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MSFT, CNI, CAT - >>> Billionaire Bill Gates Has Over Half of His $42 Billion Portfolio Invested in These 3 Dividend Stocks
by Keith Speights
Motley Fool
March 10, 2024
https://finance.yahoo.com/news/billionaire-bill-gates-over-half-185000568.html
Do billionaires like dividend stocks? Absolutely. Just take a look at the holdings of famous billionaire investors such as Warren Buffett and Ken Griffin. They're loaded with dividend stocks.
Bill Gates stands out as another great example. Although he doesn't manage a public company or hedge fund like Buffett and Griffin do, he's donated a boatload of money to the Bill & Melinda Gates Foundation Trust. And over half of this charitable foundation's $42 billion portfolio is invested in these three dividend stocks.
1. Microsoft
It should come as no surprise that Microsoft (NASDAQ: MSFT) remains Gates' favorite stock. After all, he co-founded the technology company along with Paul Allen and led it for years. Microsoft ranks as the top holding for the Gates Foundation Trust by far, making up 33.98% of its total portfolio at the end of 2023.
Many tech companies don't pay dividends, but Microsoft is an exception. The company initiated a dividend program in 2003. Over the last 10 years, Microsoft has increased its dividend payout by nearly 168%. Its dividend yield, though, is still only 0.74%.
One key reason why the yield is so low is that Microsoft's share price has soared. The stock has been a 10-bagger over the last 10 years and is up almost 60% over the last 12 months.
2. Canadian National Railway
The Gates Foundation isn't just betting on tech stocks such as Microsoft. Canadian National Railway (NYSE: CNI) ranks as its third-largest holding, making up nearly 16.3% of the total portfolio.
Canadian National Railway isn't limited to just Canada. It has 20,000 or so miles of rail that transport products in the middle part of the U.S. as well. The company also offers transportation and logistics services in addition to rail operations.
The transportation company has increased its dividend for 28 consecutive years, most recently boosting its dividend payout by 7% in the first quarter of 2024. Its dividend yield currently stands at 1.94%.
3. Caterpillar
Caterpillar (NYSE: CAT) is the fifth-largest position for the Gates Foundation. It makes up 5.14% of the total portfolio. That brings the combined weight of these three dividend stocks to 55.41%.
The Gates Foundation has owned Caterpillar since the fourth quarter of 2005. However, the last time it added shares of the equipment manufacturer was back in the fourth quarter of 2013. The most recent transaction involving Caterpillar came in 2022 Q1, with the sale of roughly 24% of the foundation's stake in the company.
Caterpillar has generated nice dividend income for the Gates Foundation through the years. The company has paid a dividend every quarter since 1933 and has increased its payout for 29 consecutive years. Its dividend now yields 1.55%.
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'Derf, Yes, they clearly aren't as good as some of the other stocks on the list, but are only 2 of 50 dividend stocks in total. So it's diversified and lots of small positions. Owning 200 stocks also makes it too cumbersome to sell, so it helps enforce a long term buy / hold mindset. Anyway, it's one strategy, but what works for one investor may not for another.
Having large concentrated positions would have its advantages, but I'm not that confident in my stock picking ability. Buffett says to stay in one's 'circle of competency', and for me that means mostly the S+P 500, with the individual stocks there to help keep it interesting :o)
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I don't like either of your last two.
>>> NextEra Energy -- Fossil fuels aren't going away anytime soon, but renewable energy has steadily contributed more to America's electric grid. NextEra Energy (NYSE: NEE) is one of the world's largest green energy producers and the largest electric utility business in the United States. Growth in renewable energy has fostered big investment returns. Since going public, NextEra has beaten the S&P 500.
https://finance.yahoo.com/news/4-supercharged-dividend-stocks-buy-131600987.html
The company is also an excellent dividend growth stock. The payout has increased for 30 years, and investors get a solid 3.7% starting yield.
The best part? Its dividend growth. Management has raised the dividend by an average of 11% annually over the past five years and is guiding for 10% increases through at least this year. That makes NextEra a dividend growth stock you want to snap up whenever the price dips.
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>>> Enbridge -- Oil and gas must move from where they are extracted to refineries and exports. This doesn't happen by itself. Midstream companies like Enbridge (NYSE: ENB) own vast networks of pipelines and storage to make this possible.
https://finance.yahoo.com/news/4-supercharged-dividend-stocks-buy-131600987.html
Enbridge is one of North America's largest energy companies. Its network of pipelines spans thousands of miles from Canada to the Gulf of Mexico. It also operates renewable energy projects and a natural gas utility business.
Enbridge acts like a toll booth, making money on fees when oil and gas flow through its lines. That makes the business less volatile, and the utility business also helps create dependable revenue streams.
Enbridge has raised its dividend for 28 consecutive years, a testament to its business model. Additionally, investors get a high starting yield of 7.4%. The payout ratio is manageable at 81%, so investors can feel reasonably confident in it despite its abnormally high yield.
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Hadn't really thought about SMG as a pot stock.
The problem I have with pot stocks (I'm noticing I have problems with industries), is that the heads of the companies were most likely criminals before it was made legal.
The problem I have with pharmas are, they seem to rarely make money. With that said, I do own several medical related companies
LLY
GSK
ZTS
PFE
MRK
HLN
MDT
OGN
ABT
GILD
then I got talked into SNGX by Jim Cramer.
Derf, >> ABBV vrs AMGN <<
One solution is to just own both :o) Most of these pharma stocks have nice dividends, and they've been doing great, so I have 9 of them -
ABBV
AMGN
COR
JNJ
LLY
MRK
NVO
NVS
ZTS
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Derf, >> SMG <<
I've been tempted by that stock for several years, but it became so linked to the cannabis sector that it follows those stocks closely. As a turnaround I figure it's still very risky, unless it can de-link itself from the cannabis connection, or if that sector somehow comes back to life. Last I checked they were waiting for Congress to change the banking laws so these companies can get regular financing. Both Parties are apparently for it, but it sounded like not much chance of passage until after the election.
Fwiw, I have a Cannabis Sector board, but it's been neglected -
https://investorshub.advfn.com/Cannabis-and-Hemp-Sector-Ideas-27865
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I was just reading a Motley Fool article comparing ABBV to AMGN right now. MF says that at the moment AMGN is the better buy.......well......ummmm...
thats a definite maybe.
ABBV has just gone through a big run up. AMGN has falled off to its support line. Both pay around 3.5% dividend. AMGN definitely has the lower PE at the moment.
I just bought some $SMG. Just broke through resistance. Currently $65.68.
Dropping back below $60 would be a bad thing.
what's is the highest continuous DIV above 8%??
>>> The Best Performing Self-Storage REITs Over The Past Year
Benzinga
by Ethan Roberts
Jan 25, 2024
https://finance.yahoo.com/news/best-performing-self-storage-reits-215814670.html
Of all the real estate investment trust (REIT) subsectors, self-storage is one of the most difficult to classify. According to the National Association of Real Estate Investment Trusts (Nareit), "Self-storage REITs own and manage storage facilities and collect rent from customers. Self-storage REITs rent space to both individuals and businesses."
Self-storage REITs often get classified as specialized REITs, but the specialized category also includes REITs that own timber, farmland, data centers and other types of properties, so it can be confusing. The basic self-storage REITs include:
CubeSmart (NYSE:CUBE), Public Storage (NYSE:PSA), Extra Space Storage Inc. (NYSE:EXR), National Storage Affiliates Trust (NYSE:NSA), U-Haul Holding Co. (NYSE:UHAL), Iron Mountain Inc. (NYSE:IRM) and AmeriCold RealtyTrust Inc. (NYSE:COLD).
But these REITs do not perform equally. Take a look at which storage companies have performed best over the past 52 weeks:
Iron Mountain Inc. is a Portsmouth, New Hampshire-based specialty REIT with a focus on information management and storage, data center infrastructure and asset lifecycle management. Iron Mountain was founded in 1951, became a REIT in 2014 and has more than 225,000 customers worldwide. In recent years, it has shifted most of its focus from paper to data storage.
In June 2023, Iron Mountain raised its quarterly dividend from $0.62 to $0.65. The forward annual dividend of $2.60 presently yields 3.84%.
In November, Iron Mountain acquired Regency Technologies, a provider of IT asset disposition (ITAD) services in the U.S. for $200 million.
Over the past 52 weeks, Iron Mountain has had a total return of 33.32%, far surpassing all the other storage REITs.
CubeSmart is a Malvern, Pennsylvania-based, internally managed self-storage REIT with 1,374 storage facilities across the U.S. It had its initial public offering (IPO) in 2004 under the name, U-Store-It. In 2011, it was rebranded as CubeSmart. Between 2012 and 2022, CubeSmart grew its funds from operations (FFO) per share by 242%. Its same-store occupancy rate was recently 92.1%.
On Dec. 7, CubeSmart announced an increase in its quarterly dividend from $0.49 to $0.51 per share. The dividend has increased by 55% over the past five years. The $2.04 annual dividend presently yields 4.46%.
On Jan. 2, Jefferies analyst Jonathan Petersen upgraded CubeSmart from Hold to Buy and raised the price target from $38 to $53.
Over the past 52 weeks, CubeSmart has had a total return of 10.11%, making it the second-best-performing self-storage REIT.
Public Storage is a Glendale, California-based, self-managed self-storage REIT that is one of the largest brands of self-storage services in the United States. Its portfolio includes 3,028 self-storage facilities with 217 million rentable square feet across 40 states. It has the largest market cap rate of all self-storage facilities with $51.63 billion.
