PG

You Are Ahead of the News As a Valuentum Member

by

Remember When We Said Economic Prognosticators Were Off Their Rockers? From the September 2012 edition of our Best Ideas Newsletter (see page 2), released September 15, 2012: “Could you imagine if you had listened to bond-king Bill Gross (please note he is not the equity king), Marc Faber (author of the Gloom, Boom & Doom report) or the Economic Cycle Research Institute (ECRI), which called for a recession in September 2011 – some 30% in the S&P 500 ago (yes, 30%!). Aside from being incorrect, bearish economic prognosticators fully admit that their expectations have little to do with what may happen to the equity markets in the future (as Bernanke’s unlimited QE has shown). Still, such admissions do not stop … Read more

FAQ: Why Doesn’t the ‘Percentage Undervalued/Overvalued’ Match Up to the Actual Discount/Premium to Valuentum’s Fair Value Estimate of the Company?

by

We view the intrinsic value of a firm as a range, not a single point estimate. So instead of us saying that a company is worth exactly $55 per share, for example, instead we’d say it is worth between $50 (low end) and $60 per share (high end) — think of this range as our margin of safety. We use a margin of safety due to the inherent uncertainty of predicting with absolute precision a firm’s future free cash flow stream — a firm’s future free cash flows determine our estimate of the company’s intrinsic value, and the future is not known yet. As a result, the ‘percentage undervalued/overvalued’ (as shown on our 16-page reports) is calculated by comparing the firm’s current price with the … Read more

FAQ: How Is Your Best Ideas Portfolio Doing This Year?

by

At Valuentum, we task ourselves with a tall order. While most investment newsletters compare themselves to a market benchmark, we go one step further. We want to deliver positive returns to you, our subscriber, year after year, in addition to outperforming the market benchmark. Below, we outline a table that shows the outperformance we provided to our members since the time they joined.  So, for example, if you joined as a member on April 13, 2012 our Best Ideas portfolio has offered 3.8 percentage points of outperformance. Or, if you joined on July 13, 2011, our Best Ideas portfolio has offered 22 percentage points of outperformance. Importantly, did you know that, according to Advisor One, only 13% of hedge funds are beating the S&P … Read more

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

by

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

Johnson & Johnson Posts Strong Results

by

Dividend growth gem Johnson & Johnson (click ticker for report: ) posted strong results Tuesday morning. Revenue grew 6.5% (10.8% ex-currency) year-over-year to $17.1 billion, slightly better than consensus estimates. Earnings, net of a non-cash charge of $553 million, increased 0.8% year-over-year to $1.25 per share, a few cents better than consensus expectations. We like the company, and we hold shares in our Dividend Growth Newsletter portfolio. Domestic growth outpaced the rest of the world, with sales surging 13.4% year-over-year to $7.8 billion. The acquisition of Synthes materially boosted medical device sales, which grew 18.3% domestically and 14.4% internationally (excluding currency). Pharmaceutical sales growth was also strong, with the segment expanding 7% (11.3% excluding currency) year-over-year to $6.4 billion, driven … Read more

Dividend Growth Gem P&G Increases Dividend for 56th Consecutive Year; Ups Payout 7%

by

P&G’s dividend increase of 7% was roughly in line with our expectations of high-single-digit growth. — Business Wire (Friday, April 13) “The Procter & Gamble Company (NYSE: PG – News) announced that its Board of Directors declared an increase in the quarterly dividend from $0.525 to $0.562 per share on its Common Stock and on the Series A and Series B ESOP Convertible Class A Preferred Stock of the Company, payable on or after May 15, 2012 to Common Stock shareholders of record at the close of business on April 27, 2012 and to Series A and Series B Preferred Stock shareholders of record at the start of business on April 27, 2012. This represents a 7% increase compared to the … Read more