KMB

The Dividend Dilemma

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One of the core tenets of the Valuentum process not only rests in the all-important price vs. value consideration (see Valuentum’s Brian Nelson talk about that here), but also in “letting winners run.” At first read, these two items appear to be at odds with each other. For example, we preach about getting stocks at a bargain, but yet, we don’t sell holdings when they start to move beyond our estimate of their fair value. What gives? At the Valuentum core, we prefer an entry point that corresponds to the time when shares have substantial valuation and pricing support (i.e. they have high Valuentum Buying Index ratings), and we prefer an exit point when shares have little valuation and pricing … Read more

Procter & Gamble Wraps Up a Strong Fiscal Year 2014

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Procter & Gamble (PG) reported strong fiscal fourth-quarter results Friday. The April-June quarter revealed organic sales expansion of 2% thanks to strong pricing expansion and core earnings-per-share growth of 20%, to $0.95. Excluding the negative impact of foreign exchange, currency-neutral core earnings per share increased 25%. We continue to like the pricing power of Procter & Gamble’s brands, and the pace of earnings growth was fantastic during the last quarter of its fiscal year. Management continues to deliver on its top and bottom-line commitments. P&G’s brands include Tide, Ariel, Gillette, Venus, Bounty, Charmin, Pantene, Olay, Pampers, Crest, Oral-B, Duracell, and Vicks. These brands aren’t going away anytime soon, in our view. Though management indicated that it will shed some lower-margin brands, … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

Earnings from 15 Dividend Growth Giants

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History has revealed that the best performing stocks during the previous decades have been those that shelled out ever-increasing cash to shareholders in the form of dividends. In a recent study, S&P 500 stocks that initiated dividends or grew them over time registered roughly a 9.6% annualized return since 1972 (through 2010), while stocks that did not pay out dividends or cut them performed poorly over the same time period. Such analysis is difficult to ignore, and we believe investors may be well-rewarded in future periods by finding the best dividend-growth stocks out there. Let’s take a look at the recent performance of 15 high dividend payers and disclose their ‘valuation ratings’ and most recent Valuentum Dividend Cushion scores. Valuentum … 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

Clorox Faces Cash Flow Headwinds in Fiscal 1Q

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Our general takeaway after surveying calendar third-quarter results from peers Hershey (HSY), Colgate-Palmolive (CL), and Unilever (UN) was that performance in the consumer staples space was mostly positive during the third quarter and that emerging-market performance remains robust (even though Unilever toned down expectations a bit). Clorox’s (CLX) better-than-expected fiscal first-quarter results, released Thursday, did not deviate from the mostly positive newsflow. Sales expanded 2% (3.5% excluding the negative impact from currency), and the company recorded pretax profit growth of 7%. Volume for the fiscal first quarter advanced 1% thanks to gains from Professional Products, Charcoal, Laundry and Burt’s Bees offset by declines in Home Care. Gross margins were flat as cost savings and price increases mitigated higher manufacturing and logistics … Read more

Evaluating Third-Quarter Performance of a Few Bellwethers

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DuPont’s 3Q Free Cash Flow Leaves Much to Be Desired DuPont (DD) reported third-quarter results Tuesday that showed revenue advancing 5% (thanks primarily to higher volume growth) and operating earnings of $0.45 per share, a modest bump from the same period a year ago. The standout on the top line was ‘Agriculture’ sales, which jumped 15% thanks to higher insecticide volumes and higher seed prices in Latin America. Excluding its ‘Performance Chemicals’ division, which suffered from price declines for titanium dioxide, refrigerants, and fluropolymers, all operating segments posted increased operating earnings versus last year. DuPont noted that it expects fourth-quarter operating earnings to be up substantially from that of the year-ago period, but it still reiterated its full-year operating earnings … Read more

Kimberly-Clark Posts Solid Second Quarter Results

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Wisconsin-based consumer products company Kimberly-Clark (click ticker for report: ) posted solid second quarter results Monday morning. Revenue was flat year-over-year at $5.7 billion, just a touch below consensus estimates. Adjusted earnings per share increased 8% year-over-year to $1.41, slightly above consensus expectations. Even though headline numbers were strong, free cash flow totaled $356 million, equal to just under 7% of revenue (not as strong as we would have liked, but still good). Kimberly-Clark’s ‘Personal Care’ segment, the firm’s largest division, underperformed the rest of the company, with revenue declining 1% year-over-year to $2.4 billion. European operations are being pared back, and it now no longer sells its legendary Huggies brand in any European market except for Italy. North American … Read more

Dividend Increases for the Week Ending February 22

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This week was jam-packed with companies raising their quarterly cash dividends. Below we provide a list of firms that upped their dividends for the week ending February 22. 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 Abercrombie & Fitch (ANF): now $0.20 per share quarterly dividend, was $0.175. Analog Devices (ADI): now $0.34 per share quarterly dividend, was $0.30. Chemung Financial (CHMG): now $0.26 per share quarterly dividend, was $0.25. Chesapeake Lodging Trust (CHSP): now $0.24 per share quarterly dividend, was $0.22. Cheviot Financial Corp. (CHEV): now $0.09 per share quarterly dividend, was $0.08 Corrections Corp of America … Read more

A Dual Focus on Valuation and Yield Is the Best Way to Combat Changes in Future Dividend Tax Rates

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With a potential hike in the dividend tax rate just around the corner, there is no more important time than now for income investors to evaluate their existing portfolio holdings to determine whether they are well-positioned for a higher-tax environment. Assuming there are no changes to the current trajectory, the top dividend tax rate is expected to rise to 39.6% next year (up from 15% currently), and the highest-income earners will see a Medicare surtax on top of that. Evaluate All Aspects of a Dividend Investment First of all, we think those investing in high-yielders (firms) at any price (HYAAP) may be most affected by this change in tax rates. These high-yielders at any price (HYAAP) tend to be favorites of those at or near retirement, particularly given the paltry payouts on fixed … Read more