Valuentum Exclusive Analysis for the Discerning Investor

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Nov 8, 2021

ALERT: High Yield Dividend Newsletter Portfolio Changes
Image: Mike Cohen. Calendar third-quarter results were solid for constituents in the High Yield Dividend Newsletter portfolio, and we look forward to a bright 2022!

Oct 27, 2021

Digital Realty Boosts Guidance and Further Extends Growth Runway
Image Source: Digital Realty Trust Inc – Third Quarter of 2021 IR Earnings Presentation. On October 26, Digital Realty Trust posted third quarter 2021 earnings that beat both consensus top- and bottom-line estimates. The data center real estate investment trust (‘REIT’) saw its GAAP operating revenues come in at $1.1 billion (up 11% year-over-year) and its non-GAAP core funds from operations (‘FFO’) per share come in at $1.65 per share (up 7% year-over-year) last quarter. Digital Realty also increased its guidance in conjunction with its latest earnings report, which we appreciate, as that signals the REIT is growing confident that it will exit 2021 on a high note. When taking into consideration Digital Realty’s ability to tap capital markets at attractive rates (something we cover in this article), we give the REIT a “GOOD” Dividend Safety rating as its adjusted Dividend Cushion ratio is near parity at 0.7, which factors in expected dividend growth over the coming years. Additionally, we give Digital Realty a “GOOD” Dividend Safety rating, underpinned by its bright cash flow growth outlook. The top end of our fair value estimate range sits at $186 per share of DLR, well above where Digital Realty is trading at as of this writing.

Oct 13, 2021

High-Yield Idea CyrusOne Considers Selling Itself
Image Shown: Shares of CyrusOne, an idea included in our High Yield Dividend Newsletter portfolio, are on a modest upward climb of late. The data center real estate investment trust (‘REIT’) is reportedly considering putting itself up for sale, though we like the REIT’s income generation upside regardless of whether a sale does materialize as its outlook continues to improve after posting stellar performance during the first half of 2021. Reportedly, CyrusOne is actively exploring a potential sale according to Reuters. We include shares of CONE as an idea in the High Yield Dividend Newsletter portfolio. The data center real estate investment trust (‘REIT’) has experienced significant turnover in its top ranks over the past couple of years which we will cover briefly, as that likely set the stage for the potential sale. Should CyrusOne decide not to sell itself, we would still be fans of its business model, growth runway, improving outlook, and income generation potential. Let's dig into latest developments in this article.

Sep 9, 2021

Digital Realty Is a Stellar Income Growth Idea
Image Source: Digital Realty Trust Inc – September 2021 IR Presentation. Digital Realty Trust is a carrier-neutral data center real estate investment trust (‘REIT’) that provides co-location and interconnection services. The REIT has grown its annual dividend over the past 15+ consecutive years, and we view Digital Realty as a stellar income-generation idea. As of this writing, shares of DLR yield ~2.8%. We include shares of DLR as an idea in both the Dividend Growth Newsletter and High Yield Dividend Newsletter portfolios. Investors have been steadily warming up to Digital Realty this year, with shares of DLR up ~23% year-to-date, and we see room for additional upside as the top end of our fair value estimate range sits at $186 per share of Digital Realty.

Aug 15, 2021

Dividend Growth Idea Realty Income Is on the Rebound
Image Source: Realty Income Corporation – August 2021 IR Presentation. Realty Income, “The Monthly Dividend Company,” has paid out a dividend over the past 610+ consecutive months and shares of O yield a nice ~4.0% as of this writing. We are big fans of its pending merger with VEREIT and its international expansion plans as these endeavors will significantly improve both Realty Income’s growth runway and the resilience of its business model going forward. We continue to like Realty Income as an idea in the Dividend Growth Newsletter portfolio and appreciate the REIT’s latest guidance boost. On a final note, we are keeping an eye on its pending merger with VEREIT.

Aug 9, 2021

High Yielding Idea CyrusOne Beats Estimates and Raises Guidance
Image Source: CyrusOne Inc – Second Quarter of 2021 IR Earnings Presentation. The data center and colocation service provider CyrusOne is a real estate investment trust (‘REIT’) that is included as an idea in the High Yield Dividend Newsletter portfolio. CyrusOne reported second quarter 2021 earnings July 28 that beat both consensus top- and bottom-line estimates, and CyrusOne also increased its full-year guidance in conjunction with its latest earnings update. We liked what we saw in CyrusOne’s latest earnings report.

