Member Articles

What’s Weighing on the Markets

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Renewed concerns over the severity of trade tensions, a flattening yield curve, negative news out of the homebuilding space and other geopolitical uncertainties have investors feeling anxious. December 4 marked the worst day for the Dow Jones Industrial Average since October 10. By Kris Rosemann What was once thought to be broad-based optimism related to potentially easing trade tensions between the US and China (FXI) and investors taking a liking to recent commentary from the Fed regarding an easing of the future trajectory of rate hikes came tumbling down during the trading session December 4. President Trump tweeted early in the session that people should remember he is “a Tariff Man” if a trade deal cannot be reached with China, … Read more

Dollar General Slips on Lower Bottom-Line Guidance

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Simulated Best Ideas Newsletter portfolio idea Dollar General continues to deliver consistent top-line performance, but higher than expected expenses in the second half of its fiscal 2018, including hurricane-related expenses and rising transportation costs, resulted in a reduction of operating margin and diluted earnings per share guidance. Net sales growth expectations were also tempered slightly. By Kris Rosemann Margin performance across the retail space has left a bit to be desired of late, “Retail Margins Weighed Down by Labor, Transportation Costs,” and simulated Best Ideas Newsletter portfolio idea Dollar General (DG) was unable to avoid some of the pressures as its fiscal third quarter report, results released December 4, brought with it slightly lower margin expectations for the full fiscal … Read more

In the News: Conflicting Crude Oil Reports, All Eyes on G20 Summit, HP Battling Through Tariffs, Altria Eyes Crown Juul of E-Cigs

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Let’s take a look at some top stories across the markets, including conflicting reports on the likelihood of a crude oil production cut agreement from OPEC and Russia, implications of the G20 Summit this weekend, HP’s solid fiscal fourth quarter report, and Altria’s potential acquisition of a stake in noted private e-cig maker Juul. By Kris Rosemann Volatility in the crude oil market (USO) is nothing new, but investors have been whipsawed quite notably of late by a number of conflicting reports that have potentially meaningful implications on the direction of crude oil prices in the near term. Reports that Russia (RSX) was in agreement with Saudi Arabia (KSA) over the need for production cuts provided a boost to the … Read more

Dividend Increases/Decreases for the Week Ending November 30

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Below we provide a list of firms that raised their dividends during the week ending November 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 Associated Banc-Corp (ASB): now $0.17 per share quarterly dividend, was $0.15. C&F Financial (CFFI): now $0.37 per share quarterly dividend, was $0.36. Capital Southwest (CSWC): now $0.46 per share quarterly dividend, was $0.34. Culp (CULP): now $0.10 per share quarterly dividend, was $0.09. Four Corners Property Trust (FCPT): now $0.2875 per share quarterly dividend, was $0.275. Herzfeld Caribbean Basin Fund (CUBA): now $0.305 per share annual … Read more

United Technologies Announces Separation Plans

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Image Source: United Technologies Investor Presentation United Technologies completed the acquisition of Rockwell Collins and announced plans to separate into three independent companies. By Kris Rosemann Key Takeaways United Technologies completed its acquisition of Rockwell Collins and now plans to separate into three independent companies: an aerospace and defense supply company, a climate control company, and an elevator company. The separation is expected to be completed in 18-24 months. The acquisition has resulted in a significant increase in financial leverage, and both Moody’s and S&P lowered United Technologies’ credit rating to three notches above junk territory. United Technologies is prioritizing deleveraging heading into the separation. No material share repurchases will be executed, and we suspect dividend growth to be paused as … Read more

Cardinal Health Battling Bottom-Line Headwinds

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Image Source: Global Panorama Healthcare product distributor and Dividend Aristocrat Cardinal Health has had its share price performance in 2018 dampened by a number of factors, including generic drug price deflation weighing on its ‘Pharmaceutical’ segment, struggles in its ‘Medical’ segment, and the potential for disruption within its industry. By Kris Rosemann The drug distribution industry is attractive as a result of the group’s predictable revenue streams and the strong competitive positions of a number of participants, which result from the barriers to entry that are difficult-to-replicate distribution networks, myriad regulatory compliance issues, and industry relationships. The industry currently operates as an oligopoly with McKesson (MCK), Cardinal Health (CAH), and AmerisourceBergen (ABC) collectively controlling more than 90% of the market. … Read more

Traffic Improves, Pricing Leads Comps Growth at Cracker Barrel

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Image Source: Mike Mozart Cracker Barrel’s fiscal 2019 first quarter report revealed improving traffic trends from the previous quarter, and menu price hikes continue to help drive average transaction value higher. Margin performance is worth watching, but we like that management is continuing to invest in its growth initiatives. By Kris Rosemann Shares of simulated Dividend Growth Newsletter portfolio idea Cracker Barrel (CBRL) have performed extremely well of late, and our decision to stick with the company following a weaker than expected fiscal 2018 fourth quarter report is paying off. Shares are up ~27% as of this writing since the close of the day of that fourth quarter report and ~37% since we initially highlighted the idea in early 2016. … Read more

In The News: Record-Low Smoking Rates, China Steel Demand Concerns, and a New Look GM

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US smoking rates are at all-time lows, and the FDA is pushing to restrict sales of menthol products and flavored e-cigarettes. Meanwhile General Motors has announced an accelerated restructuring plan, and concerns have cropped up regarding steel demand in China. By Kris Rosemann The Centers for Disease Control and Prevention (CDC) estimates that 14% of US adults, or roughly 34.3 million people, smoked cigarettes in 2017, a record low, compared to 15.5% in 2016 and 42.4% in 1965, the first year the figure was tracked. Public health initiatives have clearly played a role in the decline, but the CDC also estimates that 47 million people still use some form of tobacco product. The US Food and Drug Administration (FDA) is … Read more

Deere Expects Replacement Cycle to Continue Despite Trade Tensions

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Image Source: David Wright Deere & Co’s fiscal 2018 fourth quarter report included expectations for the replacement cycle for farm machinery to continue despite global trade tensions and other geopolitical uncertainty. Its equipment operations have performed well of late as it continues to ride a wave of solid demand. By Kris Rosemann Ag equipment giant Deere & Company (DE) reported fiscal 2018 fourth quarter earnings November 21, and the company continues to take advantage of the replacement cycle for farm machinery amid global trade tensions and other geopolitical uncertainty. New and innovative products are also helping drive its top line, according to management, and net sales advanced 18% in the fiscal fourth quarter on a year-over-year basis. Equipment net sales … Read more

Dividend Increases/Decreases for the Week Ending November 23

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Below we provide a list of firms that raised their dividends during the week ending November 23. 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 Becton, Dickinson (BDX): now $0.77 per share quarterly dividend, was $0.75. CB Financial Services (CBFV): now $0.23 per share quarterly dividend, was $0.22. Cross Timbers Royalty Trust (CRT): now $0.144509 per share monthly dividend, was $0.124040. Deswell Industries (DSWL): now $0.06 per share semi-annual dividend, was $0.04. Exchange Bank (EXSR): now $1.00 per share quarterly dividend, was $0.95. Farmers & Merchants Bank of Long Beach (FMBL): … Read more