Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Apr 17, 2020

Dividend Increases/Decreases for the Week Ending April 17
Let's take a look at companies that raised/lowered their dividend this week.

Apr 16, 2020

Johnson & Johnson Beats Estimates, Adjusts Guidance in Light of COVID-19
Image Source: Johnson & Johnson – First Quarter 2020 Earnings IR Presentation. On April 14, Best Ideas Newsletter and Dividend Growth Newsletter portfolio holding Johnson & Johnson increased its quarterly dividend by over 6% sequentially to $1.01 per share which represents the firm’s 58th consecutive annual increase. We view this payout boost in the face of the ongoing coronavirus (‘COVID-19’) pandemic as a sign of management’s confidence in Johnson & Johnson’s future free cash flows, which we appreciate. Shares of JNJ now yield ~2.8% as of this writing at the new annualized payout rate.

Apr 16, 2020

JPMorgan Outlines Scenario Where Dividend Could Be Cut
Source: JPMorgan 1Q20 Earnings Presentation. JPMorgan posted a terrible first-quarter 2020 report April 14, missing analyst expectations (which are a wild guess in times like these) by a long shot. If the economy continues to worsen, JPMorgan’s results will get uglier from here. On the earnings call, management indicated that second-quarter provisioning might be incrementally worse if the economy worsens. There is also room for deterioration in its Markets segment if trading activity dies down and one would expect the Asset & Wealth Management segment results to worsen if the markets are flat-to-down from here. The government rescue programs might also prove to be a temporary fix and consumer and business debt might just go bad later after an initial fix from stimulus funds received from the government. In the firm’s annual letter, Chairman and CEO Jamie Dimon also painted the picture for how the dividend could possibly be cut if things turn out worse than the more adverse scenario that the firm is postulating as one potential outcome.

Apr 16, 2020

Wells Fargo Faces Regulatory Pressure Amid an Enormous Bad Debt Cycle
Image Source: Wells Fargo 1Q2020 Earnings Presentation. Wells Fargo is facing the same enormous bad debt cycle ahead just like its big bank peers, but it is also carrying a ton of its own baggage at just the wrong time. Earnings had already been under pressure before the bad debt cycle had hit, and the bank is facing a very difficult regulatory situation, with a cap on total assets that has been in place since 2018. This is causing the bank to forgo revenue growth opportunities and make difficult trade offs to help existing customers over new customers. This means that Wells is competing with one arm tied behind its back; it has also meant substantially higher costs as the bank has done a ton of hiring to help deal with the regulatory issues. Now Wells is under (optical) pressure to retain employees. All of this has resulted in sliding earnings over the past four quarters.

Apr 13, 2020

Historic Oil Deal Reached
Image Source: Chevron Corporation - March 2020 Security Analyst Meeting Presentation. Over the Easter holiday weekend, members from the Organization of Petroleum Exporting Countries (‘OPEC’), non-OPEC members that are part of the OPEC+ group (countries that in the recent past have joined forces with OPEC to curtail global oil supplies in a formal manner), and non-OPEC members outside of the OPEC+ group such as Brazil, Canada, and the United States came to an agreement to cut their collective oil output by north of 10 million barrels per day. Global oil and other raw energy resource prices have been simply demolished year-to-date due to a combination of demand destruction from the ongoing coronavirus (‘COVID-19’) pandemic and the emergence of a price war between Saudi Arabia and Russia. Please note that oil demand destruction due to the “cocooning” of households (and the related drop off in refined petroleum product demand from automobiles, airplanes, etc.) may be as high as 35 million barrels per day according to some analysts, an enormous figure that’s resulting in major stockpile buildups all over the world. Other analysts don’t necessarily see the level of demand destruction as that high (projections are being updated constantly); however, they are still calling for a drop off in demand that’s in the ten(s) of millions of oil barrels per day range (at least in the short-term, depending on how long the pandemic lasts). Even if this agreement is effectively implemented, that won’t result in oil prices (and other raw energy resource prices) returning to pre-COVID-19 levels in the short/medium-term, in our view, but will make emerging from this pandemic an easier task given that global oil storage capacity is nearing its limit. As of this writing on April 13, oil prices are trading up modestly but are still down by well over 50% year-to-date.

