Member Articles

General Electric Stripping Businesses, Dividend in Aggregate

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Image source: GE investor presentation By Kris Rosemann Though it had long ago become apparent that General Electric (GE) was struggling to generate ample cash flow from its industrial operations, “GE Takes the Plunge, Halves Dividend,” speculation had been running rampant on how new CEO John Flannery would handle the mess of a business he had been handed. Investors may have thought they got the answer in late 2017 when the company announced billions in dollars of divestitures and a dividend reduction, but here we are again, discussing what will become of GE’s once sprawling portfolio of industrial assets. With its dividend reduction in November 2017, GE announced its intention to refine its portfolio to focus on its three core … Read more

Eli Lilly Looks to Bolster Its Presence in Oncology

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We are becoming increasingly impressed with Eli Lilly as the company boasts an enviable stable of new products that should power the company well into the next decade. Lilly is through the bulk of its patent trough, in our view, and its pipeline should set the company up for years of potentially uninterrupted revenue growth. Shares are not necessarily cheap, however. By Alexander J. Poulos Key Takeaways Lilly is aggressively building its oncology portfolio, and we think a new suite of recently-approved products should help power growth into the next decade. Lilly has opened the checkbook to acquire two additional novel compounds that underscore its desire to become a player in the oncology space. We view Lilly’s appetite for deal … Read more

Still Expecting Strong 2018 from Digital Realty

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Image Source: DLR Investor Presentation In April of this year, we added Digital Realty Trust to the simulated Dividend Growth Newsletter portfolio. We think its addition adds a nice boost to the overall dividend yield to the portfolio. By Kris Rosemann and Brian Nelson, CFA Simulated newsletter portfolio idea Digital Realty (DLR) continues to benefit from the secular trends driving data center demand. The company is among the top-10 largest publicly-traded REITs, and it offers a wide portfolio of data center solutions across the globe (a dozen countries and over 30 metropolitan areas). Digital Realty is well-positioned for the future, as it stands to capitalize on artificial intelligence needs and growth in the Internet of Things (IoT), but it will … Read more

Owens & Minor: Dividend At Risk, But Shares Not Expensive

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We’re fans of consistent dividend payers with strong free-cash-flow coverage and solid balance sheets, but we remain very skeptical of companies with a dividend that seems “too good to be true” as the eye-popping dividend is often a byproduct of an egregious drop in the price of the stock. We believe Owens & Minor is an example of an overleveraged, slow-growth entity that may have trouble maintaining its dividend in coming years. We value shares at $20 each, however, so the market may be overreacting a bit on the downside. By Alexander J. Poulos Key Takeaways Business disruption has taken its toll on Owens & Minor’s margins and underlying profitability. From where we stand, there is little in the way … Read more

Internet Sales Taxes and Restructuring the U.S. Post Office

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The Supreme Court has been active in creating revenue opportunities for states, as in legalizing sports betting and most recently in facilitating the collection of online sales taxes. The White House has floated the idea of reorganizing the U.S. Postal Service, but we think this endeavor represents more of a tail risk for Stamps.com than anything else. Though we expect smaller online retailers to feel some pressure as a result of the online sales tax ruling (Amazon already collects online sales taxes), we don’t think the ruling, while leveling the playing field for some brick-and-mortar retailers, will change the fate of many aging department stores such as J.C. Penney and Sears, both of which may not make it to the … Read more

Dividend Increases/Decreases for the Week Ending June 22

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Below we provide a list of firms that raised their dividends during the week ending June 22. 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 AG Mortgage Investment Trust (MITT): now $0.50 per share quarterly dividend, was $0.475. ALPS Alerian Energy Infrastructure ETF (ENFR): now $0.19209 per share quarterly dividend, was $0.17445. ALPS Cohen & Steers Global Realty Majors ETF (GRI): now $0.43792 per share quarterly dividend, was $0.2199. ALPS International Sector Dividend Dogs ETF (IDOG): now $0.38588 per share quarterly dividend, was $0.32374. Bank of Commerce (BOCH): now $0.04 per … Read more

PayPal Hits New Highs!

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We continue to watch PayPal as it has been a fantastic idea in the simulated Best Ideas Newsletter portfolio since it split from eBay. Rivalries are intensifying in the digital payments space and the company will have to replace lost business with eBay in coming years, but we still like the idea. We also view Bitcoin and other cryptocurrencies as more an opportunity than a threat for many digital payment providers. By Brian Nelson, CFA On June 19, PayPal (PYPL) announced it would acquire Hyperwallet for $400 million in cash. We think the PayPal executive team was impressed with the technology at Hyperwallet, which faciliates the ability to “pay almost anyone almost anywhere in the world.” As PayPal fuses this … Read more

Oracle’s Dividend Still Very Healthy

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Image Source: May Wong Oracle issued what is likely conservative fiscal first-quarter 2019 guidance, but the company continues to generate record amounts of operating cash flow and has a solid net cash position on the books. We’re not worried about the dividend. By Brian Nelson, CFA Oracle’s (ORCL) Dividend Cushion ratio is 4.5 at the time of this writing, meaning that, on the basis of expectations of future free cash flows relative to expected cash dividends paid, assuming a nice 12-18% annual growth rate in dividends per share over the next 5 years (as shown in its dividend report), and factoring in its net cash position on the balance sheet, we expect Oracle to cover future expected cash dividends paid … Read more

In the News: Facebook, General Electric, GameStop

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We continue to love Facebook’s valuation opportunity, and the company has registered a 10 on the Valuentum Buying Index. General Electric’s stock price continues to swoon, and we couldn’t have called it better. We used the mosaic theory to anticipate private-equity interest in GameStop. Not a bad trio of calls, no? By Brian Nelson, CFA You will not get as much out of our website unless you read and understand “The 16 Steps” and “Analysis of the Best Ideas Newsletter” first. If you haven’t read about the Dividend Cushion ratio, and you are an income investor, you have to do that, too. We talk about the efficacy of this ratio here. You need a solid foundation on which to build. … Read more