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Altria Posts Second Quarter Results; Earnings Outlook Raised But Volume Declines Evident

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On Tuesday, Best Ideas portfolio and Dividend Growth portfolio holding Altria (click ticker for report: ) reported solid second-quarter results. Though Altria’s revenue fell nearly 3% (down 1.2% net of excise taxes), the firm was able to drive operating earnings expansion of 6.6% thanks to a combination of strong pricing and cost-cutting initiatives. The cigarette maker’s second quarter adjusted diluted earnings per share advanced 5.1% to $0.62, as all three of the firms’ divisions drove ‘operating companies income’ and margin expansion during the period. Adjusted ‘operating companies income’ at its ‘Smokeable Products’ division nudged higher, but only because cigarette price increases stuck. Its total retail cigarette share grew during the quarter, but industrywide headwinds were massive as the firm’s domestic … Read more

Philip Morris’ Second Quarter Reveals Volume Pressures

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Philip Morris (click ticker for report: ) issued lower-than-expected revenue and earnings in its second quarter Thursday. Net revenues, excluding excise taxes and currency, rose modestly (0.5%) thanks to improvements in ‘Latin America and Canada,’ while operating income, excluding unfavorable currency movements, fell more than 3% (led by more than a 9% slide in operating income in its ‘Asia’ division). Adjusted diluted earnings per share nudged up a penny, to $1.37, and we note that such improvement was augmented by its share repurchase program. Philip Morris’ cigarette shipment volume of 228.9 billion units fell nearly 4%. Though the pace of the volume decline slowed from the first quarter of the year, performance was clearly subdued, and volumes in the ‘Eastern … Read more

Lorillard Boosts Dividend After Solid 2012

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Strength in the cigarette space continued Wednesday morning when Newport’s parent company Lorillard (click ticker for report: ) reported solid fourth quarter results. Revenue jumped 5% year-over-year to $1.7 billion, smashing consensus estimates. Earnings also easily exceeded consensus expectations, jumping 8% year-over-year to $0.79 per share on an adjusted basis. Unlike competitor Altria (click ticker for report: ), which has focused on smokeless tobacco but not yet leaped into e-cigarettes, Lorillard acquired blu eCigs and has capitalized on the segment’s strong growth. Sales of electronic cigarettes jumped nearly 3-fold quarter-on-quarter thanks to increased distribution (and perceived health benefits compared to traditional cigarettes). We believe Lorillard will continue to scale the business using its existing infrastructure, and 2012 could be the early … Read more

Philip Morris Capitalizes on Growth Markets

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International cigarette maker Philip Morris (click ticker for report: ) announced strong fourth quarter results. Revenue, net of excise taxes, grew 2.8% year-over-year to $7.9 billion, falling slightly short of expectations, though that was mainly attributable to currency fluctuations. Adjusted earnings per share increased 13% year-over-year to $1.24, exceeding the consensus estimate by a few cents. On a company-wide level, shipments of cigarettes grew 2.9% year-over-year (excluding acquisitions) during the fourth quarter. Revenue and earnings, when accounting for currency fluctuations, also looked much more favorable, growing 6% and 16%, respectively. Philip Morris also used its strong cash flow generation to repurchase $2 billion of stock, while returning $0.85 per share (per quarter) to investors in the form of dividends. Shipment … Read more

Nothing Can Stop Best Ideas Portfolio Holding Altria

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Best Ideas Newsletter portfolio holding and Dividend Growth Newsletter portfolio holding Altria (click ticker for report: ) announced strong fourth quarter results, reflecting the firm’s resiliency in the face of a secular decline in its core product. Revenue increased 1.8% year-over-year to $6.2 billion, slightly above consensus estimates. Earnings were superb, growing 10% year-over-year to $0.55, excluding certain items (Image Source: Altria). Altria’s share gains at Marlboro drove smokeable products revenue higher during the fourth quarter. The firm’s market share increased one percentage point versus a year ago and was 0.6 percentage points higher by the end of 2012 versus the end of 2011. Such brand strength resulted in revenue expansion (net of excise taxes) of 3.6% to $3.8 billion (up 2.4% to … Read more

Dear Valuentum Member

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In such a short time that you’ve known us, you have seen us do so much: from generating more than 25 percentage points of outperformance in our Best Ideas portfolio since inception (May 2011) to delivering on our high-single-digit return goal of our Dividend Growth portfolio during 2012 to the Valuentum Dividend Cushion score predicting the dividend cuts of JC Penney (JCP), SuperValu (SVU), Roundy’s (RNDY), and others. You’ve seen us identify a triple in EDAC Tech (EDAC) and predict the bankruptcy of the parent of American Airlines (AMR). These are tremendous accomplishments. There’s an old saying in the market that if your winners are outperforming your losers, you’re doing a great job. Through November of last year, 87% of … Read more

Why the Fiscal Cliff Deal Helps Dividend Growth Investors

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After Congress finally approved a deal to thwart the fiscal cliff Tuesday night, investors throughout the US finally have a clear picture on the tax treatment of investments going forward. Assuming no deal was reached, the US income tax code would have reverted to pre-Bush tax cut era rates, which included higher marginal rates at all income levels, higher capital gains taxes, and dividends being treated as ordinary income. Assuming several tried-and-true dividend aristocrats are valued by many on a yield basis, equity prices for high-yielding and overvalued stocks could have suffered a substantial price decline as the after-tax yield would have been meaningfully reduced. We felt the repercussions of uncertainty in the portfolio of our Dividend Growth Newsletter. Shares … Read more

The Valuentum Dividend100 Publication; A Must-Have For Any Income Investor

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Dividend investors literally have thousands of income stocks to choose from. So what are they to do, and where can they go for the most trusted forward-looking opinions on dividend growth and safety? That’s the question we seek to answer with our ValuentumDividend100 publication. In this document, we showcase the top 100 high-quality, dividend growth gems within our coverage universe. Whether you’re looking to build a portfolio consisting of high-yielding, dividend-growers or simply seeking to augment it with a few income gems, the Valuentum Dividend100 is an essential resource for any income investor. We outline some of the key components of our Dividend100 publication below, and explain how you can get the most from each of one Sign Up for … Read more

Dividend Growth Portfolio Modeling Made Easy!

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Empowering Dividend Growth Investors Do you or your clients have a dividend growth portfolio? If so, this model is indispensable. It’s the best tool out there to account for the quarterly reinvestment of growing dividends after adjusting for future equity price growth in a portfolio setting. This model will allow you to better plan for your and your clients’ retirement needs and has unmatched functionality. Plus, this tool has easy-to-follow instructions and is customized to provide deliverable print outs for you or your clients. Your firm’s logo can be added, too. To purchase Valuentum’s Dividend Growth Retirement Portfolio Model (Calculator), please click here! The model, built by Brian Nelson, CFA, sets out to do much more than what other simple dividend … 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