Apr 13, 2020

Dollar General Near All-Time Highs, Decides to Issue Long-Term Debt at Attractive Rates
Image Source: Dollar General Corporation – May 2016 Investor Day Presentation. Dollar General is now trading near its all-time highs after rising ~8.5% year-to-date, at a time when the S&P 500 is down almost 15%, as of the end of normal trading hours on April 9. We include shares of DG in our Best Ideas Newsletter portfolio and recently covered some of Dollar General’s operational updates in our ‘US Beer Sales Reportedly Surge During the Pandemic, Dollar General Well-Positioned to Meet Rising Demand’ article that can be viewed here. We are following up on that piece, and our note covering Dollar General’s most recent financial updates that can be viewed here, to highlight how Dollar General is maintaining its liquidity position during these harrowing times. The ongoing coronavirus (‘COVID-19’) pandemic is wreaking havoc on global economies and staying on top of debt maturities is a key part of maintaining the funds needed to meet surging demand for consumer staples products (keeping inventory management and other considerations in mind). Shares of DG yield ~0.9% as of this writing.

Apr 13, 2020

Pinterest Sees Interest in its Social Media Site Grow During COVID-19 Pandemic
Image Source: Pinterest Inc – Fourth Quarter of 2019 Earnings IR Presentation. Social media firm Pinterest published an operational and financial update after the market close April 7 that caught a lot of investor’s eyes. Pinterest reported that its user base, measured by monthly active users (‘MAUs’), had continued to grow sequentially in the first quarter of 2020 on both a domestic and international basis. While the ongoing coronavirus (‘COVID-19’) pandemic has likely negatively impacted its digital advertising business, Pinterest is communicating to investors that over the longer term, its social media offering is growing in popularity which supports growth down the road.

Apr 10, 2020

Dividend Increases/Decreases for the Week Ending April 10
Let's take a look at companies that raised/lowered their dividend this week.

Apr 9, 2020

Digital Realty’s Growth Outlook Improving, Shares Near All-Time Highs
Image Source: Digital Realty Trust Inc – March 2020 IR Presentation. Digital Realty Trust is a holding in both the Dividend Growth Newsletter and High Yield Dividend Growth Newsletter portfolios, and its shares have performed quite well of late with DLR trading near all-time highs as of this writing. Year-to-date, DLR is up ~26% while the S&P 500 is down ~13% as of this writing. Demand for data centers is surging as the ongoing coronavirus (‘COVID-19’) pandemic is forcing households to stay indoors, which in turn is increasing demand for video streaming services, telecommunications offerings, and other activities that are voracious consumers of data. During these harrowing times, we hope members and their loved ones are staying safe as we ride out the pandemic. Shares of DLR yield roughly 3.0% as of this writing.

Apr 8, 2020

US Fiscal Stimulus and Emergency Spending Update
Image Source: Pictures of Money. On Thursday, April 9, the US Senate is set to hold a vote on whether to add additional funding towards helping small- and medium-sized businesses (‘SMBs’) on top of the $350 billion allocated towards a loan/grant program that was included in the recently passed $2+ trillion Coronavirus Aid, Relief, and Economic Security Act (‘CARES Act’). Key Republican legislators and Trump administration officials including Senate Majority Leader McConnell (Kentucky), Treasury Secretary Mnuchin, and Senator Rubio (Florida) who is Chairman of the Senate Committee on Small Business and Entrepreneurship, want to add $250 billion in funding capacity to the SMBs relief program, dubbed the Paycheck Protection Program (‘PPP’). That program involves providing loans to SMBs equal to 250% of their monthly payroll, and those loans can be used to pay employees along with utilities and rent. If those funds are used to retain workers, they can become forgivable loans and effectively grants (if certain conditions are met).