Valuentum Exclusive Analysis for the Discerning Investor

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Earnings Roundup: ABBV, CVX, NYCB, XOM
Image: Unrealized losses continue to mount for banking entities due to the Fed's rate-hiking cycle. "Unrealized losses on securities totaled $683.9 billion in third quarter, up $125.5 billion (22.5 percent) from the prior quarter, primarily due to an increase in mortgage rates that reduced the value of mortgagebacked securities. Unrealized losses on held-to-maturity securities totaled $390.5 billion in the third quarter, while unrealized losses on available-for-sale securities totaled $293.5 billion." -- Image Source: FDIC Quarterly.AbbVie is facing pressure from declining sales of Humira, but the company's long-term outlook looks fine to us bolstered by promising growth of Skyrizi and Rinvoq. Chevron put up mixed fourth-quarter 2023 results, but its free cash flow easily covers its dividend payout. We've grown cautious on Chevron due to its deal making, however. New York Community Bancorp is provisioning for greater credit losses, while its net interest margin is under pressure. The bank recently slashed its payout, and we continue to reiterate why we don't like the dividends of banking firms. Exxon Mobil put up an excellent 2023, and while the firm's dividend is in great shape, we no longer are pursuing new energy-related ideas in the newsletter portfolios at this time.

Dividend Increases/Decreases for the Week of February 2
Let's take a look at firms raising/lowering their dividends this week.

Big Cap Tech and Large Cap Growth Continue to Lead Market Higher
Image Source: Marco Pakoeningrat. We continue to like the areas of big cap tech and large cap growth as the top firms in these areas have strong cash-based sources of intrinsic value: net cash on the balance sheet and strong expected future free cash flow generation. After the close February 1, the market received the quarterly earnings reports from Meta Platforms, Amazon, and Apple, and we were pleased by the trio’s performance during the calendar fourth quarter. We maintain our long-held view that big cap tech and large cap growth will continue to lead the market higher, and we continue to overweight these areas in the newsletter portfolios.

Dividend Increases/Decreases for the Week of January 26
Let's take a look at firms raising/lowering their dividends this week.

Earnings Roundup: TSLA, NEE, IBM, CMCSA, NOW
Image: The Model Y was the best-selling vehicle globally in 2023. Image Source: Tesla. Tesla missed fourth-quarter results, and while the firm continues to generate robust free cash flow with a solid net cash position, uncertainty surrounding the name looms. NextEra makes the cut for ESG investors, and its earnings outlook for the next few years remains robust, even if its dividend growth may slow. IBM is back in growth mode, and the firm is looking to capitalize on watsonx and generative AI. Comcast has a lot of things going for it, and the firm's robust free cash flow generation suggests that future dividend growth will be robust, despite its lofty net debt position. ServiceNow continues to deliver for investors, and it continues to grow at a robust pace.

Earnings Roundup: NFLX, ASML, T, ABT
Image: Netflix’s substantially improved free cash flow has made it a clear winner in the streaming wars. Image Source: Netflix. Netflix has won the streaming wars and continues to throw off material free cash flow as it lands incremental deals, the latest for WWE Raw. ASML is one of the most prolific innovators in the semiconductor industry, and its quarterly net bookings in the fourth quarter reveal an exciting future, even as revenue is forecast to be flat in 2024. AT&T's earnings outlook for 2024 disappointed, and rising capital spending will pressure free cash flow in 2024. Dividend King Abbott Labs continues to drive strong organic growth rates, exclusive of COVID-19 related weakness, and we expect years of future dividend growth at the company.

Earnings Roundup: LMT, PG, MMM, GE, JNJ, VZ
Lockheed Martin's backlog hits a new high. Procter & Gamble's gross margin surprises to the upside. 3M's bottom-line outlook for 2024 came in lower than expectations. We're excited about GE's split into two companies this year and are positive on GE Aerospace. Johnson & Johnson reaffirmed its outlook for 2024, while Verizon's free cash flow continues to improve.

3 Substantial Benefits of Dividend Growth Investing
Image Source: www.epictop10.com. There are three primary benefits of a well-executed dividend growth strategy, one that is carried out with prudence and care and one that pays careful attention to the intrinsic value of the stock and its critical cash-based components. Albert Einstein is reported to have called compound interest the "eighth wonder of the world," but dividend growth investing has the potential to offer long-term investors so much more! Let's explain.

Stock Reports on 25 Dividend Kings to Pad Your Dividend Growth Portfolio
Image Source: Jason Train. Investors love dividends! After all, research has shown that companies that have paid an ever-increasing dividend for a long time do quite well in the stock market. In this note, you can download the stock reports of 25 Dividend Kings, or stocks that have raised their dividends in each of the past 50 years!

In the News: MSFT, AAPL, SAVE, ALB
Image: Microsoft and Apple have been strong performers the past several years, with Microsoft recently surpassing Apple’s market capitalization to become the largest entity in the S&P 500. The start of trading in 2024 hasn’t been tracking the way that we like, but it’s way too early to sound the alarm on any sort of correction. The employment markets remain very healthy, both as it relates to unemployment and wage gains, while inflation looks to be largely under control, with the market expecting a number of rate cuts during 2024. We continue to like the areas of big cap tech and large cap growth in the current market environment.