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Recent Articles
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Walmart’s Free Cash Flow Remains Robust, Buys Vizio to Boost Advertising Business
Feb 21, 2024
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Image: Walmart’s free cash flow generation during fiscal 2024 was superb and comfortably covers its cash dividends paid.
Walmart is doing a fantastic job executing on its value proposition, and the company is in a sweet spot with respect to consumer trends given the step change in prices the past few years that is causing consumers to trade down to value offerings. The firm’s comp sales are coming in better than expected, and its free cash flow generation remains well in excess of its cash dividends paid, providing ample support for further dividend hikes. Walmart will execute a 3-for-1 stock split on February 23 and will begin trading on a post-split basis February 26. Though Walmart retains a massive net debt position, perhaps its only drawback from a financial standpoint, the company is a fantastic dividend grower and perhaps one of the best considerations within the retail space these days. Shares yield ~1.4% at the time of this writing.
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Dividend Growth Idea Home Depot Hikes Payout Nearly 8%!
Feb 20, 2024
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Image: Home Depot is working through some soft sales trends following robust home improvement spending during the pandemic, but the company’s free cash flow generation remains top notch.
On February 20, Dividend Growth Newsletter portfolio holding Home Depot reported mixed fourth quarter results that showed revenue pressure in the period, but the company still beat expectations on both the top and bottom lines. We’re huge fans of Home Depot’s resilience through the ups and downs of the real estate market, and the company’s pace of dividend growth remains solid. Our fair value estimate of Home Depot stands at $369 per share, modestly higher than where it is trading, and the company has a strong 1.4x Dividend Cushion ratio, which speaks to future dividend expansion.
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Energy Transfer’s Lofty Distributions Are Much More Sustainable These Days
Feb 19, 2024
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Image: Energy Transfer covered its distributions with traditional free cash flow in 2023, and the company offers investors an elevated distribution yield.
Energy Transfer reported mixed fourth-quarter results on February 14, but the company’s traditional free cash flow metrics continue to hold up well, providing support to its lofty distribution. Years ago, pipeline entities were spending much more than they reasonably could to be able to sustain their distributions at prior levels, and many have readjusted both their capital spending trajectories as well as their distributions over the years. These days, pipeline entities such as Energy Transfer, with their geographically diversified portfolio of assets, are in much better shape to sustain their payouts. Units of Energy Transfer yield ~8.7% at the time of this writing.
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Tanger’s External Growth Activity Looks Encouraging
Feb 17, 2024
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Image Source: Tanger Inc.
Tanger Inc. is an owner and operator of outlet and open-air retail shopping destinations, and the REIT has done a great job of late, with shares advancing more than 50% during the past year. While traditional real estate equities have languished, Tanger has managed to keep moving in the right direction. The REIT reported better than expected fourth-quarter results February 15, and its ~3.6% dividend yield isn’t too shabby. For investors looking to take a leap into retail REITs, Tanger may be among the top considerations.
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