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Fundamental data is updated weekly, as of the prior weekend. Please download the Full Report and Dividend Report for any changes.
Oct 29, 2024
Phillips 66’s Dividend Well Covered with Free Cash Flow
Image Source: Phillips 66. In the quarter, Phillips 66 achieved its target of $1.4 billion in business transformation savings, including a $1 per barrel refining cost reduction. The firm is also optimizing its portfolio, with asset dispositions totaling $2.7 billion, approaching its $3 billion target. We like Phillips 66 free cash flow generation of $774 million in the third quarter, which easily outpaced its dividends paid in the quarter. The company has distributed $12.5 billion through share buybacks and dividends since July 2022, and it remains on pace to achieve its target of $13-$15 billion by year end. Our fair value estimate of Phillips 66 stands at $155 per share. Shares yield 3.6% at the time of this writing.
Oct 28, 2024
In the News: Newmont, McDonald’s, the Election
Newmont is facing cost pressures, while its gold production is expected to be flattish in 2025. McDonald's has worked fast to put the recent E. coli outbreak behind it. We don't expect the situation to damage McDonald's brand or impact the trajectory of its business in the long run. The U.S. Presidential election is on November 5, and while there are differences between the agendas of former President Donald Trump and Vice President Kamala Harris, we're not making changes to the newsletter portfolios on account of political risk and uncertainty.
Sep 26, 2024
An Important Measure of Leverage for Dividend-Growth and Income-Oriented Shareholders, One That Is Dividend-Adjusted
As more and more investors rely on company dividends for income, dividends, in our view, have become more debt-like commitments in nature, especially from the perspective of dividend-growth or income-oriented shareholders. Years ago, we rolled out a measure of financial leverage that considers both the company’s debt and the present value of its future expected cash dividend obligations, which, in the eyes of die-hard dividend-growth or income-oriented shareholders, may be implicitly assumed to be debt-like commitments in substance. We think this leverage ratio can be used in conjunction with the Dividend Cushion ratio to gain additional insight into the dividend-paying financial health of an entity.
Sep 13, 2024
Dividend Increases/Decreases for the Week of September 13
Let's take a look at firms raising/lowering their dividends this week.
Aug 27, 2024
Toll Brothers Expects Demand to Remain Solid Into 2025
Image: Toll Brothers stock has done quite well during the past couple years. For its fiscal year 2024 guidance, Toll Brothers expects deliveries of 10,650-10,750 units (was 10,400-10,800) with an average delivered price per home of $975,000. Its adjusted home sales gross margin is targeted at 28.3% for fiscal 2024 (was 28%), while SG&A as a percentage of home sales revenue is expected at 9.4% for the year. Toll Brothers ended its fiscal third quarter with $893.4 million of cash and cash equivalents and $2.8 billion in total debt. Its net debt-to-capital ratio stood at 19.6% at the end of the fiscal third quarter. Though Toll Brothers’ backlog faced declines in its fiscal third quarter, we liked the increased guidance across its key homebuilding metrics.
Aug 26, 2024
Chevron Lacks Dividend Coverage with Traditional Free Cash Flow
Image: Chevron’s shares have been choppy during the past few years. During the second quarter, Chevron returned $6 billion in cash to shareholders, including $3 billion for each of dividends and share repurchases, and more than $50 billion during the past two years. The second quarter marked the ninth straight quarter of over $5 billion cash returned to shareholders. Chevron ended June with $4 billion in cash and cash equivalents and total debt of $23.2 billion. Through the first six months of the year, traditional free cash flow, as measured by cash flow from operations less all capex, was $5 billion, shy of the $6 billion it paid as dividends over the same time period. We prefer ExxonMobil, which has much better dividend coverage than Chevron.
Aug 20, 2024
Ford Raises Adjusted Free Cash Flow Guidance, Warranty Costs Weigh on Shares
Image: Ford’s second quarter results weren’t great, but the company’s guidance calls for increased adjusted free cash flow in 2024. Ford is facing issues due to rising warranty costs in its Ford Blue [ICE] division, while losses continue to mount in its electric vehicle division, Ford Model e, where it anticipates a full-year loss of $5-$5.5 billion due in part to continued pricing pressures. However, it was reassuring that management maintained its 2024 company adjusted EBIT guidance, while raising its adjusted free cash flow guidance for the year. Based on Ford’s quarterly dividend of $0.15 per share, the company yields 5.6% at the time of this writing. Our $15 per share fair value estimate remains unchanged.
Aug 12, 2024
Procter & Gamble’s Organic Growth Fails to Impress
Image Source: P&G’s Citizenship Report. Procter & Gamble’s fiscal fourth quarter disappointed a number of investors as organic growth failed to outpace expectations. Looking to fiscal 2025, all-in sales growth is expected in the range of 2%-4%, with organic growth in the range of 3%-5%. P&G is targeting fiscal 2025 core net earnings per share growth in the range of 5%-7% versus fiscal 2024 core earnings per share of $6.59. We like P&G a lot, but shares are trading well above our fair value estimate.
Aug 9, 2024
Paper: Value and Momentum Within Stocks, Too
Abstract: This paper strives to advance the field of finance in four ways: 1) it extends the theory of the “The Arithmetic of Active Management” to the investor level; 2) it addresses certain data problems of factor-based methods, namely with respect to value and book-to-market ratios, while introducing price-to-fair-value ratios in a factor-based approach; 3) it may lay the foundation for academic literature regarding the Valuentum, the value-timing, and ultra-momentum factors; and 4) it walks through the potential relative outperformance that may be harvested at the intersection of relevant, unique and compensated factors within individual stocks.
Jul 19, 2024
Netflix Still Has a Long Runway of Growth Ahead of It
Image Source: Netflix. Netflix reported solid second quarter results and raised its forward-looking guidance for the full year 2024. The company is winning the streaming wars and has a long runway of future membership growth given the 80% of TV time it and Youtube don’t already own. Its nascent ads business continues to gain traction, too. Netflix still expects to haul in free cash flow of $6 billion in 2024, as it continues to buy back stock. The company ended the quarter with $14 billion in gross debt versus cash and cash equivalents of $6.7 billion. We think Netflix is performing well, but we're already quite tech heavy in the newsletter portfolios and won't be adding shares to any portfolio at this time.


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