LUMN

Hard Work and the Trust That Binds

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Image Source: Terry Johnson By Brian Nelson, CFA We’ll have our traditional Valuentum Weekly email coming out on Sunday, and I’m excited to say our team is putting the finishing touches on our technology industry update, so we’ll have a whole bunch of fresh reports for you to look at Sunday evening/Monday morning. It’s easy to forget how much we’ve been through the past two years. Often, we forget how helpful the warning that markets were going to crash was the weekend before they did on February 22, 2020, “Is a Stock Market Crash Coming? – Coronavirus Update and P/E Ratios,” how we thought dollar-cost-averaging made sense at the bottom in March 2020, and how we went “all-in” in April … Read more

Microsoft’s Dividend Is Rock Solid But Why?

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Image Shown: Valuentum’s Dividend Report on Microsoft. The Dividend Cushion Ratio Deconstruction reveals the numerator and denominator of the Dividend Cushion ratio for Microsoft. At the core, the larger the numerator, or the healthier a company’s balance sheet and future free cash flow generation, relative to the denominator, or a company’s cash dividend obligations, the more durable the dividend. In the context of the Dividend Cushion ratio, Microsoft’s numerator is larger than its denominator suggesting strong dividend coverage in the future. The Dividend Cushion Ratio Deconstruction image puts sources of free cash in the context of financial obligations next to expected cash dividend payments over the next 5 years on a side-by-side comparison. Because the Dividend Cushion ratio and many … Read more

Crown Castle Is a Great Income Growth Idea

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Image Shown: Crown Castle International Corp has an expansive portfolio of shared wireless infrastructure assets that covers every major market in the US. Image Source: Crown Castle International Corp – First Quarter of 2021 IR Earnings Presentation By Callum Turcan Crown Castle International Corp (CCI) is a high-quality real estate investment trust (‘REIT’) that focuses on shared wireless infrastructure assets. Its expansive portfolio includes 40,000+ towers, ~80,000 route miles of fiber, and ~80,000 small cell nodes. According to Crown Castle, the REIT has a presence in every major US market. As of this writing, shares of CCI yield ~2.9%. Over the long haul, Crown Castle aims to grow its dividend per share and adjusted funds from operations (‘AFFO’) per share … Read more

AT&T Right-Sizing Dividend, WarnerMedia Joining Forces with Discovery

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Image Shown: AT&T Inc’s WarnerMedia unit is joining forces with Discovery Inc. This transaction, if it goes through as planned, will create another giant in the video streaming services industry. Image Source: Discovery Inc – Discovery Joining Forces with WarnerMedia IR Presentation By Callum Turcan Despite the upcoming rightsizing of its dividend payout in light of a pending spin-off, the telecommunications and media giant AT&T Inc (T) continues to be one of our favorite income generation ideas. We’re not making any changes to the newsletter portfolios at this time, and the recent news indicates AT&T’s balance sheet is about to improve significantly. Major Transaction On May 17, AT&T announced a major transaction with Discovery Inc (DISCA) that involves AT&T using a … Read more

Best Idea Disney’s Outlook Is Bright and Getting Brighter

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Image Source: The Walt Disney Company – December 2020 Investor Day Presentation By Callum Turcan On May 13, The Walt Disney Company (DIS) reported second quarter fiscal 2021 earnings (period ended April 3, 2021) that beat consensus bottom-line estimates but missed consensus top-line estimates. Investors were dismayed that the company’s paid video streaming subscriber base did not grow by as much as expected. However, we are not worried as Disney’s outlook is bright and getting brighter. Though the coronavirus (‘COVID-19’) pandemic has weighed negatively on its business, ongoing vaccine distribution efforts are slowly enabling Disney to open its numerous theme park and resort operations back up (historically, these assets were Disney’s cash-flow cows). For instance, Disneyland and Disneyland California Adventure … Read more

Good News from High Yielding AT&T

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Image Source: AT&T By Brian Nelson, CFA On Thursday, April 22, AT&T (T) reported solid first-quarter results that gave the market confidence that it can make good on its payout to shareholders. The company offers high yield dividend investors an attractive risk-reward profile given its healthy earnings (and free cash flow) coverage of the dividend, in our opinion. During the period, AT&T’s consolidated revenue advanced 2.7% while adjusted diluted earnings per share came in at $0.86 versus $0.84 in last year’s quarter. Operating cash flow leapt 12% while free cash flow soared to $5.9 billion, up by more than half over the same tally in the year-ago period. Here’s what CEO John Stankey had to say about the quarter in … Read more

ViacomCBS Makes Big Bet on Streaming

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Image Source: ViacomCBS Inc – Fourth Quarter of 2020 IR Earnings Presentation By Callum Turcan After Viacom and CBS were reunited in December 2019, the new entity ViacomCBS Inc (VIAC) has finally started to gain some traction on the video streaming front. The service CBS All Access, which has since been rebranded as Paramount+, was largely a dud and did not gain the level of attention that Walt Disney Company’s (DIS) Disney+ service (more on Disney’s video streaming successes here and here), AT&T Inc’s (T) HBO Max service (AT&T’s video streaming growth strategy is picking up steam as we covered here), or Netflix Inc’s (NFLX) namesake service (more on Netflix here) were able to generate. For background, ViacomCBS’s operations include … Read more

AT&T’s Video Streaming Growth Story Is Starting to Take Flight

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Image Source: AT&T Inc – 2021 Investor & Analyst Day Presentation By Callum Turcan On March 12, AT&T Inc (T) hosted its 2021 Analyst & Investor Day event. In conjunction with the event, AT&T issued long-term financial and operational guidance which included a substantial upward revision in its expected HBO/HBO Max subscriber growth over the coming years. We continue to be big fans of AT&T as a high yielding opportunity and include AT&T as an idea in the High Yield Dividend Newsletter portfolio (more here). As of this writing, shares of AT&T yield ~7.0%. Background Information In June 2018, AT&T completed its acquisition of Time Warner which gave AT&T the keys to Home Box Office (‘HBO’). A pillar of AT&T’s … 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

We Expect Netflix to Turn Into a Free Cash Flow Generating Machine

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Image Shown: Netflix Inc’s global paid subscriber base is expected to keep growing at a decent clip going forward, though at a slower pace than in the recent past. Image Source: Netflix Inc – Shareholder Letter covering its fourth quarter and full-year earnings in 2020 By Callum Turcan The proliferation of video streaming services during the past decade accelerated in 2020 due to the coronavirus (‘COVID-19’) pandemic forcing households to stay indoors, which in turn drove up demand for economical forms of at-home entertainment. During the early days of the video streaming services industry, subscriber growth was driven largely by the “cord cutting” trend in which households traded out more expensive cable/satellite TV packages (sometimes referred to as “premium” TV … Read more