In addition to providing storage units, it also sells packing and moving supplies and provides insurance services. Public Storage was founded in 1972 and became a publicly traded REIT in 1995 when it merged with Storage Equities. It was added to the S&P 500 in 2005. As of the end of the third quarter, its occupancy rate was 92.1%, but occupancy declined 1.2% from the third quarter of 2022.
Public Storage pays a $3 quarterly dividend. Its $12 annual dividend presently yields 4.09%.
Both Goldman Sachs and Truist Securities recently maintained Buy ratings on Public Storage. On Jan. 11, Goldman Sachs analyst Andrew Rosivach raised the price target from $307 to $340, and on Dec. 28, Truist Securities analyst Ki Bin Kim raised the price target from $285 to $315.
Over the past 52 weeks, Public Storage has had a total return of 5.09%, the third largest return among self-storage REITs.
Extra Space Storage Inc. is a Salt Lake City-based self-storage REIT with over 3,500 self-storage properties, comprising 2.5 million units totaling 280 million square feet across 43 states and Washington, D.C. It has a market cap of $32.72 billion.
In July 2023, Extra Space Storage and Life Storage Inc. completed a merger in an all-stock transaction that added 1,200 properties to Extra Space's total portfolio, making it the largest self-storage company in the United States.
On Jan. 11, Goldman Sachs analyst Caitlin Burrows maintained a Buy rating on Extra Space Storage and raised the price target from $149 to $168.
Extra Space Storage pays a quarterly dividend of $1.62. The annual dividend of $6.48 presently yields 4.36%.
Despite being the largest self-storage REIT, over the past 52 weeks Extra Space Storage only returned 2.57%, the fourth-best total among the self-storage REITs.
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You are on the wrong board there bubba.
Why do they let spammers like you in here?
And what the heck is a "trial member"?
NEWS OUT - KINETIC KNIT Quality Otc is using #AI and the #Metaverse to propel businesses into remarkably higher production levels.
Full PR - LATESTNEWSKNIT
Thanks. And you can look through my stock ideas on my board
https://investorshub.advfn.com/Derfs-Grotto-1450
And post that begins with ...Ð...is a stock market viewpoint. The rest are mostly me rambling on thoughts (if you want to add to them). Used to be quite a busy board, but then politics became an issue....until I banned them from discussion, so everyone left.
Yes, I know what you mean about I-Hubbers, they seem to mainly be penny stock addicts. But there are also some sharp people on I-Hub.
Btw, here is the full list of favorite buy / hold stocks (link below). Some of these are obvious, but others less so. A key criteria is that the stock has to have a nice long term chart (trajectory and steadiness), which is the best overall screening tool I've come up with. The reddish highlighted stocks I own, and the blue highlighted ones I'm waiting for a pullback. I got a little carried away with these lists, but I guess OCD will do that to you, lol..
Listed alphabetically -
https://investorshub.advfn.com/Best-Long-Term-Stock-Ideas-25585
By market cap -
https://investorshub.advfn.com/Buy-Hold-Stocks-42434
By sector (with additional stock ideas included) -
https://investorshub.advfn.com/Elite-Stocks-38031
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I will peruse your list at my earliest convenience. Mostly I just wanted to make sure you weren't a bot.
It's been a long time since I've found someone looking for the same types of stocks as me around here.
>> Who the heck are you? <<
Retired, but following stocks and sectors is a hobby, and these boards are mainly to store articles and stock lists. Thanks for any ideas :o)
Here are the current dividend oriented stocks I own (below). With dividends, I mostly just choose good long tern buy / hold stocks, and figure a dividend over 2% is an added bonus -
AbbVie (ABBV) - Research unit from Abbott Labs (282 Bil) ------------------------------------- 3.8% (Healthcare)
Analog Devices (ADI) - Data converter products (88 Bil) ---------------------------------------- 2.0% (Technology)
Automatic Data Processing (ADP) - Business outsourcing solutions (100 Bil) ---------- 2.4% (IT Services)
Coca Cola (KO) - Beverages (244 Bil) (Berkshire) ------------------------------------------------ 3.1% (Consumer)
EastGroup Properties (EGP) - Industrial property REIT, in Sunbelt (8 Bil) ----------------- 2.8% (REIT)
Equinix (EQIX) - Data center REIT (66 Bil) ---------------------------------------------------------- 2.1% (REIT)
McDonalds (MCD) - Fast food restaurants (195 Bil) (Berkshire) ------------------------------ 2.3% (Consumer)
Mondelez Intl (MDLZ) - Food products (was part of Kraft) (Berkshire) (94 Bil) ----------- 2.3% (Consumer)
Pepsico (PEP) - Food and beverage (241 Bil) ------------------------------------------------------- 2.9% (Consumer)
Procter + Gamble (PG) - personal care products (357 Bil) (Berkshire) ---------------------- 2.5% (Consumer)
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Amgen (AMGN) - Biopharma (141 Bil) ---------------------------------------------------------------- 3.0% (Healthcare)
Home Depot (HD) - Home improvement and construction products (304 Bil) --------------- 2.5% (Retail)
Illinois Tool Works (ITW) - Diverse industrial products + equipment (78 Bil) --------------- 2.2% (Industrial)
Merck (MRK) - Pharmaceuticals (287 Bil) ------------------------------------------------------------- 2.6% (Healthcare)
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Who the heck are you?
I'm always looking for real dividend companies. Not sure how I've missed this board.
FAVO Capital Inc. has successfully acquired three notable firms, including Believe Call Center
located in the Dominican Republic. Lendtech CRM Solutions, together with an associated
Independent Sales Firm.
Believe Call Center: Enhancing Customer Engagement and Support Capabilities
The Dominican Republic-based Believe Call Center was acquired by Favo Capital in a calculated attempt to improve customer support and engagement. By entering the Caribbean market, Favo Capital is demonstrating its dedication to offering outstanding customer service to a wide range of clients and enhancing its back-office skills in order to facilitate future growth.
Read more: https://bit.ly/FAVO_NEWS
>>> PepsiCo Is Known for Sodas Such as Pepsi and Mountain Dew. But Almost 50% of Its Profits Comes From Something Else Entirely.
by Jon Quast
The Motley Fool
December 31, 2023
https://finance.yahoo.com/news/pepsico-known-sodas-pepsi-mountain-165723426.html
The granddaddy of the colas is The Coca-Cola Company, with the Coca-Cola brand launching in 1886. The Pepsi-Cola Company, now PepsiCo (NASDAQ: PEP), wasn't far behind with its own Pepsi-Cola drink in 1898. And the two have locked horns for cola supremacy ever since.
Neither Coke nor Pepsi was able to take down its cola competitor. So it wasn't long before these two companies upped the ante by developing comprehensive soda-brand portfolios. Nowadays, PepsiCo sells well-known sodas such as Mountain Dew, Pepsi Wild Cherry, Mug Root Beer, Crush, and Starry in addition to its eponymous Pepsi.
PepsiCo built its portfolio by making several key acquisitions. Its 1964 acquisition of Mountain Dew was especially crucial to its present-day success. In the U.S. carbonated soft-drink market, Mountain Dew had 6.6% market share in 2022, according to Statista. I'd say that buyout worked out quite well.
Pepsi's Mountain Dew acquisition was huge. But a merger the following year was even more significant for the company and its shareholders.
It has nothing to do with carbonated soft drinks. But almost half of Pepsi's profits today are derived from a source that would have shocked the beverage company's founders.
When a beverage company dreamed bigger
In 1965, Pepsi-Cola merged with Frito-Lay -- a snack company with a portfolio that today includes Lay's, Fritos, Doritos, Cheetos, Funyuns, Spitz, Cracker Jack, and more. This was a strong departure for a business formerly focused entirely on carbonated soft drinks. But it was a good move.
Through the first three quarters of 2023, PepsiCo's Frito-Lay North America business segment has generated revenue of $17.4 billion. That's nearly as big as its Beverages North America segment's revenue of $19.7 billion.
In North America, Pepsi's snack revenue nearly matches the revenue from beverages. But these snack foods actually have better profit margins. Frito-Lay's operating income of $4.9 billion is better than operating income of just $2.2 billion for beverages.
Not only is Frito-Lay's operating income higher than beverages, it's also accounted for 48% of PepsiCo's total operating income year to date. In short, if Pepsi hadn't pivoted to snacks nearly 60 years ago, it would be half the company that it is today.
Why it matters for investors
There are so many potential takeaways with an observation like this for PepsiCo. For starters, as one of the largest beverage companies in the world both then and now, Pepsi's growth would have been more limited if it had stayed completely within its core competency. Expanding outside of it into an adjacent market with robust cross-promotion opportunities made a lot of sense.
It's similar to what Hershey is doing now, extending beyond candy and into snack items such as pretzels and popcorn.
More broadly, companies that can expand beyond core competencies often make good investments; this trait is known as optionality. Many companies attempt to branch out and few do it well. But PepsiCo is one of the grand success stories.
PepsiCo's blend of beverage revenue and snack sales has an additional benefit for shareholders: It's a potentially more reliable business because it has greater diversity.
All other things being equal, I would choose PepsiCo stock over a pure-play beverage company because of this stabilizing quality. If headwinds blow in the carbonated soft-drink industry for whatever reason, PepsiCo has another part of the business that can help carry it through the challenges.
That's particularly good news for dividend investors. PepsiCo has raised its dividend for 51 consecutive years, making it a Dividend King. Many investors choose to invest in these companies for their predictable dividend payments. Having a diverse business makes it more likely that PepsiCo won't get knocked off the list by a sudden shock to its business.
And it's all possible because the management team for The Pepsi-Cola Company -- a beverage business -- had the foresight to branch into an entirely different arena when it merged with snacking company Frito-Lay.
