KO

Earnings from 5 Dividend Growth Giants

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Let’s evaluate the recent quarterly results of five traditional dividend growth plays. Please be sure to access the 16-page reports and dividend reports of the firms included in this article. If you are interested in receiving the valuation models of companies, please let us know. Coca-Cola (KO) There are few companies fundamentally stronger than Coca-Cola. The firm boasts a number of competitive advantages: its brands, financial strength, distribution system, global reach, and a deep executive bench. It has raised its dividend in each of the past 50+ years, and we expect dividend growth to continue at a high-single-digit annual pace for the foreseeable future. Though the strength of Coca-Cola’s competitive position is undeniable, we don’t expect the ‘cola wars’ with … 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

The Risks of Dividend Growth Investing

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Did you know that if you invested in retail-focused REIT Realty Income’s (O) stock in October 1994 with an original investment of $8,000, your current annual dividend income would be $2,190, equivalent to a yield on cost north of 27%?!?! For any dividend growth investment, yield on cost is the current annualized dividends divided by the original investment, or $2,190/$8,000 in this example. The benefits of dividend growth investing have never been more evident, and a prudent, well-defined dividend growth plan targeting the ‘right’ companies over the next 20 years could result in your portfolio generating a 27% yield on cost in a couple decades, too! Though this sounds fantastic (and perhaps, unreal), investors must be aware of the significant … Read more

The Cola Wars: Currency Headwinds Intensify; Snacks Looking Better

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We live in a thirsty world. Global non-alcoholic ready-to-drink (NARTD) consumption is expected to advance at nearly a 6% compound annual growth rate over the next four years. Since the beginning of this decade, NARTD retail value has increased by $135 billion, and the market is expected to grow by another $300 billion before the end of 2020. The global beverage industry is fueled by a number of global macro trends: 20% growth in urban population, 70% increase in personal expenditure per capita, 50% growth in middle class, and 1 billion teens today. Coca-Cola (KO) and Pepsi (PEP), which both reported results last week, are poised to benefit from these strong market demand trends, and Pepsi has a faster-growing snacks … Read more

Update: Digging Into the Valuentum Dividend Cushion

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Sign Up to Receive our Dividend Growth Newsletter! Add the High Yield Dividend Newsletter to Your Membership! 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 by Ned Davis Research, 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. As such, we’ve developed a rigorous dividend investment … Read more

Thank you…

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By Brian Nelson, CFA Earlier this week, I received an email from a colleague and valued member of our services. I wanted to share it here for others to read. I haven’t included his name, but if he wants me to, I can add it in. It is filled with wisdom, experience and kindness. And it really made my year to read his words. The Valuentum community, I believe, is the best community of investors out there. Sir, if you do happen to read your own email on our site, we very much have appreciated your feedback, and we hope to continue to live up to your praises. We are dedicated, and our team has been rejuvenated by your words. … Read more

Coca-Cola Remains Strong; Green Mountain Deal Shakes Up Beverage Industry

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Though many investors are focused on the relatively weak global volume performance in Coca-Cola’s (KO) fourth-quarter results, released February 18, we’re not worried about the beverage giant’s fundamental strength. Excluding the impact of structural changes, comparable currency-neutral net revenues advanced 4% in the period, while comparable currency-neutral operating income jumped 6%, in line with its long-term growth target. Comparable currency-neutral earnings per share jumped 7% in the fourth quarter, roughly in-line with the full-year pace. This isn’t terrible performance by any stretch of the imagination, and the company continues to achieve global value share gains in nonalcoholic ready-to-drink beverages. Coca-Cola’s cash flow from operations declined modestly during the year, but greater scrutiny with respect to capital spending facilitated free cash flow … Read more

Deciphering Valuentum’s Dividend Lingo

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On January 25, Barron’s published an article called “Get Lucky: IQT’s Lucky 13 Portfolio.” In it, the publisher talked about the reasoning behind why 13 dividend-paying stocks were highlighted in the article. Let’s walk through the reasoning behind these 13 stocks and how the assessment of some of these dividend picks applies the Valuentum Dividend Cushion framework (click here), in part or in whole. Valuentum’s Brian Nelson also gives his quick thoughts on the comments of each company as if he were training a new analyst on how to interpret the article from an analytical standpoint. Abbott Labs (ABT): “a solid anchor position for any portfolio…Free operating cash flow is three times its dividend.” Nelson’s thoughts: Abbott is clearly a … Read more

Previewing Yum! Brands’ Fourth Quarter Results

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Yum! Brands (YUM), the owner of KFC, Pizza Hut, and Taco Bell, will report its fourth-quarter results after the market close Monday. The quick-service restaurant giant is a global powerhouse with solid brands and strong cash-flow generating capacity. Yum! Brands has generated cash flow from operations of $1 billion or more in each of the past 10 years, with the firm pulling in more than $2 billion in each of the past two years. The company’s greatest growth opportunity resides with its KFC brand in China. Per one million people, there are just 3 KFC units in China. In other Asian countries, this ratio is closer to 20 to 1, implying significant long-term expansion in the country. China’s consumer class … Read more