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Recent Articles
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Use Both the Dividend Cushion Ratio (Probability of a Dividend Cut) and the Qualitative Dividend Ratings in Your Assessment of the Payout
Nov 10, 2023
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The Dividend Cushion ratio ranks companies on the probability of a dividend cut in the longer run, while the qualitative ratings in part assess the outlook for the health of the payout in the near term in the context of management’s willingness to preserve and raise the payout. Since the systematic application of the Dividend Cushion ratio across our coverage in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90% at identifying the risks of a dividend cut in advance of the event.
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Dividend Increases/Decreases for the Week of November 10
Nov 10, 2023
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Let's take a look at firms raising/lowering their dividends this week.
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Disney’s Free Cash Flow Is Expected to Surge But A Strong Recovery Is Already Priced In
Nov 9, 2023
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Image Source: Valuentum.
On November 8, Disney reported improved fourth-quarter results for its fiscal 2023. Revenue advanced 5% on a year-over-year basis in the quarter, and the firm drove non-GAAP diluted earnings per share to $0.82 from $0.30 in the prior year period. The company’s Disney+ streaming service added 7 million core customers in the quarter, and its commentary that its streaming business would reach profitability in the fourth quarter of next fiscal year was welcome. Cost savings will be key, and the executive team expects free cash flow to grow significantly in fiscal 2024 versus the most recently reported year. All of this was great news, but a massive recovery in free cash flow is already factored into its price. Our $81 fair value estimate remains unchanged.
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Gilead's Oncology Business Could Represent One Third of Product Revenue By 2030
Nov 8, 2023
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Image: Gilead’s potential in oncology speaks to long-term sustainability.
On November 7, Gilead Sciences reported better-than-expected third-quarter results with revenue and non-GAAP earnings per share handily beating the consensus estimates. Gilead was once a market darling having cured hepatitis C, but success in this area has forced the company to reinvent itself, and it continues to make solid progress in HIV product sales and oncology (Trodelvy and Cell Therapy). We have Gilead on our radar for consideration, and the company’s dividend yield of ~3.7% pays investors to wait for its promising pipeline to flourish. We value Gilead north of $100 per share, far above where it is currently trading.
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