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>>> Better Buy: Coca-Cola vs. PepsiCo
Motley Fool
By Stefon Walters
Sep 28, 2023
https://www.fool.com/investing/2023/09/28/better-buy-coca-cola-vs-pepsico/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Coca-Cola's higher margins are a testament to its efficiency and pricing power.
PepsiCo's broad portfolio helps hedge against declining demand in the beverage market.
Both have increased their dividend annually for decades -- making them Dividend Kings.
Investors can't go wrong with either choice, but one stands out as the better long-term option.
When it comes to non-alcoholic beverage companies, there's Coca-Cola (KO) and PepsiCo (PEP) -- and then there's everyone else. In the U.S., the two account for around 71% of the carbonated soft drink market. The dominance of that duopoly makes them attractive investment opportunities.
For investors looking to invest in one of these companies, there's no "wrong" option to go with here. However, each company has its own unique strengths and focus areas. Let's see which offers a more compelling case for investors looking to choose one to add to their portfolio.
Coca-Cola's financials seem to be stronger
Coca-Cola is the market leader in non-alcoholic beverages, but one thing that may surprise people is just how much more revenue PepsiCo brings in. In Q2 2023, Coca-Cola made around $12 billion in revenue, more than $10 billion less than PepsiCo made.
Despite the gap in revenue, both companies are similar in net incomes, which is a testament to Coca-Cola's profit margins.
Higher profit margins are important because they give companies more financial flexibility. Higher margins generally come with more cash flow, which companies use for things like research and development, acquisitions, and paying dividends.
Coca-Cola can operate at higher margins largely because of its focus on beverages, operational efficiency, and the pricing power it has thanks to its strong brands. PepsiCo's margins aren't shabby by any means, but its broader business means it has more complexities to deal with, which can lower efficiency.
There's a difference in portfolio diversification
PepsiCo's revenue gap over Coca-Cola can be attributed to its larger portfolio that includes beverages, snacks, and nutrition products. Coca-Cola's portfolio only consists of beverages. Both have iconic brands, including, but not limited to, the following:
Coca-Cola: Coca-Cola, Sprite, Powerade, Dasani, and Minute Maid.
PepsiCo: Pepsi, Gatorade, Lay's, Doritos, and Aquafina.
PepsiCo's vast portfolio can help provide a cushion during times when beverage sales may lag or consumer preferences shift. Coca-Cola dominates the beverage segment, but PepsiCo's diverse portfolio allows it to take advantage of consumer trends across multiple categories.
A good example would be PepsiCo's introduction of products tailored to health-conscious consumers, among them Naked Juice for vegetable and fruit-based smoothies, whole grain breakfast options, and sugar-free, zero-calorie alternatives to traditional sodas.
Both companies have admirable dividends
Regarding dividends, Coca-Cola leads PepsiCo slightly. At their current share prices, Coca-Cola has a 3.2% yield compared to PepsiCo's 2.8%.
Coca-Cola has increased its dividend annually for 61 straight years while PepsiCo has a 50-year streak, so both are Dividend Kings. However, PepsiCo has been increasing its dividend by larger percentages in recent years. PepsiCo has boosted its payouts by 36% in the past five years compared to Coca-Cola's 18%.
Dividend yields fluctuate with stock price, so you don't want yield to be a determining factor in your investment thesis, but it's important nonetheless. Maybe more important, though, is the sustainability of the dividend.
Neither Coca-Cola nor PepsiCo is in danger of needing to cut their dividends, but it's worth noting how much lower Coca-Cola's 56% dividend payout ratio is than PepsiCo's 81%. Coca-Cola's lower payout ratio gives it more flexibility to reinvest in the business or potentially accelerate its dividend increases.
Which should investors go with?
For long-term investors, the better choice now seems to be Coca-Cola. The stock is more expensive, with a price-to-sales ratio of 5.6 compared to PepsiCo's 2.7, but it has the foundation to be a stable and high-yielding stock for the long haul.
Between its top-tier brand equity, impressive margins, and lucrative dividend, Coca-Cola seems to be the more appealing choice for investors looking for reliability and a shareholder-friendly company. It also passes the Warren Buffett test as it is one of his top holdings.
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>>> Amcor plc (AMCR)
https://finance.yahoo.com/news/11-best-packaging-stocks-buy-202837768.html
Number of Hedge Fund Holders: 22
Amcor plc (NYSE:AMCR) is a multinational packaging company that provides a wide range of packaging solutions and services. The company manufactures flexibles, rigid plastics, specialty cartons, and other packaging products. The company remained committed to its shareholder return in its fiscal Q3 2023, as it returned $745 million to shareholders through dividends and share repurchases. Its revenue for the quarter came in at $3.6 billion, declining by 1.1% from the same period last year.
One of the best packaging stocks, Amcor plc (NYSE:AMCR) has been growing its dividends consistently for the past 39 years. It currently pays a quarterly dividend of $0.1225 per share for a dividend yield of 4.86%, as of July 4.
At the end of March 31, 22 hedge funds in Insider Monkey's database owned stakes in Amcor plc (NYSE:AMCR), worth collectively over $244.5 million. With roughly 15 million shares, Polaris Capital Management is the company's leading stakeholder in Q1.
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>>> Passive Income: 3 Dividend Kings Worth a Look
by Derek Lewis
July 7, 2023
https://finance.yahoo.com/news/passive-income-3-dividend-kings-213400562.html
Investors love dividends, as they provide a passive income stream and help cushion the impact of drawdowns in other positions.
And when seeking income, many investors turn to the Dividend Aristocrats, a group of S&P 500 companies that have upped their dividend payouts for a minimum of 25 consecutive years.
However, a step above is the elite Dividend Kings group, companies that have increased their dividend payouts for a minimum of 50 consecutive years.
Three members of the club – Johnson & Johnson JNJ, PepsiCo PEP, and Sysco SYY – all deserve consideration from those seeing reliable dividend payouts. Let’s take a closer look at each.
Johnson & Johnson
Headquartered in New Jersey, Johnson & Johnson is an American multinational corporation that develops medical devices, pharmaceuticals, and consumer packaged goods. Shares currently yield a solid 2.9% annually paired with a payout ratio sitting sustainably at 44% of earnings.
As we can see below, the company has shown a commitment to increasingly rewarding shareholders.
In addition, shares could entice value-focused investors, with the current 15.2X forward earnings multiple sitting beneath the 16.8X five-year median and the Zacks Medical sector average.
PepsiCo
PepsiCo is an American multinational beverage, food, and snack corporation headquartered in New York. Shares yield 2.7% annually, with the company’s payout growing by an impressive 5.5% over the last five years.
PEP is a consistent earnings outperformer, exceeding earnings and revenue estimates in five consecutive quarters. Just in its latest release, the consumer staples titan delivered a 10% EPS beat and reported revenue 4% above expectations.
As we can see below, the company’s revenue growth is somewhat-seasonal but overall reflects stability.
Sysco Corp.
Sysco markets and distributes a range of food and related products primarily to the food service or food-away-from-home industry. Shares currently yield 2.6% annually, with the payout growing by a solid 7.5% over the last five years.
It’s hard to ignore the company’s growth profile, further reflected by its Style Score of “B” for Growth. Estimates suggest nearly 25% earnings growth in its current fiscal year (FY23) on 12% higher revenues. And in FY24, current projections call for an additional 12% earnings growth paired with a 4% sales climb.
Bottom Line
Targeting dividend-paying stocks is an excellent strategy that investors can deploy.
Dividends soften the blow from drawdowns in other positions, provide more than one way to reap a return from an investment, and allow maximum returns through dividend reinvestment.
And all three stocks above – Johnson & Johnson JNJ, PepsiCo PEP, and Sysco SYY – are Dividend Kings, upping their dividend payouts for a minimum of 50 consecutive years.
For those seeking a reliable income stream, all three deserve serious consideration.
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NextEra Energy (NEE) - >>> With its commitment to sustainability, NextEra Energy (NYSE:NEE) has become one of the world’s most significant wind and solar energy providers. The company offers various services, including electricity generation, transmission, distribution, and storage.
https://finance.yahoo.com/news/3-dividend-paying-utility-stocks-172034663.html
NextEra Energy is also involved in research and development initiatives. Through its continued efforts to provide reliable and affordable renewable energy to customers around the globe, NextEra Energy has become an industry leader in delivering clean energy solutions.
NextEra’s huge portfolio and breadth of operations offer a certain level of stability. Plus, its experience in solar and wind projects gives it the edge over competitors looking to capitalize on the benefits of the Inflation Reduction Act.
Recently, NextEra Energy saw its stock nosedive following its earnings repot. The company’s EBITDA did not meet Wall Street projections in the company’s fourth quarter. Additionally, the head of its Florida Power & Light utility announcing his retirement. This was on top of a press release that had to be put out, to refute claims that the company had broken any campaign finance laws in Florida.
Sentiment perked up somewhat after NextEra declared a quarterly dividend of $0.4675/share, which is 10% higher than the previous payout of $0.4250. Shares are still down almost 10% this year, though.
Altogether, NextEra Energy is one of the largest utility companies in North America, offering offers investors an attractive yield of 2.5%. It also is well-positioned to take advantage of growth opportunities in the future. With its low-risk profile, NextEra Energy is an ideal option for investing in dividend-paying utility stocks.
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>>> Southwest Airlines reinstates dividend, sees strong travel demand
Reuters
December 7, 2022
https://news.yahoo.com/southwest-airlines-reinstates-quarterly-dividend-115829890.html
(Reuters) -Southwest Airlines Co on Wednesday became the first major U.S. airline to reinstate its quarterly dividend, more than two years after suspending it in the wake of the coronavirus pandemic.
