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3 Strong Dividend Payers to Consider Within Consumer Staples

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By Brian Nelson, CFA Dividend growth may never go out of style. For one, there are tremendous compounding benefits to investing in dividend growers over the long haul, “3 Substantial Benefits of Dividend Growth Investing.” A focus on traditional cash-based sources of intrinsic value and dividend health is therefore essential to avoid tragic dividend cuts in your portfolio (see our walk-through of the cash-based sources of intrinsic value and how to find them in our article/video about Apple here). Three dividend growers that we do not include in the Dividend Growth Newsletter portfolio but that have recently-reported calendar first-quarter 2021 earnings and may be worth considering in a diversified equity portfolio are Kellogg (K), Colgate-Palmolive (CL) and Clorox (CLX). These three … Read more

P&G and Kimberly-Clark Tell Two Different Stories

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Image Shown: Since the beginning of 2019, on a price-only basis, Procter & Gamble (orange) has handily outpaced the Vanguard Consumer Staples ETF while Kimberly-Clark (turquoise) has stumbled. Brian Nelson, CFA Consumer staples (VDC) stocks are known for the stability of their demand profiles, strong and recognizable household brand names, and solid dividend growth track records. Procter & Gamble (PG) may be among the most recognizable names across the sector, but Kimberly-Clark (KMB) is not far behind. Their share prices, however, tell two different stories since the beginning of 2019. In P&G’s third-quarter fiscal 2021 report (calendar first quarter), issued April 20, the company posted a net sales increase of 5% and diluted net earnings per share expansion of 13%, … Read more

Dividend Increases/Decreases for the Week March 12

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Below we provide a list of firms that raised their dividends during the week ending March 12. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Americold Realty Trust (COLD): now $0.22 per share quarterly dividend, was $0.21. AngloGold Ashanti (AU): now $0.384 per share annual dividend, was $0.11. Applied Materials (AMAT): now $0.24 per share quarterly dividend, was $0.22. Cango Inc. (CANG): now $1.00/ADS special dividend, was $0.25. Cervus Equipment (CSQPF): now CAD 0.11 per share quarterly dividend, was CAD 0.06. Citrix (CTXS): now $0.37 per share quarterly dividend, was $0.35. … Read more

ALERT: Raising Cash in the Newsletter Portfolios

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January 27, 2021 ALERT: Raising Cash in the Newsletter Portfolios We are raising the cash position in the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio to 10%-20%. — By Brian Nelson, CFA — Our research has been absolutely fantastic for a long time, but 2020 may have been our best year yet. You can read the 2020 recap here. With the S&P 500 trading within our fair value estimate range of 3,530-3,920 (and the markets rolling over while showing signs of abnormal behavior), we’re raising the cash position in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to 10%-20%. — For more conservative investors, the high end of this range may even be larger, especially … Read more

All I Want for Christmas Are Dividend Aristocrats

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Image Source: Five Furlongs It may not be as catchy as Mariah Carey’s Christmas hit, “All I Want For Christmas Is You,” but if you ask a dividend growth investor what they might want for Christmas as it relates to an investment, they might start singing about a long list of Dividend Aristocrats–a list of companies that have increased their dividends in each of the past 20-25+ years. Therefore, we wanted to do something special this Christmas for members. We’ve aggregated a list of every non-financial Dividend Aristocrat in our 16-page stock report coverage universe and made a list conveniently available below, including some key data and links directly to their 16-page stock reports (pdf). To access the 16-page stock … Read more

Walking Through the Calculation of the Dividend Cushion Ratio

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A cow for her milk, A hen for her eggs, And a stock, by heck, For her dividends. An orchard for fruit, Bees for their honey, And stocks, besides, For their dividends. – John Burr Williams, “The Theory of Investment Value” (1938) Executive Summary: We believe the Dividend Cushion ratio is one of the most helpful 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, considers balance sheet health, and is forward looking. Since its development in 2012, we estimate its efficacy at ~90% in helping to forewarn readers of impending dividend cuts. For companies where Valuentum reports are available, the Dividend Cushion ratio can be found in a stock’s Dividend … Read more

ICYMI — Dividend Growth Strategies Struggle

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Image: A large cap growth ETF (orange) has significantly outperformed an ETF tied to a dividend growth strategy, the SPDR S&P Dividend ETF (SDY), which mirrors the total return performance of the S&P High Yield Dividend Aristocrats Index. — By Brian Nelson, CFA — To no surprise to many members, several dividend growth strategies have faced tremendous pressure during 2020. The Journal recently wrote a piece on the topic, but from our perspective, the problem with many dividend growth strategies is that they tend to be balance-sheet agnostic and pay little attention to traditional free cash flow expectations, focusing only on the yield itself, sometimes dismissing future fundamentals in favor of historical growth trends and the inferior EPS-based dividend payout ratio. — In many dividend-targeted … Read more

Facebook’s Promising Growth Outlook

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Image Shown: Top-weighted Best Ideas Newsletter portfolio holding Facebook Inc has seen its stock price surge higher over the past year and we see room for considerably more capital appreciation upside. Facebook’s growth trajectory will depend in large part on how effective the firm is at generating more revenue per active user, especially in markets outside of the US & Canada. The emergence of a large global middle class should assist in these endeavors. We view Facebook’s growth outlook quite favorably and continue to be big fans of the social media giant. By Callum Turcan Facebook Inc (FB) continues to be one of our favorite companies out there. Shares of Facebook are included as a top-weighted holding in our Best … Read more

Update on Johnson & Johnson

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Image Shown: An overview of Johnson & Johnson’s expectations for fiscal 2021 provided during its second quarter of fiscal 2020 earnings report. We continue to like shares of Johnson & Johnson as a top-weighted holding in our Dividend Growth Newsletter portfolio. Image Source: Johnson & Johnson – Second Quarter of Fiscal 2020 Earnings IR Presentation By Callum Turcan Johnson & Johnson (JNJ) is a top-weighted holding in our Dividend Growth Newsletter portfolio, and we continue to be big fans of the healthcare and consumer staples giant. The company recently published some key updates that we wanted to draw our members’ attention towards. Before we begin, please note that Johnson & Johnson is near the front of the pack when it … Read more

3 Lessons in Portfolio Management Over 10 Years

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Dear members: — We’re finally getting a pause in the rapid ascent of the markets on September 3rd. Though headlines may look scary and momentum/volatility investors could start to pile on to the downside, a modest retracement is actually a good thing. We continue to focus on the long haul with our processes, and we’re viewing the sell-off as profit taking, for the most part. — In the near term, the markets will also have to digest some speculators betting on mean reversion between “value” (cyclical) versus “growth” (secular), but we maintain the view that the value-versus-growth conversation is largely nonsense (see block quotes below), and mean reversion is something akin to the gamblers’ fallacy, in my humble opinion. Investors should also continue … Read more