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Recent Articles
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Efficacy of the Dividend Cushion Ratio
Nov 16, 2022
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The Dividend Cushion ratio is one of the most powerful financial tools an income or dividend growth investor can use in conjunction with qualitative dividend analysis. The ratio is one-of-a-kind in that it is both free-cash-flow based and forward looking. Since its creation in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90%.
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Home Depot Says Customers Remain “Resilient and Engaged”
Nov 16, 2022
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Image: Home Depot's third-quarter performance wasn't bad. Inventories expanded, but management reiterated that its core customer remains resilient and engaged. Image Source: Home Depot.
Home Depot’s third-quarter report was solid, all things considered. The firm offset weaker transactions with a higher average ticket to driven solid comp performance. Management noted that its core customer remains resilient, and while inventories have ballooned on a year-over-year basis, we’re less concerned about the inventory build as most of Home Depot’s inventory is of the non-perishable variety. We like the firm as an idea in the simulated Dividend Growth Newsletter portfolio, though we continue to pay attention to the health of its balance sheet, which includes a considerable net debt position.
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Walmart Is Back on Track; Markets Looking Healthier
Nov 15, 2022
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Image: Walmart’s operating income performance, while still under pressure, improved considerably during the third quarter. Image Source: Walmart.
Walmart Inc. was the canary in the coal mine earlier this year when the company reported its first-quarter 2022 results in May that showed spending on food staples and energy (gas) was cutting into discretionary general merchandise (hardline) spending. However, market sentiment seems to be improving these days, and the firm’s third-quarter results released November 15 showed the huge big box retailer is getting back on track. Though we’re not going to be adding Walmart to any newsletter portfolio, we like what we saw in the quarterly report.
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ASML Launches Big Buyback; Lithography Systems Well Positioned for Demand Growth
Nov 13, 2022
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Image: ASML has been one of the most successful semiconductor companies thanks in part to the firm’s advanced lithography systems that continue to meet customer demands for size and cost efficiencies. Image Source: ASML.
We think ASML Holding is in a sweet spot in the semiconductor space as its lithography systems position the industry well along the path of Moore’s Law. Strong past investments have given it a leadership position, and we expect ASML to capture a significant amount of its addressable market from smartphones to personal computing and beyond, all the while it pays a dividend and buys back stock along the way. A continued focus on research & development and capital spending, while maintaining a strong and flexible balance sheet should be expected. The firm’s recent Investor Day was a positive catalyst for shares and eased the worst of the concerns regarding the intermediate-term impact of Sino-American tensions on the semiconductor space. We continue to like shares of ASML Holding.
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