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Dividend Increases/Decreases for the Week Ending March 7

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Below we provide a list of firms that raised/lowered their dividends during the week ending March 7. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here (or use our ‘Symbol’ search box in our website header). Firms Raising Their Dividends This Week Agree Realty (ADC): now $0.43 per share quarterly dividend, was $0.41. Altisource Residential Corp (RESI): now $0.40 per share quarterly dividend, was $0.25. Avago Technologies (AVGO): now $0.27 per share quarterly dividend, was $0.25. The Children’s Place (PLCE): now $0.1325 per share quarterly dividend (first ever). Devon Energy (DVN): now $0.24 per share quarterly dividend, was $0.22. Family Dollar Stores (FDO): now … Read more

Evaluating the Outlook for Defense Stocks

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The defense industry is home to a number of large defense contractors—General Dynamics (GD), Lockheed Martin (LMT), Northrop Grumman (NOC) and Raytheon (RTN)—that have significant project/intellectual know-how, long-term customer/government ties, and widespread integration expertise that cannot be easily replicated by many smaller contractors. This gives established, large defense contractors a leg up on bidding for new government contracts and optimizing the margin profile for many through cost cutting and productivity enhancements. Still, competing budget priorities within the overall US budget and within the US defense budget itself will pose both challenges and opportunities for much of the group. However, long-term cybersecurity and national security risks aren’t going away, and this will ensure that the group has a steady share of … Read more

Boeing’s Fourth-Quarter Results Were Disappointing But We’re Not Worried about the Strength of Commercial Aerospace

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On Wednesday, aerospace and defense bellwether Boeing (BA) reported relatively disappointing fourth-quarter results. Revenue advanced 7% in the period, but core operating earnings were flat versus the prior-year quarter due to a 50 basis-point headwind in its core operating margin. Our experience with Boeing is that the firm tends to face share-price pressure when financing or emerging-market scares become prominent, the latter taking center stage in recent days—the Argentine peso collapsed and the South African rand continues to face pressure due to an unexpected rate hike. News about China—including a slowdown in manufacturing, banking concerns, and a sizzling (but more vulnerable) real estate market—isn’t helping either. Boeing is more exposed to these “news” items than most companies, particularly given the … Read more

Three Reasons Why Dividend Growth Investors Are Quite Savvy

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A version of this article appeared on our website on October 1, 2013. There are many different approaches to investing, but we think dividend growth investors are quite savvy, especially when they combine a rigorous dividend growth process in the form of the Valuentum Dividend Cushion ratio with the valuation rigors behind the Valuentum Buying Index. Let’s examine the three reasons why we think dividend growth investors are a smart group in the age of ultra-low interest rates. #1. Fool Me Once, Shame on You…Fool Me Twice, Shame on Me Today’s dividend growth crowd has seen enough. First, they witnessed the dot-com bubble (1997-2000), a period in stock market history where firms’ stock prices soared in some cases as a result … Read more

Surveying 3Q Performance from the Large Defense Contractors

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Northrop Grumman Executes Nicely in 3Q But Reveals Declining Backlog On Wednesday, Northrop Grumman (NOC) reported strong third-quarter results considering the competing budget priorities in Washington and the subsequent difficult revenue environment. The defense contractor’s revenue dropped 2.6%, as expected, but its segment operating income increased 4.5% thanks to roughly 90 basis points of segment operating margin improvement. Third-quarter diluted earnings per share leapt 17.6%, and free cash flow swelled to $860 million (14.1% of sales), up from $748 million (11.9% of sales). We very much liked the profitability improvements and its increased free-cash-flow conversion during the period, but the firm’s backlog performance in the quarter wasn’t stellar: As of September 30, 2013, total backlog was $37.5 billion compared with … Read more

Flashback 2008: Brian Nelson and Pat Dorsey — the Morningstar Years

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We think it’s important to know the people you’re working with at Valuentum. We’re not some robot behind the scenes that only lives in the Internet. We’re hard-working individuals with families just like you. Let’s take a flashback in time to when Valuentum’s current President of Equity Research Brian Nelson called for Boeing’s shares to hit $110 in 2008, while he was working as a Senior Analyst at Morningstar. Shares are just a few dollars away from that level today. Source: http://www.youtube.com/user/MorningstarInc?feature=watch << Learn more about Brian Nelson, CFA Aerospace & Defense – Prime: BA, FLIR, GD, LLL, LMT, NOC, RTN Aerospace Suppliers: AIR, ATRO, COL, HEI, HXL, PCP, SPR, TDY, TXT

Headline Risk Entering the Market

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The summer months have been relatively uneventful, with the exception of concerns relating to the Federal Reserve’s coming tapering of its bond-buying program and quibbles between hedge fund giants over a company that makes protein shakes—we’re talking about Herbalife (HLF) in the latter example. Even the sequester proved to be a largely underwhelming event so far through 2013. As a result, the market has focused on fundamentals, awarding strong performance and punishing poor performance (almost irrespective of valuation parameters). However, the market remains fully valued at current levels, with the forward price-to-earnings ratio on S&P 500 companies in-line with its 10-year average at 14.1 times, and the distribution of our Valuentum Buying Index ratings tilting decidedly negative. The forward price-to-earnings … Read more

House Defense Appropriators Ignore Sequestration

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To download the 155+ page fiscal 2014 Defense Appropriations bill, please click here. On Tuesday, the House Appropriations Committee released the subcommittee draft of the fiscal year 2014 Defense Appropriations bill. The bill provides for $512.5 billion in non-war funding, an amount that completely ignores the level that would be caused by automatic sequestration spending cuts (to the tune of over $28 billion). The House’s proposal is also $5.1 billion below fiscal 2013 levels and $3.4 billion below President Obama’s request. In any case (whether the bill in current form is implemented or if sequestration takes hold and further spending cuts are put in place), the trajectory of defense spending for fiscal 2014 relative to fiscal 2013 is down. The … Read more

Firms Raising Their Dividends in the Week Ending March 8

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The flurry of dividend increases continues. Below we provide a list of firms that upped their dividends for the week ending March 8. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here. Firms Raising Their Dividends This Week Allied World (AWH): now $0.50 per share share quarterly dividend, was $0.375. Agree Realty (ADC): now $0.41 per share quarterly dividend, was $0.40. Amtrust Financial (AFSI): now $0.14 per share quarterly dividend, was $0.10. Canadian Natural (CNQ): now C$0.125 per share quarterly dividend, was C$0.105. Colgate-Palmolive (CL): now $0.68 per share quarterly dividend, was $0.62. Covanta (CVA): now $0.165 per share quarterly dividend, was $0.15. Devon … Read more

Revenue Upside at Defense Contractors May Now Be Capped

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On Thursday, defense contractors Lockheed Martin (click ticker for report: ) and Raytheon (click ticker for report: ) reported mixed fourth-quarter results. Though both ended the year with strong backlogs, we think cautious commentary regarding sequestration risk may put a cap on future revenue upside (relative to expectations). Lockheed Martin’s bottom-line missed the mark during the fourth quarter, but revenue came in slightly better than expected. The defense contractor issued 2013 guidance of $44.5-$46 billion in sales and $8.80-$9.10 in earnings per share, both ranges higher than consensus estimates. The firm ended 2012 with a record backlog of $82.3 billion (implying a book-to-bill ratio of 1.03 for the year), representing roughly 1.75 times expected 2013 revenue (Image Source: LMT 4Q Earnings … Read more