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Oct 26, 2023
Brief Take: Altria’s 10% Dividend Yield Is Too Hard to Pass Up
Altria Group’s forward estimated 10% dividend yield is too hard to pass up as it is comfortably covered by traditional free cash flow. The tobacco giant reported third-quarter 2023 results on October 26 that showcased how its asset-light business model continues to throw off tons of cash. Traditional free cash flow generation came in at ~$5.9 billion during the first nine months of 2023, while cash dividends paid came in at ~$5 billion, resulting in a very nice free cash flow cushion on a ~10%-yielding stock. Though revenue growth at Altria remains under pressure, gross profit continues to move in the right direction. Altria has raised its dividend 58 times during the past 54 years, and the firm continues to target mid-single-digit dividend growth annually. For income investors that aren’t worried about ESG-related criteria, Altria could make for a great diversifier in a high-yield dividend income portfolio. Our fair value estimate stands north of $60 per share (shares are trading under $40 at the time of this writing). Oct 25, 2023
Visa’s High Margin Business Reveals Consumer Spending Remains Resilient
Image: Visa has been a strong performer thus far in 2023. On October 24, Best Ideas Newsletter portfolio holding Visa reported excellent fourth-quarter results for its fiscal 2023. Net revenues advanced 11% on a year-over-year basis, while non-GAAP net income and non-GAAP earnings per share leapt 18% and 21% year-over-year, respectively, in the period. For the fiscal year, Visa generated an impressive 64.4% operating margin. Payments volume increased 9% and cross-border volume advanced 16%, showcasing that the consumer remains very healthy thanks in part to low unemployment rates, despite concerns over higher mortgage costs, student loan repayments, and general economic uncertainty as savings accrued during the COVID-19 pandemic wane. We continue to be big fans of Visa as our top payments-related idea. Sep 15, 2023
Dividend Increases/Decreases for the Week of September 15
Let's take a look at firms raising/lowering their dividends this week. Jul 27, 2023
McDonald’s, Chipotle, Domino’s Second-Quarter 2023 Results Solid
Image: Shares of McDonald’s, Chipotle and Domino’s have done well since the beginning of 2020, with Chipotle leading the pack. McDonald’s and Chipotle aren’t going away anytime soon, and we’re not at all discouraged by their respective second-quarter 2023 same-store-sales performance; CMG’s performance gave the market pause, but the sell-off in the burrito maker’s shares was mostly profit-taking (after a huge run up so far in 2023). McDonald’s is a perfect stock for the current inflationary environment, in our view, while Chipotle remains one of the best unit growth stories in the restaurant arena. Another one of our favorites, Domino’s has recently broken through its downtrend. We don’t expect to make any major changes to our fair value estimates of MCD, CMG, or DPZ, and we continue to like shares of all three in the Best Ideas Newsletter portfolio. Jul 27, 2023
“Bought” Low and “Sold” Low with Meta
Image: Shares of Meta Platforms have been on a wild ride the past few years. We didn’t do well with the stock, unfortunately. Let the good times roll in big cap tech and large cap growth! What a fantastic year 2023 is turning out to be and thank you for sticking with us. If Meta serves as any example for you, it should be that you shouldn’t expect us to get everything "right," but it should be very, very clear that we’ve gotten far more things “right” than we’ve gotten “wrong” over the years. Cheers! Jul 24, 2023
Public Storage Picks Up Simply Self Storage; M&A Remains Hot in Self Storage
Image Source: Public Storage. On July 24, Public Storage announced that it had agreed to acquire Simply Self Storage from Blackstone Real Estate Income Trust (BREIT) for $2.2 billion. The news follows the Public Storage-Life Storage takeout saga that ended with Life Storage running to Extra Space Storage for a deal. A PSA-LSI deal had made a lot of sense, and we’re not sure why LSI wanted nothing to do with PSA, but it may have had to do with a poor cultural fit. LSI apparently said it wasn’t for sale right before it tied the knot with EXR--moves that just didn’t seem to add up, in our view. In any case, we’re glad PSA walked away from a possible “winner’s curse” had it pursued LSI, and we’re largely indifferent to the smaller transaction regarding Simply Self Storage. Jul 21, 2023
Dividend Increases/Decreases for the Week of July 21
Let's take a look at firms raising/lowering their dividends this week. Apr 21, 2023
Dividend Increases/Decreases for the Week of April 21
Let's take a look at firms raising/lowering their dividends this week. Apr 11, 2023
Markets Don’t Look Bad
Image: The market-capitalization weighted S&P 500 continues to hold its January breakout, while support held in mid-March. The market-capitalization weighted S&P 500 is no longer in a downtrend, and while the regional banking crisis gave investors pause, we’d have to say the markets don’t look bad. From a technical standpoint, the SPY broke through its downtrend in January, while it held support in mid-March. If the S&P 500 can break through the early February near-term highs, technically, things are looking quite good for the beginnings of this nascent market leg-up. It’s been a long road to get to what looks like a “bottom,” but we might have witnessed it in October of last year. Mar 21, 2023
The Power of Expectations: How Financial Advisors Can Improve Client Retention
Image Source: Frédéric Glorieux. This could make the difference between a happy client and a lost client. The High Yield Dividend Newsletter, Best Ideas
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