U.S. airlines have benefited from pent-up demand for leisure trips and a gradual return of lucrative business travel, helping them post strong quarterly earnings despite worries of an economic slowdown.
"Our fourth-quarter 2022 outlook remains strong, and we have a solid plan for 2023," Chief Executive Officer Bob Jordan said in a statement.
In a regulatory filing ahead of its investor day on Wednesday, Southwest said it was expecting "strong leisure revenue trends" to continue into the first quarter of next year, while business travel was expected to improve.
The carrier also trimmed its fourth-quarter fuel cost forecast by about 5 cents per gallon, compared with its previous estimate.
Southwest declared a third-quarter dividend of 18 cents per share, the same level at which it was prior to the pandemic. The dividend will be paid on Jan. 31.
The airline did not detail any stock buyback plans, which have been fiercely opposed by unions, who have asked U.S. airlines to focus on investing in their workers and fixing operational issues.
As part of the federal COVID-19 relief package, airlines had been prohibited from buying back their shares. The ban, however, expired on Sept. 30.
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Winmark - >>> These 3 Dividend Payers Are Outpacing the S&P 500
Motley Fool
By Collin Brantmeyer
Nov 9, 2022
https://www.fool.com/investing/2022/11/09/these-x-dividend-payers-are-outpacing-the-sp-500-c/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Costco has a history of paying special cash dividends and beating the market.
PepsiCo recently became a Dividend King and has a current yield of 2.5%.
Winmark Corporation is set to pay its third special cash dividend in three years.
In a down year for the market, these three dividend stocks are topping the S&P 500.
It's no secret that investors are disappointed with their returns in 2022, with the S&P 500 down about 20% year to date. For investors looking to beat the market, there's evidence that consistent dividend-paying stocks are likelier to produce higher returns with lower volatility than non-dividend-paying stocks.
Therefore, it may be worth adding these three reliable dividend-paying stocks, which have outperformed the market in 2022, to your portfolio.
1. Costco
Most price-conscious consumers are familiar with Costco (COST -0.45%), the membership-only big-box retailer. Its stock is a favorite among long-term investors for its ability to beat the market and pay dividends consistently. Over the past five years, Costco stock is up 194%, compared to the S&P 500's 47%.
Despite a lackluster 2022 with a negative 14% return, Costco stock is still beating the S&P 500 by about 6%.
On the surface, Costco's quarterly dividend of $0.90, which represents a dividend yield of 0.76%, isn't overly impressive. However, the third-largest retailer in the world is known for paying a special cash dividend about every three years. Its last one came in 2020 at $10 per share.
Costco's balance sheet is also one of the strongest in the retail industry. As of Aug. 31, the company had more than $11 billion in cash and short-term investments, compared to just $6.48 billion in long-term debt. As a result, Costco has a rare negative net debt (cash and short-term investments minus long-term debt), which equates to roughly negative $4.5 billion. By comparison, Costco competitors Target and Walmart have a net debt of approximately $14 billion and $35 billion, respectively.
If Costco stock has a downside, it's unquestionably its valuation. Using the common valuation metric price-to-earnings (P/E) ratio, Costco's P/E ratio is roughly 37, whereas its competitors, Target and Walmart, are 18 and 28, respectively. Still, there's a reason Costco deserves a high valuation: Over the past three, five, and 10-year periods, Costco stock has handily beaten Target, Walmart, and the S&P 500.
Overall, Costco has proven to be one of the safest stocks an investor can own. With an unmatched balance sheet, it should continue paying dividends for years to come.
2. PepsiCo
While PepsiCo's (PEP 0.64%) 4% year-to-date returns wouldn't be impressive in a bull market, the stock is outperforming the overall market by about 25% in 2022. The multinational food, snack, and beverage giant became a Dividend King -- an S&P 500 company that has paid and raised its dividend annually for at least 50 consecutive years -- earlier this year. At that time, it raised its quarterly dividend from $1.075 to $1.15 per common share. The stock's current dividend yield is about 2.5%, considerably higher than the S&P 500's 1.6% dividend yield.
Pepsico is a mature business, and its management focuses on returning cash to its shareholders. In 2022, it will pay cash dividends of $6.2 billion and repurchase $1.5 billion worth of shares, for a combined $7.7 billion.
Beyond PepsiCo's dividend and share repurchases, the company posted revenue of $58.3 billion during the first three quarters of 2022, which represented 7.7% growth year over year. Better yet, the company posted net income of $8.4 billion during that same time period, representing a 33% year-over-year increase from $6.3 billion.
These results show that PepsiCo's snacks and sugary beverages will always be in demand whether the economy is booming or struggling. And as a market leader in the food and beverage industry, PepsiCo stock makes an excellent addition to any investor's portfolio.
3. Winmark Corporation
Winmark Corporation (WINA) is a small-cap stock with a market capitalization just shy of $1 billion. Consumers are likely aware of its franchise-based retail companies that specialize in buying and selling used goods: Music Go Round, Once Upon a Child, Plato's Closet, Play It Again Sports, and Style Encore.
Its stock is essentially flat in 2022, which is still a commendable 20% higher than the S&P 500. Winmark currently pays a quarterly dividend of $0.70 per share, which represents a dividend yield of 1.12%. The company has a history of paying and raising its quarterly dividend each year, dating back to 2010, with the exception of one quarter in 2020 when the COVID lockdowns occurred in the U.S and Canada.
Like Costco, Winmark also has a history of paying special cash dividends. In fact, Winmark is paying $3 per share on Dec. 1, 2022 to all shareholders at the close of business on Nov. 9, 2022. Prior to this-year's special dividend, Winmark last paid a special dividend of $3 per share and $7.50 per share in 2020 and 2021, respectively.
Winmark is incentivized to open more franchises because the company's revenue comes from franchise fees and royalty fees. To open one, a franchisee must pay an initial franchise fee of about $25,000 in the United States and pay 4% to 5% of weekly gross sales.
As a result of Winmark's capital-light business model, the company generated $21.1 million in revenue and $10.3 in net income during its latest quarter. Those figures led to an impressive net profit margin -- net income divided by sales -- of 48%. For comparison, Costco had a net profit margin of 2.5% for its most recent quarterly earnings.
One negative for the otherwise glowing company is Winmark's slow franchise growth. Currently, the company has 1,291 franchises and only opened a net of 22 stores over the past 12 months, representing 1.7% growth. If the company can add more franchises at a faster pace, the stock should continue beating the S&P 500 -- just as it has done for years.
Are these dividend stocks buys?
In uncertain market conditions, dividend stocks can provide some comfort when you see payments hit your portfolio each quarter. Beyond that, if executives know that shareholders expect them to raise the stock's dividend each year, the company may take on less risk.
These three stocks, in particular, have established histories of beating the S&P 500 and should continue doing so -- all while paying you quarterly to hold them in your portfolio.
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>>> 3 Dividend Stocks That Will Thrive in a Low-Carbon Future
Motley Fool
By Daniel Foelber, Scott Levine, and Lee Samaha
Nov 3, 2022
https://www.fool.com/investing/2022/11/03/3-dividend-stocks-thrive-low-carbon-energy-future/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
NextEra Energy is finally hitting its stride.
Johnson Controls can help reduce carbon emissions for building owners and operators.
Brookfield Renewable operates a massive portfolio of renewable energy assets.
The energy transition offers immense opportunity for long-term investors.
The energy transition presents economic and environmental opportunities for the public and private sectors. Whether it's lowering emissions for legacy industries and existing processes or implementing new technologies that can support a lower carbon future, there is a heightened focus on sustainable growth and environmental, social, and governance investing.
NextEra Energy
NextEra Energy (NEE 1.17%), Johnson Controls International (JCI 5.74%), and Brookfield Renewable (BEP -0.20%) (BEPC 0.59%) are three quality dividend-paying companies with prospects that are aligned with the energy transition.
Improved profitability is the key for NextEra Energy
Daniel Foelber (NextEra Energy): Last Friday, NextEra Energy reported another excellent quarter. The regulated electric utility posted 13% growth in adjusted earnings per share (EPS) in the third quarter versus a year ago.
The company has two main business units. Florida Power & Light (FPL) is the legacy business that supports more than 12 million folks across Florida. That unit alone made over $1.07 billion in net income for the quarter. Meanwhile, NextEra Energy Resources (NEER) is the company's (mostly) renewable energy arm. It finances and operates utility-scale projects across North America. NEER's profitability has improved over the years. It made $722 million in adjusted earnings for the quarter.
NextEra Energy has grown to become the largest renewable energy operator in North America, mainly by using excess free cash flows from FPL to fund NEER's development. It's worth noting that FPL is also investing in solar to shift its energy mix away from natural gas. But NEER's improved profitability is an excellent sign that the business unit is becoming self-sufficient.
Over time, NEER's profitability should help NextEra Energy pay down debt and fund future dividend raises. Having paid and raised its dividend for 28 consecutive years, NextEra Energy is a Dividend Aristocrat with a proven track record of returning value to shareholders.
NextEra Energy is also a reliable business that is able to accurately forecast performance multiples years into the future. For the full year 2022, it is guiding for adjusted EPS of $2.80 to $2.90. For 2023, it expects adjusted EPS of $2.98 to $3.13 followed by $3.23 to $3.43 in 2024 and $3.45 to $3.70 in adjusted EPS in 2025. It also expects to grow its dividend by 10% per year through at least 2023 and 2024. NextEra Energy remains a well-rounded utility stock with a nice blend of growth and reliable passive income from its 2.3% dividend yield.
Johnson Controls International
Long-term growth prospects are excellent for Johnson Controls
Lee Samaha (Johnson Controls): Around 50% of carbon emissions come from the built environment, including 27% from building operations. Building owners and operators must invest in their properties to meet their net-zero emissions goals. That's the driving force behind the case for buying Johnson Controls stock.
