Member Articles

The Dividend Cushion Beats the Aristocrats

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Please select the image below to download the report. Backtested results are hypothetical and do not represent actual trading. Actual results may differ from backtested information being presented.  —– Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies. Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a … Read more

ConAgra’s ESG Initiatives Noble; Near-5% Dividend Yield Supported By Free Cash Flow

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Image Source: ConAgra By Brian Nelson, CFA On April 4, ConAgra Brands (CAG) reported decent third quarter fiscal 2024 results, with revenue coming in-line with expectations and the company’s bottom line numbers beating out the consensus estimate. Net sales fell 1.7% from the prior-year period, while organic net sales declined 2%. Its weak organic net sales were driven by both a negative impact from price/mix and lower volumes. ConAgra’s adjusted gross profit margin increased 52 basis points in the quarter as higher productivity more than offset inflationary pressures, but higher advertising and promotional spending weighed on performance. The company’s operating margin faced some headwinds in the period, falling 49 basis points on an adjusted basis, to 16.4%. Adjusted diluted earnings … Read more

Gilead’s 4%+ Dividend Yield Covered Nicely with Free Cash Flow

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Image: Gilead’s coverage of its dividend with free cash flow remains rock-solid. By Brian Nelson, CFA On February 6, Gilead Sciences (GILD) reported mixed fourth-quarter results with revenue coming in better than expected, despite a decline, and non-GAAP earnings per share coming in a bit light relative to expectations. Our fair value estimate of Gilead Sciences stands at $96 per share, well above where they are currently trading, and Gilead’s 4%+ dividend yield is backed by a healthy Dividend Cushion ratio of 1.9. The company’s fourth-quarter revenue fell 4% on a year-over-year basis as COVID-19 related sales faded as the world has largely moved past the global pandemic. The weakness in that area, however, was partially offset by higher oncology … Read more

Phillips 66 Raises Dividend 10%!

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By Brian Nelson, CFA Refiner and High Yield Dividend Newsletter portfolio idea Phillips 66 (PSX) declared on April 3 a quarterly dividend of $1.15 per share on its common stock, reflecting a 10% payout increase. Management had the following to say about the payout hike: The dividend increase reflects the confidence we have in our growing mid-cycle cash flow generation and disciplined approach to capital allocation, including a secure, competitive and growing dividend. Since our formation in 2012, we have steadily raised our dividend, resulting in a 16% compound annual growth rate. We are well-positioned to continue delivering significant shareholder value through the successful execution of our strategic priorities, including returning $13 billion to $15 billion to shareholders through dividends … Read more

PVH’s Weak Guidance Sends Shares Tumbling

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By Brian Nelson, CFA On April 1, PVH Corp. (PVH) reported better than expected fourth quarter results, but the company’s cautious outlook sent the stock tumbling. Fourth quarter revenue fell 1% on a constant currency basis, better than the company’s guidance calling for a decline of 3%-4%. On a non-GAAP basis, PVH earned $3.72 per share, which compared to guidance calling for ~$3.45 per share. The company noted that the macro environment in Europe remains challenging, which negatively impacted its wholesale business. The executive team of the maker of Tommy Hilfiger and Calvin Klein brands had a lot to say about the quarterly report: We delivered a strong fourth quarter and fiscal 2023, generating high single-digit direct-to-consumer growth, with growth … Read more

Best Buy’s Free Cash Flow Comes Up Short in Covering Dividend

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Image Source: Mike Mozart By Brian Nelson, CFA Back in late February, Best Buy (BBY) reported better than expected fourth quarter fiscal 2024 results, despite revenue pressures. Enterprise comparable store sales fell 4.8%, but the drop was lower than what consensus had been expecting and represented a marked improvement over the same 13-week period last year. Though Best Buy is not immune to the challenges in retail these days, the company continues to hold its own, despite a heated competitive environment. Domestic revenue fell 0.9% due to a decline in comparable store sales, with management pointing to weakness in home theater, appliances, mobile phones and tablets, but strength in gaming-related revenue. Though revenue was under pressure in the period, the … Read more

RTX Ends Year with Record Backlog, Shares Yield ~2.4%

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By Brian Nelson, CFA Back in late January, RTX (RTX), formerly Raytheon Technologies, reported solid fourth-quarter results, beating on both the top and bottom lines. Adjusted sales advanced 10% from the prior year, while adjusted earnings per share edged 2% higher, to $1.29. For the fourth quarter, the company hauled in $4.7 billion in operating cash flow and generated $3.9 billion in free cash flow. RTX ended the year with record company backlog of $196 billion, with $118 billion attributable to commercial and the balance to defense. Image Source: RTX Management noted the firm is off to a good start in 2024 in the press release: RTX reported solid full-year results, delivering 11 percent organic sales growth and $5.5 billion in … Read more

Colgate-Palmolive Strong Pricing Expansion to Drive Base Business Earnings Expansion

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Image Source: Colgate-Palmolive By Brian Nelson, CFA Colgate-Palmolive (CL) put together a solid quarter when it reported fourth-quarter results in late January. During its fourth quarter, net sales and organic growth both came in at 7% thanks to strong pricing expansion, with the company’s base business earnings per share up 13%, to $0.87. Impressively, both the company’s GAAP gross margin and base business gross margin advanced 400 basis points, to 59.6%. The firm continues to dominate the toothpaste and manual toothbrush markets, with a global market share of 41.1% and 31.5%, respectively, year-to-date. Management had a lot to say about the quarterly results and outlook: We are pleased to have finished the year with another quarter of strong top and … Read more

Mondelez Expects Organic Growth to Slow in 2024

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Image Source: Mondelez By Brian Nelson, CFA Back in late January, Mondelez International (MDLZ) reported better than expected fourth-quarter results. Net revenue advanced 7.1% in the quarter thanks to strong organic net revenue growth of 9.8% offset in part by weaker volume/mix. Gross margin increased 190 basis points in the quarter as the company pushed through meaningful price increases across its regional portfolio led by particular strength in Latin America. Adjusted diluted earnings per share increased 23.5% on a constant-currency basis. Management was upbeat on the performance in the press release: Our 2023 results underscore the strength of our execution, the importance of our investments and the resiliency of our portfolio, footprint, categories, and brands. We delivered double-digit top-line and earnings … Read more

Toll Brothers Notes Strong Start to Spring Selling Season

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By Brian Nelson, CFA Back on February 20, luxury homebuilder Toll Brothers (TOL) released first-quarter results for fiscal 2024. Both revenue and GAAP earnings per share came in better than expected. Home sales revenue increased 10% in the quarter from the year-ago period, while delivered homes advanced 6%. Impressively, net signed contract value was up 42% from last year’s quarter, while the number of contracted homes increased 40%. Its backlog fell 18%, to $7.08 billion, however, but the company continues to benefit from higher home sales gross margins. Management’s commentary on the quarter was upbeat in the press release: We are very pleased with our strong first quarter results. We delivered 1,927 homes at an average price of approximately $1.0 … Read more