1%-2% Added MCD: 4%-6% Added PEP: 4%-6% By Brian Nelson, CFA As long-term investors, the hardest part is knowing when to get back into the market with “recently-raised” cash. We’ve done a good job year-to-date through the last “performance” measurement in August. [We’ll continue to update members periodically on simulated newsletter performance across all newsletter portfolios.] But with the markets being punished since August 19, when we “raised” cash, we’re going to go back to “fully invested.” Let’s explain what this means. First, we’re still bearish on the broader markets. We’ve carved out some “alpha” we would have missed had we not captured the latest downdraft, and we … Read more

Dividend Growth Idea UnitedHealth Group Outperforming

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Image Shown: Shares of dividend growth idea UnitedHealth Group Inc have put up stellar performance so far in 2022. By Callum Turcan On October 14, UnitedHealth Group Inc (UNH) reported third quarter 2022 earnings that beat both consensus top- and bottom-line estimates. The health care giant also increased its full-year guidance for 2022 (again) during its latest earnings update after previously boosting its full-year guidance during both its first and second quarter earnings reports. We include shares of UnitedHealth Group as an idea in the Dividend Growth Newsletter portfolio as the company is a stellar free cash flow generator backed up by a pristine balance sheet and bright growth outlook. Shares of UNH yield ~1.3% as of this writing. Earnings … Read more

Banks Held Up in 3Q 2022 But Mortgage Market Dynamics and Consumer Health Are Big Economic Concerns

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Image: Homebuyer mortgage payments on new homes have increased more than 50% since last year due to rising interest rates. We think this is a precursor to lower housing prices, which could have implications across the banking and financials sector. Image Source: Redfin By Brian Nelson, CFA We’ve never been huge fans of taking on outsized banking and financials exposure in the simulated newsletter portfolios for a number of reasons. First, the banking industry, much like the insurance industry, is generally muted exposure to the broader economic environment. Though having some exposure to banking and financials may make sense, long-term investors are going to get a better bang for their buck with general operating entities that aren’t necessarily tied to … Read more

NextEra Energy Is a Great Income Growth Idea

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Image Shown: NextEra Energy Inc is a great income growth idea that complies with ESG investing standards as the company is investing heavily in renewable energy power generation assets and battery storage facilities. Image Source: NextEra Energy Inc – June 2022 IR Presentation By Callum Turcan The utility sector is home to companies with stable and highly visible cash flows, particularly as it concerns regulated utility operations, given the essential nature of the services these enterprises provide. Regulated utility operations refers to utilities that participate in rate cases with state-level public utilities commissions (‘PUCs’), with these rate cases largely setting the parameters of what the relevant utility can charge its customers. Generally speaking, PUCs and the rate case process allows … Read more

Dividend Increases/Decreases for the Week of October 14

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Below we provide a list of firms that raised their dividends during the week ending October 14. 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                A.O. Smith (AOS): now $0.30 per share quarterly dividend, was $0.28. Agree Realty (ADC): now $0.24 per share monthly dividend, was $0.23. Albertsons Companies (ACI): now $6.85 per share special dividend, was $0.12. Avient (AVNT): now $0.2475 per share quarterly dividend, was $0.2375. BioSyent (RX:CA): now CAD 0.04 per share quarterly dividend. Cardinal Energy Ltd. (CJ:CA): now CAD 0.06 per share monthly dividend, was CAD … Read more

Serious Question: What Are You Looking At?

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Image: Stocks with the largest 52-week losses, according to YahooFinance. By Brian Nelson, CFA Thank goodness that you’re subscribed to a service that didn’t include any of the above as top ideas in their simulated newsletter portfolios. Many were chasing returns in 2021 and are now left holding the bag this year, but we stuck to our methodology and processes, and we didn’t expose members to tremendous risks. That’s what it’s all about.  With that said, let’s talk about how we successfully navigated a number of these terrible ideas in the Exclusive publication, a monthly resource that includes an income idea, a capital appreciation idea, and a short idea consideration, released to members each month on the 8th. Exclusive Long Ideas … Read more

Over the Long Haul, Domino’s Has a Bright Growth Runway Ahead of It

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Image Source: Domino’s Pizza Inc – 2022 ICR Conference IR Presentation By Callum Turcan Recessionary clouds are building across the globe at a time when inflationary pressures are running rampant. Only high-quality companies should be seriously considered during turbulent times such as these, and in our view, Domino’s Pizza Inc (DPZ) fits the bill. Domino’s operates of the best delivery operations out there, one supported by a top-notch digital presence and a popular customer loyalty program. We include shares of Domino’s in the simulated Best Ideas Newsletter portfolio, and our fair value estimate for DPZ sits at $374 per share, materially above where shares of DPZ are trading at as of this writing. Furthermore, shares of DPZ yield ~1.3% as … Read more

Stay Away from Mortgage REITs!

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Image Source: Mortgage REITs have underperformed the broader stock market for years, and we don’t think individual investors and financial advisors should be dabbling in the mortgage markets via these instruments. By Brian Nelson, CFA On September 28, mortgage REIT (“mREIT”) Invesco Mortgage Capital (IVR) cut its dividend 28%, to $0.65 per common share. The bond markets have been experiencing a lot of pain of late, and mortgage rates have shot up considerably since the Fed started hiking. We think this spells trouble for mortgage REITs, which already suffer from highly unpredictable mortgage market dynamics. So far in 2022, the iShares Mortgage Real Estate Capped ETF (REM) has fallen more than 40% (on a price-only basis), and while its forward … Read more

Recent Fair Value Estimate Updates

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Image Source: Valuentum By Brian Nelson, CFA  Our work is always forward-looking in nature, consistent with the markets, which drive pricing and valuation on the basis of future expectations. 2022 has no doubt been a difficult year for many an investor across asset classes, not just equities. Perhaps the biggest insight provided by the Valuentum analyst team for this year came in the second edition of the book Value Trap, “Renowned Investor Brian Nelson Publishes Second Edition of Best Indie Book Award Winner Value Trap: Theory of Universal Valuation,” but such an insight has often been reiterated on our website and through the newsletters, too. To put it bluntly: We became significantly worried about the diversification benefits of the 60/40 stock/bond … Read more