The company has a multiyear opportunity to benefit from a cycle of retrofit investment by building owners. And the global pandemic has created an increased awareness of the need for adequately ventilated, healthy, clean buildings. Throw in the dramatically increased gains in building efficiency from using digital technology to manage structures' operations better, and it's not hard to see why building owners are likely to invest.
This speaks to an opportunity for Johnson Controls to grow sales of its heating, ventilation, air-conditioning, building controls, and fire & security products. Indeed, a quick look at revenue and order trends across its industry in 2022 confirms how vital the industry is now.
That said, Johnson Controls did disappoint investors earlier in the year. It's not that orders and backlog growth aren't firm; it's more the case that management was too optimistic over its ability to overcome supply chain pressures. For example, the company found it challenging to execute on its backlog of higher-margin building controls, given an undersupply of semiconductors.
Still, those supply chain pressures will likely ease, and the company's long-term prospects look good. Throw in a 2.8% dividend yield, and the stock is attractive for income-seeking investors.
Brookfield Renewable Corporation Inc.
A powerful path to pocketing some passive income
Scott Levine (Brookfield Renewable): While some companies dip their toes in low-carbon initiatives, Brookfield Renewable is fully immersed. The business includes more than 6,000 power-generating facilities in its portfolio of assets that represent a variety of renewable energy sources: solar, wind, hydropower, and energy storage.
Located around the globe, these assets account for about 24 gigawatts (GW) of generating capacity. For income investors interested in exposure to companies that will prosper from the growing push toward low-carbon power sources, Brookfield Renewable (with a forward dividend yield of 4.2%) is a worthy consideration.
Management's commitment to rewarding investors is undeniable. Since its start in 2000, Brookfield Renewable has increased its distribution to unitholders at a 6% compound annual rate, from $0.38 per unit in 2000 to $1.28 per unit in 2022.
And it's likely that the distribution will continue powering higher for the foreseeable future. Brookfield Renewable consistently articulates a target of annual distribution growth of 5% to 9%. Skeptics might question whether management's dedication to shareholders is jeopardizing the company's financial well being, but the fact that the company has an investment-grade credit rating of BBB+ from Fitch Ratings should allay those concerns.
Brookfield Renewable has a robust pipeline of projects -- about 62 GW of generating capacity -- to support future growth. From 2021 to 2026 alone, management expects to increase its portfolio by 3% to 5% from those projects in its pipeline, additions that will help the company to grow its funds from operations by about 10% per unit.
But growth isn't solely coming from organic sources. Brookfield recently demonstrated its interest in acquisitions with the announcement that it plans on partnering with Cameco to acquire Westinghouse Electric, a global leader in nuclear services.
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>>> 3 Dividend Stocks That Prove That Slow But Steady Wins the Race
Motley Fool
By Marc Rapport
Jul 22, 2022
https://www.fool.com/investing/2022/07/22/3-reits-that-prove-that-slow-but-steady-wins-the-r/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Mid-America Apartment Communities and Prologis are the biggest property owners of their kinds.
Agree Realty is not as big but has a retail portfolio that is profitable and growing.
Agree Realty, Mid-America Apartment Communities, and Prologis have the past, present, and future to merit investor interest.
It's times like these that try investors' souls, or at least their portfolios. Brutal market conditions brought on by inflation and fears of recession have battered the best-laid plans of even conservative income investors like me.
But that doesn't mean I'm selling off those buy-and-holds that I believe will continue to provide reliable income and return to steady growth in share price, too, as the economy and the market eventually recovers.
My focus also will largely remain on real estate investment trusts (REITs), those pools of income-producing assets that tax law requires to pass at least 90% of their taxable income to shareholders.
Many of these dividend machines have proven the adage that slow but steady wins the race if the finish line means a nice flow of cash that supplements the other eggs in your retirement nest.
Here are three to consider. They're in different industries, and each has been in business since before the turn of the century (remember Y2K? That turn of the century).
They are retail REIT Agree Realty (ADC 0.17%), industrial REIT Prologis (PLD -0.29%), and residential REIT Mid-America Apartment Communities (MAA 0.12%).
The chart below shows that over the past 20 years, not only have these three stocks easily outperformed their peers, as reflected in the CRSP US REIT Index, but to a lesser degree even the broader market represented by the S&P 500.
No flash, but plenty of cash
They're hardly flashy outfits, these three. But two of them are the largest of their kind. Prologis has a portfolio of about a billion square feet of logistics warehouse space around the globe and is adding more with its announced acquisition of Duke Realty in a $26 billion megadeal.
In their recent quarterly earnings conference call, Prologis made it clear it sees continued strong demand for logistics warehouse space despite economic tailwinds turning to headwinds for this sector that grew red-hot during the pandemic.
Then there's Mid-America Apartments, with a portfolio of more than 280 apartment communities and 102,000 units that make it America's largest landlord. MAA's properties are nearly all in the Sunbelt and South, where demand and rents are rising, and this kind of business is particularly good.
Last but not least is Agree Realty. While much smaller than the other two, this owner of more than 1,500 shopping centers in 47 states has held steady through ups and downs, including the pandemic's wrath on retail real estate. While its 31 million square feet is minuscule compared with Prologis, Agree is also on the grow, reporting record quarterly investment in new properties last year and then again in the first quarter of this year.
Agreeable performances all around, with more to come
The market has indeed found Agree agreeable. The company's stock is up about 6% so far this year, while MAA and Prologis are both down a more-typical 27% or so. As for yield, Prologis is at about 2.7%, MAA is at about 3%, and Agree is at about 3.8%.
But long-term performance tells us a different story. Over the past 20 years, MAA would have grown a $10,000 stake to about $172,000, a compound annual growth rate (CAGR) in total return of 15%. For Agree, make that about $141,000 and 14%, and for Prologis, a still very respectable $93,000 or so and nearly 12%.
Each of these REITs provides a nice return and has the portfolio and seasoned management in place to continue proving that slow but steady can indeed be a very rewarding pace in this kind of buy-and-hold race.
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>>> Vanguard High Dividend ETF - >>> Worried About Inflation? 1 Investment Strategy That Warren Buffett Likes
Motley Fool
6-21-22
by Trevor Jennewine
https://www.msn.com/en-us/money/topstocks/worried-about-inflation-1-investment-strategy-that-warren-buffett-likes/ar-AAYF0Vz?cvid=9dcd6ab5b7af4343bb421fa35b8da7ad
In May 2021, Warren Buffett offered advice to investors at Berkshire Hathaway's annual meeting. For context, the stock market was soaring at the time -- the S&P 500 had climbed 48% in the previous 12 months -- fueled by unbridled enthusiasm brought on by stimulus checks, low interest rates, and the reopening of businesses in the wake of the pandemic. But Buffett's words were sobering.
He told his audience that many new investors were essentially gambling. Buffett also expressed his belief that index funds were a better option than individual stocks for the average person. Specifically, he recommended holding an index fund comprised of a diversified group of U.S. equities over a long time horizon.
Of course, the macroeconomic environment looks much different today. Rampant inflation and rising interest rates have caused the S&P 500 to crater, sending the benchmark index into bear market territory. But inflation hit a fresh 40-year high in May, so things may get worse before they get better. The S&P 500 is currently 23% off its high, but there have been six bear markets in the last 50 years, and the index dropped by over 45% on three of those occasions.
Building on Buffett's advice, here is one investment strategy that could help your portfolio weather the current downturn.
A diversified index of dividend stocks
Many dividend stocks outperform the market during downturns, especially those that regularly raise their payouts. The reason for that is simple. Only high-quality businesses generate enough cash to consistently pay shareholders a dividend that increases over time. If you reconcile that idea with Buffett's advice, the Vanguard High Dividend Yield ETF (NYSEMKT: VYM) looks like an attractive investment idea right now.
The Vanguard High Dividend Yield ETF comprises 443 U.S. stocks that span 10 market sectors, though 55% of the fund is allocated to consumer staples, energy, utilities, industrials, and healthcare, all of which tend to outperform in inflationary environments. Another 20% of the fund is invested in the financial sector, which tends to outperform in rising interest rate environments. To that end, the Vanguard High Dividend Yield ETF is currently just 14% off its high, easily outpacing the 23% decline in the broader S&P 500.
Also noteworthy, four of the index fund's top 10 positions are stocks Buffett owns through Berkshire Hathaway. That includes Chevron and Bank of America, which account for 19% of Berkshire's investment portfolio. Better yet, the Vanguard High Dividend Yield ETF bears an expense ratio of just 0.06%, meaning you would pay just $6 on a $10,000 portfolio, and its dividend yield currently sits at 2.72%, meaning a $10,000 portfolio would generate $272 in passive income each year.
As a caveat, while the Vanguard High Dividend Yield ETF has significantly outperformed the broader S&P 500 over the past year, especially when accounting for dividend payments, the S&P 500 typically wins in the long run. For instance, the S&P 500 has generated a total return of 65% over the past five years, while the Vanguard High Dividend Yield ETF has generated a total return of 47%.
However, you can't put a price on peace of mind. If your current portfolio composition has you worried about the impact of runaway inflation, consider starting a position in this index fund. I think Warren Buffett would like the idea.
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Realty Income - >>> 2 Stocks That Cut You a Check Each Month
Motley Fool
By Eric Volkman
Jun 9, 2022
https://www.fool.com/investing/2022/06/09/2-stocks-that-cut-you-a-check-each-month/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
This pair of REITs will line your pockets every few weeks.
For the most part, dividend investing rewards the patient. That's because the standard dividend payment cycle is once per quarter, meaning a mere four times per year.