Aug 7, 2021

Two High-Quality Self-Storage REITs Beat Estimates and Raise Guidance
Image Shown: Shares of CubeSmart (depicted by the blue line) and Public Storage (depicted by the orange line), two self-storage REITs that are included as ideas in the High Yield Dividend Newsletter portfolio, have surged higher year-to-date. We are big fans of the self-storage real estate investment trust (‘REIT’) industry, particularly in the US. These REITs offer their customers an economical way to maximize their living space at a time when domestic housing prices are surging from a baseline that is already quite high. Additionally, self-storage REITs are well-positioned to push through continuous rent increases given that the monthly rental expense for a self-storage unit for an ordinary US household likely represents just a sliver of their monthly budget, as compared to a monthly rental expense for a primary home or the monthly food budget, etc. Our favorite two names in the space are CubeSmart (CUBE) and Public Storage (PSA).

Jul 29, 2021

Microsoft’s Dividend Is Rock Solid But Why?
Image Shown: Valuentum’s Dividend Report on Microsoft. The Dividend Cushion Ratio Deconstruction reveals the numerator and denominator of the Dividend Cushion ratio for Microsoft. At the core, the larger the numerator, or the healthier a company's balance sheet and future free cash flow generation, relative to the denominator, or a company's cash dividend obligations, the more durable the dividend. In the context of the Dividend Cushion ratio, Microsoft's numerator is larger than its denominator suggesting strong dividend coverage in the future. The Dividend Cushion Ratio Deconstruction image puts sources of free cash in the context of financial obligations next to expected cash dividend payments over the next 5 years on a side-by-side comparison. Because the Dividend Cushion ratio and many of its components are forward-looking, our dividend evaluation may change upon subsequent updates as future forecasts are altered to reflect new information. We estimate the efficacy of the Dividend Cushion ratio in warning against dividend cuts at about 90%. We measure this efficacy by looking at the Dividend Cushion ratios of companies that have cut their payouts in our coverage. If the company had a Dividend Cushion ratio below 1, we’d view the Dividend Cushion ratio as doing its job. Not all companies with high Dividend Cushion ratios are insulated from dividend cuts, and not all companies with low Dividend Cushion ratios will cut their dividend, but the Dividend Cushion ratio is yet another Valuentum-driven tool for your investor tool kit.

Jul 24, 2021

Best Ideas Newsletter Portfolio Soars!
Image shown: The top weighted ideas in the Best Ideas Newsletter portfolio continued to lead the charge during the trading session Friday, July 23. Facebook and Alphabet rallied on favorable reports from social media peers, while Vertex continues to recover thanks in part to encouraging views on CRISPR technology, while Visa looks to be back on track. DPZ had a strong trading session July 22 and experienced some profit taking. Image source: Seeking Alpha. The digital economy is here to stay, and online advertising is not a luxury but rather a necessity. Though many aren’t too big of fans of Facebook, the company, its stock continues to be severely underpriced, as its Shops and Dating features remain under-monetized, while potential at other properties such as Messenger and WhatsApp remain in the early innings, in our view. Our valuation of Facebook doesn’t include the tremendous promise that it holds in other areas of nascent growth and largely only considers Facebook/Instagram, meaning there is further upside potential beyond our fair value estimate range. Alphabet is benefiting from a lot of similar trends.

Jun 11, 2021

CubeSmart Outperforms and Boosts Its Full-Year Guidance
Image Source: CubeSmart – June 2021 IR Presentation. We continue to be huge fans of CubeSmart and like the self-storage REIT as an idea in the High Yield Dividend Newsletter portfolio. A greater percentage of US households have been turning to self-storage offerings over the past several decades in order to maximize their living space in an economical manner according to data cited by Public Storage (another idea included in the High Yield Dividend Newsletter portfolio) and Extra Space Storage. Secular tailwinds support CubeSmart’s promising growth outlook. Shares of CUBE are up 38% year-to-date as of the end of normal trading hours on June 10, easily outpacing the 12% gain seen in the S&P 500 during this period before taking dividend considerations into account. As of this writing, shares of CUBE yield ~2.9%.