Valuentum Exclusive Analysis for the Discerning Investor

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Dividend Increases/Decreases for the Week of October 25
Let's take a look at firms raising/lowering their dividends this week.

Coca-Cola’s Organic Growth Shines in Third Quarter
Image: Coca-Cola’s shares have done quite well the past couple years. Coca-Cola’s organic growth continues to be impressive, and the firm’s non-GAAP numbers show expansion in the core business. Still, it’s hard for us to get excited about a company reporting unadjusted net revenue declines, with global unit case volume also declining in the period. We think Coca-Cola retains its place as a top blue chip stock, but we think there are better ideas for consideration in the newsletter portfolios. Our fair value estimate stands at $61 per share.

Boeing Burning Through Cash
Image: Boeing’s shares have seen better days. The big red flag with Boeing is its cash flow performance. The aerospace giant burned through $1.3 billion in operating cash flow in the third quarter due to lower commercial widebody deliveries and unfavorable working capital timing, and after factoring in capital spending of $611 million in the period, cash burn in terms of negative free cash flow was roughly $2 billion in the quarter. Through the first nine months of the year, Boeing has burned through over $10.2 billion in free cash flow. Boeing’s balance sheet isn’t as strong as it once was either, with $10.5 billion in cash and marketable securities versus consolidated debt of $57.7 billion. Inventories swelled to $83.3 billion at the end of its September quarter versus $79.7 billion at the end of last year. The company does have $20 billion undrawn on its credit facilities, however. We don’t think Boeing is a top idea for investors, but we do like its total company backlog of $510.5 billion, which includes over 5,400 commercial airplanes. We prefer Honeywell as our top aerospace idea and Lockheed Martin as our top defense play.

Lockheed Martin Raises 2024 Guidance, F-35 Program in Focus
Image: Lockheed Martin’s shares have done well of late. We liked Lockheed Martin’s guidance revisions for 2024, but we’re keeping a watchful eye on its F-35 program revenues, which experienced lower sales in the quarter due to delays in receiving additional contractual authorization and funding under its Lots 18-19 contract. The company’s Missiles and Fire Control (MFC) segment and Rotary and Mission Systems (RMS) segment experienced sales increases of 8% and 6%, respectively, in the quarter. Operating profit growth was most pronounced in its MFC division. The high end of our fair value estimate range stands at $649 per share, and we continue to like shares as an idea in the Dividend Growth Newsletter portfolio.

Procter & Gamble Maintains Outlook for Fiscal 2025
Image: P&G maintained its outlook for fiscal 2025, as shares flirt with all-time highs. For fiscal 2025, P&G expects adjusted free cash flow productivity to be 90% and to pay roughly $10 billion in dividends while buying back $6-$7 billion in shares. P&G’s quarterly update revealed some top-line pressure and expectations for higher commodity prices, but the company maintained its all-in sales guidance, organic growth guidance, diluted net earnings per share growth guidance, and core earnings per share guidance for fiscal 2025. Shares of P&G yield 2.4% at the time of this writing.

Dividend Increases/Decreases for the Week of October 18
Let's take a look at firms raising/lowering their dividends this week.

Kinder Morgan’s Dividend Is Much Healthier These Days
Image: Kinder Morgan’s shares have done quite well thanks to improved free cash flow performance. Year-to-date Kinder Morgan's free cash flow, as measured by cash flow from operations less all capital spending, totaled $2.27 billion, higher than the $1.92 billion it paid in cash dividends during the same time period. Years ago, Kinder Morgan’s capital spending and cash dividends paid were significantly higher than cash flow from operations, necessitating a dividend cut. Things are much different these days, as Kinder Morgan’s free cash flow covered cash dividends paid by $353 million during the first nine months of the year. Though the firm retains a large net debt position, Kinder Morgan’s dividend is much healthier than it was years ago. Shares yield 4.6% at the time of this writing.

Taiwan Semiconductor Benefiting from Strong Smartphone and AI Demand
Image: Taiwan Semiconductor released better than expected results. Taiwan Semiconductor ended the quarter with NT$2,167.6 billion in cash and marketable securities against long-term interest-bearing debt of NT$936.16, showcasing a nice net cash position. Free cash flow in the quarter advanced to NT$184.91 billion from NT$68.03 in the year-ago period. Looking to the fourth quarter of 2024, revenue is targeted in the range of US$26.1 billion and US$26.9 billion (consensus was at US$25.02 billion), while gross profit margin and operating profit margin, based on the exchange rate assumption of 1 US dollar to 32 NT dollars, are expected to be 57%-59% and 46.5-48.5%, respectively. We liked Taiwan Semiconductor’s results and outlook, and the company remains a key idea in the ESG Newsletter portfolio.

Dividend Increases/Decreases for the Week of October 11
Let's take a look at firms raising/lowering their dividends this week.

PepsiCo Experiencing Subdued Growth, Business Disruptions Due to Geopolitical Tensions
Image: PepsiCo has traded sideways for most of the past couple years. For 2024, PepsiCo expects a low-single-digit increase in organic revenue (was previously approximately 4% in organic revenue growth) and at least an 8% increase in core constant currency earnings per share. PepsiCo is targeting total cash returns to shareholders of $8.2 billion for the year, comprising $7.2 billion in dividends and the balance in share repurchases. As it relates to core earnings per share, management is targeting at least $8.15, a 7% increase compared to 2023 core earnings per share of $7.62. Though PepsiCo’s results weren’t great with subdued category trends in North America and business disruptions from geopolitical tensions, we still like shares as a key diversifier in the portfolio of the Best Ideas Newsletter.