It is, of course, very nice to be paid more frequently. While there aren't a great many companies that distribute a payout each and every month, they do exist; you just have to know where to look. Here are two real estate investment trusts (REITs) that space out their dividend in terms of only weeks, not quarters: Realty Income (O -1.24%) and Apple Hospitality REIT (APLE -2.69%).
1. Realty Income
Most people, we can safely assume, don't spend much time thinking about companies that pay monthly dividends. But when those thoughts do arise, we can also safely bet that the first name that often comes to mind is Realty Income. The company, which concentrates on retail properties, has been doling out monthly dividends for decades now.
Retail is a good sector to be deeply involved in these days. The pandemic seems to finally, finally be abating (although we should remain cautious about this). As a result, people are conducting normal activities like shopping, going to the movies, and eating in restaurants.
This very much plays to the strength of Realty Income, whose foundational business strategy is to lease to tenants resistant to the retail apocalypse. That means places that offer retail experiences that can't be easily duplicated -- going to the cinema to see a first-run film, for example, or spending a leisurely night with your sweetheart at a cozy restaurant.
Realty Income tends to lease on long-term contracts, and its tenants are typically top operators in their industries. As a result, occupancy is consistently high.
As of the end of March, for example, its occupancy rate was 98.6%. Even in the thick of the pandemic, that figure didn't dip much below 98%, which says something about the durability of that portfolio. It's also telling that the REIT can maintain those numbers with nearly 11,300 properties on its asset list.
That latter number is sure to grow, as Realty Income is an opportunistic and ever-hungry acquirer of new properties. That, combined with the rent raises it usually mandates in its contracts, should keep the growth train running. It should also maintain the buoyancy of that monthly dividend, which at a shade under $0.25 per share currently yields a sprightly 4.4%.
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Coca Cola - >>> 3 Strong Warren Buffett Stocks for a Volatile Market
Motley Fool
By Chuck Saletta, Barbara Eisner Bayer, and Eric Volkman -
Mar 13, 2022
https://www.fool.com/investing/2022/03/13/3-strong-warren-buffett-stocks-volatile-market/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
When there's inflation, a company that gets a percentage of lots of purchases makes a ton of sense.
One Buffett pick is a timeless beverage giant that has already shown its ability to hold up well in this crazy market.
If you can't pick from among them, why not buy every Buffett investment by buying a single security?
Businesses that are built to last can be a great way to ride out tough times for stocks.
Warren Buffett is well known as one of the world's all-time great investors. He made his fortune as a value-focused investor -- someone who looks to buy stocks when they're cheap and profit as they recover. As the recent market downtrend reminds us, that's often easier said than done, as falling stocks tend to make it feel like your money is evaporating with every down day.
Still, if Buffett's success shows us anything, it's that a strong company that survives a down market can often come out the other side in a much better spot to deliver solid long-term returns for its shareholders. With that in mind, we asked three successful investors to pick strong Warren Buffett stocks that are worth considering in today's volatile market. They picked Coca-Cola ( KO -0.03% ), Visa ( V -1.03% ), and Berkshire Hathaway ( BRK.A -0.27% )( BRK.B -0.31% ). Read on to find out why and decide for yourself whether those companies deserve a spot in your portfolio.
Volatility goes better with Coke
Barbara Eisner Bayer (Coca-Cola): If anyone knows how to make money in all markets, including volatile ones, it's Buffett, the famous nonagenarian who has an approximate net worth of $114 billion. And one of the Oracle of Omaha's favorite stocks is his oldest stock position, which he started purchasing 34 years ago -- The Coca-Cola Company.
Buffett is so in love with the company that he's known to consume five cans of Coke each day. He even joked to Fortune magazine back in 2015 that his body is made up of "one-quarter Coca-Cola." It's no surprise, then, that Berkshire Hathaway owns about $22 billion worth of its shares, or 10% of the company.
It's great that Buffett is so fond of Coke, but that in and of itself doesn't make it a great buy for a volatile market. So let's look at what does.
First, Coca-Cola's products are consumed worldwide and embrace more than its fizzy namesake drink. Its portfolio of beverages has expanded to include changing and healthier tastes, and according to the company, includes "200 brands and thousands of beverages around the world from soft drinks and waters, to coffee and tea." You've probably heard of many of them: Dasani, Fairlife, Fanta, Fuze Tea, Schweppes, Powerade, Smart Water, and Minute Maid. Because these drinks are worldwide staples, people aren't going to stop drinking them when the stock market goes on a wild ride.
The company has survived extreme volatility in the past. Back in October 2018, during an extremely turbulent period, Coca-Cola was up 2% while the S&P 500 was down 9%. This happened because the company was and continues to be a huge, stable conglomerate with a solid dividend and continuing growth prospects.
While the company struggled during the coronavirus pandemic, it has finally returned to growth. During its recent fourth-quarter 2021 earnings report, Coca-Cola said net revenue had grown 10% year over year and earnings per share (EPS) were up 65% per share. And management sees brighter days ahead: 2022 revenue growth of 7.5% and EPS growth of 9% are numbers investors can get excited about for such a stable company.
But the cherry on top of these reasons why Coca-Cola is a great Buffett stock to own during volatile times is its dividend, which currently offers investors a 3% dividend yield. Coca-Cola is also a Dividend Aristocrat and has been raising its payout for 59 years in a row. If stocks start plummeting, investors will still be earning income from the dividend, which is vital when all you're seeing is red every day in your portfolio.
If Buffett put down his bottle of Coke and spoke directly to you, he might just say that Coca-Cola -- with its stable business, continuing growth prospects, and mighty fine dividend -- may be the perfect stock to survive and even thrive through volatile times.
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PG, KO, AAPL - >>> 3 Best Dividend Stocks for Retirement
Motley Fool
By John Ballard
Mar 12, 2022
https://www.fool.com/investing/2022/03/12/3-best-dividend-stocks-for-retirement/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Procter & Gamble has paid a dividend for 131 years.
Coca-Cola still sees opportunities to grow around the world.
Apple is a Dividend King in the making.
Sleep well at night with these high-quality dividend stocks.
Dividends can play a big role in the returns of stocks over many years. Since 1960, 84% of the returns from the S&P 500 index resulted from the compounding returns of reinvested dividends, according to a study by Hartford Funds.
If I were structuring my investments to produce dependable dividend income for retirement, I would consider adding shares of Procter & Gamble ( PG -0.38% ), Coca-Cola ( KO -0.03% ), and Apple ( AAPL -2.55% ) to my holdings. These companies are highly profitable and provide products people use every day, which goes a long way toward paying out rising dividend payments over time. Here's what makes these companies great investments.
1. Procter & Gamble
Procter & Gamble is one of the best income stocks you can own, simply because of its strong consumer brands and impressive streak of paying dividends to shareholders. P&G has increased its dividend for 65 consecutive years. Perhaps more impressive is that the company has paid annual dividends for 131 years.
Through high-volume sales of recognizable brands like Tide, Mr. Clean, Gillette, and Crest toothpaste, among others, P&G pumps out plenty of profits and free cash flow to fund growing dividends. Through the first half of fiscal 2022, the company has returned $11.9 billion to shareholders through a combination of dividends and share repurchases. That's approximately 3.4% of P&G's current market capitalization (total shares outstanding times stock price).
P&G competes on innovation and product superiority. The company keeps a close relationship with retailers that sell its products, which in turn can inform its product and marketing initiatives. Innovation allows P&G to hold a leading market share position even though it may not be the cheapest product on the shelves against other brands. This drives a high-margin business, where P&G's operating margin has hovered above 20%.
People will always need to do the laundry, clean house, and shave, no matter the state of the economy. The stock currently offers an above-average dividend yield of 2.4%, supported by the company's cash payout ratio of 57% relative to its free cash flow. That gives P&G plenty of wiggle room to keep raising the dividend even if free cash flow growth flattens out temporarily. For these reasons, P&G is a great starter dividend stock to buy today.
2. Coca-Cola
Coca-Cola is more than just Coke. The beverage titan now owns more than 200 brands sold in more than 200 countries. It is the largest nonalcoholic beverage company in the world, and it's another elite dividend stock worth considering. It has the brand power and growth opportunities to continue paying dividends for a long time.
There are billions of people in the world, but only a small percentage of them consume these beverages. "Even if we double the number of drinkers of our beverages over the next decade, there would still be plenty of headroom to grow for many years to come," CEO James Quincey said at the recent Consumer Analyst Group of New York.
The latest results lend credibility to Quincey's statement. Coke finished 2021 with global unit case volume up 8% and non-GAAP revenue up 16%, reflecting a strong rebound from the soft demand during the pandemic. Higher demand lifted its gross margin up one percentage point to 60.3%, driven in part by a shift in sales mix to restaurants, sporting events, concerts, and other away-from-home channels.
The recovery last year shows that Coca-Cola is still a preferred beverage when people are having fun. That's also why Coke's advertising often tries to associate consumption of its beverages with doing fun activities away from home.
The stock currently pays a tasty dividend yield of 2.9%, while only paying out 64% of its annual free cash flow in dividends. All this makes Coca-Cola worth holding for retirement.
3. Apple
While investing in well-entrenched consumer goods companies that pay dividends can be very rewarding, it's also a good idea to think about growth. Keep in mind that the total return, including dividends, of Coke and P&G have trailed the return of the S&P 500 over the last decade. This is why you need to consider adding a dividend growth stock to the mix, like Apple.
The iPhone maker's brand is just as iconic as Coca-Cola and just as established in the mindset of consumers. Over the last three years, its installed base of active devices has climbed from 1.4 billion to over 1.8 billion. Apple's users keep credit cards on file, ready to purchase a subscription or app on their iPads or iPhones. This is driving steady double-digit growth in Apple's services business, which now makes up 16% of total revenue.
Apple's dividend yield is much smaller than Coke or P&G's, but it's growing much faster. Over the last five years, Apple has increased the dividend by 52%, compared to 27% for P&G and 18% for Coca-Cola. Its dividend yield is still relatively low at 0.56%, but Apple generates over $100 billion in annual free cash flow to continue increasing the dividend payout for a long time.
Indeed, Apple's free cash flow might be growing faster than management can dish it out to shareholders. The company paid out only 14% of its free cash flow in dividends last year, so it could double the payout and bring its dividend yield over 1% if it wanted to do so.
Apple is one of the great brands of our time, and investors might wish they had bought and held this stock 30 years from now.
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>>> 2 Unstoppable Real Estate Trends That Could Make You Richer
Motley Fool
By Kody Kester
Apr 6, 2022
https://www.fool.com/investing/2022/04/06/got-1000-2-unstoppable-real-estate-trends-that-cou/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Digital Realty Trust offers a market-beating dividend yield with decent growth prospects.
American Tower can provide investors with a market-topping payout and rapid growth potential.
Neither of the two stocks appear to be excessively valued.
Data centers and telecom towers are two steadily growing industries.
Amid all of the noise that comes from day-to-day price swings of stocks, it's easy for investors to lose focus if they're not careful. But by insisting on investing in the best stocks with reasonable valuations in industries with promising trends, I believe investors will still see the big picture.
Due to the ever-present role that technology plays in the modern economy, tech-oriented real estate investment trusts (REITs) will almost certainly benefit from strong growth in the years ahead. Let's dig into two tech-related real estate trends that could create meaningful wealth for investors as the years progress.
1. Data centers
A data center is a physical location or building that stores and computes data. Businesses, individuals, and governments all rely on data centers for the proper functioning of email, websites, online transactions, and more. As technology evolves and the global economy grows, it isn't hard to imagine that data centers will become more embedded into our lives.
This is precisely why analysts anticipate that the global data center market will nearly triple from $187.4 billion in 2020 to $517.2 billion by 2030. Few stocks will benefit from this unstoppable trend as much as Digital Realty Trust ( DLR 0.84% ). That's because its $42 billion market capitalization and portfolio of more than 285 data centers make it one of the largest data-center REITs in the world.
Digital Realty's leadership in the data center industry explains how its core funds from operations (FFO) per share have compounded at 10% annually since 2005. Despite its massive size, the industry outlook should propel Digital Realty's core FFO per share higher by the mid to upper single digits annually in the foreseeable future.
And due to the stock's 70% dividend payout ratio in 2021, the dividend should grow in line with core FFO per share. That's why I believe Digital Realty has many years of 5% to 6% annual dividend increases left in the tank. Paired with a market-beating 3.3% dividend yield, this is an appealing combination of starting yield and growth potential.
And with the tech sell-off year to date, Digital Realty's stock has plunged 16%. As a result, it is priced at a core-FFO-per-share multiple of just 21.4. That's made this dividend growth stock a smart real estate company to buy right now.
2. Telecom towers
Like data centers, telecom towers are already an important part of the global economy. These structures allow us to perform a variety of activities on our smartphones that we might take for granted, like reading and sending email, surfing the internet, online shopping, and online banking.
Increased mobile data consumption and penetration rates of telecom towers in rural areas are two reasons the global telecom tower market is expected to generate massive growth. Analysts are predicting that the industry will nearly triple from $39.5 billion in 2018 to $114.1 billion by 2026.
With a $120 billion market cap, pandemic-proof American Tower ( AMT 1.43% ) is the largest telecom tower stock in the world. That status has allowed its adjusted funds from operations (AFFO) per share to grow 13.8% annually over the last decade.
And with that encouraging industry forecast, American Tower should continue to grow AFFO per share annually in the high single digits to low double digits over the medium term. Along with its dividend payout ratio of just 54% in 2021, this is probably why the company is confident enough to be targeting 12.5% dividend growth in 2022. Considering American Tower's 2.2% dividend yield, this is an attractive blend of income and growth prospects.
And similar to Digital Realty, the stock has been lumped into the tech sell-off this year. With shares down 10% year to date, American Tower is trading at around $260 per share. For a stock with this quality and growth profile, that makes it a solid buy.
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Pepsico, Iron Mountain - >>> 2 High-Yield Dividend Stocks to Buy Now
Motley Fool
By Manali Bhade
Mar 30, 2022
https://www.fool.com/investing/2022/03/30/2-high-yield-dividend-stocks-to-buy-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Snack and beverage giant PepsiCo will soon enter the prestigious Dividend Kings list.
Solid business fundamentals and a robust balance sheet make Iron Mountain attractive.
Regular income streams can make it easier for retail investors to withstand the current market volatility.
The U.S. equity market has seen some rocky times in the past few months. According to the AAII Investor Sentiment Survey, investors think the direction of the stock market in the next six months could be unusually bearish, as it has been for the past 17 weeks.
However, many high-quality dividend stocks have managed to withstand the downward pressure even in such difficult times. These stocks generate regular income and are considered safe havens in times of heightened market volatility.
PepsiCo ( PEP 1.42% ) and Iron Mountain ( IRM 1.48% ) are two dividend stocks that are currently trading at or near their 52-week highs. Here are a few reasons investors might regret not buying these stocks now.
1. PepsiCo
Consumer staples giant PepsiCo is gearing up to become a Dividend King in 2022. In February, this global beverage and snacks company announced a 5% year-over-year hike in its quarterly dividend to just below $1.08 per share, payable on March 31. The company has a dividend yield of 2.63%.
PepsiCo's current dividend payout ratio is 77%, which although not low, is still manageable considering its inflation-proof and low-risk business. The company plans to return $7.7 billion to shareholders in fiscal 2022, made up of $6.2 billion in dividends and $1.5 billion in share repurchases.
NASDAQ: PEP
Pepsico, Inc.
Today's Change
(1.42%) $2.38
Current Price
$169.76
PepsiCo enjoys significant brand power, thanks to the worldwide popularity of Pepsi and other beverages such as Gatorade and Mountain Dew. The company's snacks business includes the chips brands Frito-Lay, Ruffles, and Doritos, and it also has a breakfast food division. Both non-beverage businesses were a solid hit during the pandemic and continue to be big revenue drivers even after the relaxation of social distancing regulations. In fiscal 2021 (ended Dec. 25), the company's revenue was up 12.9% year over year to $25.3 billion.
Like many other companies, PepsiCo has faced rising commodity costs. But it has managed to offset much of this by charging higher prices. In the fourth quarter, the company increased its overall pricing by seven percentage points while sales volume grew by four percentage points. Subsequently, it reported an operating profit of $11.16 billion in fiscal 2021, up 10.7% year over year.
Pepsico is guiding for 6% year-over-year organic revenue growth in fiscal 2022, which is at the higher end of its long-term range. The confidence of the company in its execution capabilities in current challenging times coupled with a solid dividend yield make this soon-to-be Dividend King an attractive bet in 2022
.
2. Iron Mountain
Iron Mountain is a global leader in records storage and information management services (paper storage) that is fast moving toward becoming a prominent digital storage player. The real estate investment trust (REIT) has a solid client base of more than 225,000 customers in 1,450 locations across 63 countries.
The company's operations take up around 95 million square feet of real estate, of which 25 million square feet is self-owned.
Iron Mountain Incorporated (IRM)
Today's Change
(1.48%) $0.82
Current Price
$56.23
Iron Mountain's legacy paper storage business continues to be a cash cow despite ongoing global digitization. The company earns the bulk of its revenue from contracted storage rental fees and can pass along some of the inflationary impacts in the form of increased pricing.
Its records management business has a solid 98% customer retention rate. In fiscal 2021, the company reported a 2.6% year-over-year jump in organic storage-rental revenue, driven by robust pricing and volume trends.
The company is positioning itself as a major data center player and has leased 49 megawatts in fiscal 2021, much higher than its target of 30 megawatts. Iron Mountain has a total data center capacity of more than 600 megawatts and can effectively cross-sell to its broad customer base, which includes around 95% of the Fortune 1000 companies.
The REIT pays a handsome dividend yield of 4.74%, with an adjusted funds from operations (AFFO) payout ratio in the mid-60s range at the end of fiscal 2021, within the company's long-term target. AFFO is a key metric used to assess the profitability of a REIT. Iron Mountain expects its future dividends to rise at the same pace as its AFFO per share.
The REIT also has a strong balance sheet with $2 billion of liquidity and net lease-adjusted leverage at a 5.4 multiple, lower than the 5.9 multiple of the J.P. Morgan ( JPM -0.74% ) REIT Composite. A robust business model coupled with a healthy balance sheet will ensure that dividend payouts are quite safe for several years to come.
Iron Mountain expects its AFFO to be in the range of $1.08 billion to $1.12 billion in fiscal 2022.
IRM PS Ratio (Forward) Chart
IRM PS ratio (forward). Data by YCharts.
The company is currently trading at a forward price-to-sales ratio that is far lower than those of other well-managed and profitable REITs such as American Tower, Innovative Industrial Properties, and Equinix. Buying shares of a highly profitable and high-yield REIT in these inflationary times is one strategy that can potentially pay handsome returns, considering its very reasonable valuation.
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>>> Essential Utilities : For many investors, market downturns like the one we are currently experiencing can be disconcerting, leading them to fortify their holdings by buying less-volatile stocks. During boon times, these conservative stocks are hardly stealing the spotlight from innovative market disruptors that represent ample growth potential, but it's times like these when less-sexy, conservative stocks like Essential Utilities -- which offers a 2.3% forward dividend yield -- take center stage. Providing water, wastewater, and natural gas services to 5 million customers in 10 states, Essential Utilities offers indispensable services that are in demand regardless of market conditions.
Because it operates in regulated markets, Essential Utilities doesn't have the luxury of arbitrarily raising prices when the mood strikes. In 2021, for example, 98% of the company's $1.9 billion in operating revenue came from the company's business in regulated water and natural gas markets. On the other hand, the company does have excellent foresight regarding future finances. Management, for example, projects growing its water assets (excluding acquisitions) at a compound annual growth rate (CAGR) of 6% to 7% from 2021 to 2024; similarly, it forecasts growing natural gas assets at an 8% to 10% CAGR during the same period. These projections, furthermore, lead management to believe that the company will grow its earnings per share at a 5% to 7% CAGR to 2024, from the $1.67 it reported in 2021.
Besides the EPS outlook, passive income aficionados will appreciate management's approach to dividend growth over the next few years. Essential Utilities aims to raise the dividend at a similar pace to the EPS growth -- similar to what the company has done in the past. From 2016 through 2021, the dividend grew at a CAGR of 7% while the company's EPS grew about 5%. And it's not as if management expects to place the company in hot water, in terms of its financial health, solely to placate investors. Management plans on keeping its payout ratio below 65% -- a welcome sight for investors on the lookout for conservative dividend stocks.
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https://finance.yahoo.com/m/6fdbd562-0fa2-3994-9ed0-573b059e3701/nasdaq-bear-market%3A-3-safe.html?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article&yptr=yahoo
>>> 3 Reasons to Buy PepsiCo Stock
Motley Fool
By Kody Kester
Mar 17, 2022
https://www.fool.com/investing/2022/03/17/3-reasons-to-buy-pepsico-stock/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
PepsiCo's timeless brands helped it generate double-digit revenue and earnings growth in 2021.
The stock's dividend is primed to keep growing in the high single digits annually.
PepsiCo appears to be rationally valued by the market at this time.
There's a lot to like about the food and beverage giant besides its market-topping 2.9% dividend yield.
Since hitting an all-time high last November, the Nasdaq Composite has plunged as much as 20% in value and is currently down about 17.1%. Several popular stocks in the index have fallen even further, but some Nasdaq-traded stocks have not been hit nearly as hard.
For instance, consumer staples giant PepsiCo is trading down only about 9.9% from its peak $177 share price reached in January. The recent correction in PepsiCo's stock seems to be a temporary issue related to its most recent earnings report and actually just created a buying opportunity for some investors. The price drop is one rather obvious reason to buy this value stock, but there are at least three other reasons to consider. Let's dive into the stock's fundamentals and valuation and find out why PepsiCo is a buy right now.
1. PepsiCo has brand power and it flexed it in 2021
PepsiCo reported its earnings for the fiscal year ended 2021 in mid-February, and the earnings results for the year were arguably very positive for shareholders.
PepsiCo produced $79.5 billion in net revenue in 2021, equivalent to a 12.9% growth rate. So how did the $220 billion (by market capitalization) snack and beverage company pull off double-digit net sales growth last year?
The answer lies within PepsiCo's leading portfolio of brands, including the eponymous Pepsi, Lay's, Gatorade, Mountain Dew, SodaStream, and Quaker Oats, that each generates $1 billion-plus in annual revenue. As a result of these leading brands, PepsiCo's products are consumed more than 1 billion times every day by people in over 200 countries and territories throughout the world.
PepsiCo recorded a 2.5% increase in its convenient food volumes in 2021, while the company posted an even better 10% bump in beverage volumes. The company's total organic volumes were 4% higher in 2021 than the year-ago period. And the effective 5% net price hikes that PepsiCo passed along to consumers were another piece of how the company logged double-digit net revenue growth in 2021. PepsiCo's acquisitions of Pioneer Foods and Be & Cheery chipped in another 2% to net revenue growth, and favorable currency translations were responsible for the remaining 1% of net sales growth.
PepsiCo's non-GAAP (adjusted or core) diluted earnings per share (EPS) surged 13.4% higher to $6.26 in 2021. How did the company accomplish this? Two factors led to this earnings growth. Aside from PepsiCo's higher net revenue base, the company's non-GAAP net margin edged a single basis point higher to just over 10.9% in 2021. The other reason for the company's earnings growth was a 0.2% reduction in PepsiCo's weighted average outstanding share count to 1.39 billion, which was due to share buybacks executed during the year.
Analysts anticipate that PepsiCo's momentum will continue but to a lesser extent in the medium term. This is reflected by the fact that analysts are forecasting 8% annual core EPS growth over the next five years.
2. PepsiCo will soon qualify as a Dividend King
PepsiCo had a strong showing in 2021 and has an encouraging outlook for the foreseeable future. That makes it clear why the company's board of directors announced a 7% raise in the annualized dividend per share to $4.60. The dividend increase will begin with the quarterly dividend that is expected to be paid in June. Once paid, this will mark the stock's 50th consecutive year of dividend raises, which will make it a Dividend King.
PepsiCo's dividend payout ratio of 67% for 2021 is only a tad high, but still quite manageable. That's why dividend growth will probably slightly lag earnings growth over the next several years. But even so, I believe the company can keep handing out 7% annual dividend increases to get that payout ratio just below 65% by the end of 2026.
Along with PepsiCo's market-beating 2.9% dividend yield, this is an enticing blend of yield and growth prospects.
3. The stock is reasonably valued
The third reason to consider buying PepsiCo is that the inflation-proof stock looks to be sensibly priced.
PepsiCo is trading at a forward price-to-earnings ratio of 21.9, slightly below the nonalcoholic beverages industry average of 22.7. Even considering that PepsiCo's 8% annual earnings growth potential is a bit lower than the industry average of 9%, the steady nature of the stock arguably deserves a premium. PepsiCo's trailing-12 months dividend yield of 2.7% is also essentially in line with the 13-year median of 2.8%, which is further confirmation that the stock is a buy for dividend growth investors.
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Lancaster Colony - >>> Check Out This Dividend King You've Probably Never Heard Of
Motley Fool
By Justin Pope
Mar 17, 2022
https://www.fool.com/investing/2022/03/17/check-out-this-dividend-king-youve-probably-never/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Lancaster Colony sells niche food products with strong brands.
The company's strong finances power ongoing dividend growth.
The stock is a bit expensive today but poised for continued success.
Let's take a trip to the grocery store to find this underrated dividend gem.
Consumer staple companies make great dividend stocks because people buy things like food and beverages regardless of the economy. Food conglomerate Lancaster Colony may not have the name recognition of a company like Coca-Cola. Still, it's been growing its payout for the same 59 years that Coca-Cola has!
What's more, Lancaster Colony has handily delivered better investment returns than Coca-Cola over the past decade, so it's time to get to know this little-known Dividend King. Here's why investors should consider Lancaster Colony for their long-term portfolio.
About Lancaster Colony
Lancaster Colony produces and sells various food products, including frozen bread, refrigerated dips, dressings, sauces, and croutons. Some popular brands include New York Bakery, Flatout, and Marzetti. The company also produces sauces under licensing deals with brands like Buffalo Wild Wings, Olive Garden, and Chick-Fil-A.
The company specializes in niche food product categories, maintaining strong brand positioning with less competition from generic brands. Frozen bread, for example, commands freezer space in a grocery store, which is premium real estate. It's usually easier to develop additional shelf space in an aisle than to install more freezers in a store.
Approximately 64% of Lancaster Colony's sales are products requiring climate control, and its licensed products in the shelf-stable side of the business carry significant brand power of their own. Most people probably want the actual Olive Garden salad dressing instead of a generic one.
Superb fundamentals drive dividend growth
The differentiated products that Lancaster Colony sells help protect its "turf" within sales channels, but the company certainly isn't a hyper-growth company. Its revenue has risen an average of 3% annually over the past decade.
However, management runs a very tight ship financially, which has helped the company maximize its resources. Lancaster Colony holds no debt, giving it flexibility with every dollar of profit it generates.
This includes acquisitions of new brands to drive growth; Lancaster Colony has acquired many of its top brands over the years, including:
New York Bakery in 1978
Reames in 1989
Chatham Village in 1997
Sister Schubert's in 2000
Warren Frozen Foods in 2003
Flatout in 2015
Bantam Bagels in 2018
Omni Baking Company in 2021
It seems clear from the long time frame and years between deals that management isn't ever in a hurry, waiting instead for the right deal to come together. Management that doesn't put the balance sheet in danger to boost short-term growth numbers is an underrated trait in a company.
After investing in its factories and equipment, the dividend is the company's most prominent use of cash and the primary vehicle for delivering profits back to investors. In addition to raising the payout for 59 years, Lancaster Colony also issues a special dividend on occasion, the last one coming in 2015.
The regular dividend yields 2%, so investors probably have better options if they're looking for more income. Still, all those annual raises and the occasional special payout add up over a multi-year holding period.
Is Lancaster Colony a buy today?
It might be fair to call Lancaster Colony a "boring" company, but that isn't bad. It's poised to continue doing what it's been doing for decades. The balance sheet is still debt-free, and management has $114 million in cash to use as it pleases, so more acquisitions will likely occur at some point.
Furthermore, growth has picked up in recent years; revenue has grown more than 6% annually over the past three years, so investors will want to see how that continues moving forward.
The stock's one major problem is its valuation, which currently stands at a price-to-earnings (P/E) ratio of 34, a hefty amount for a company that grows at the pace that Lancaster Colony does.
The market's current sentiment toward growth stocks may push investors toward more defensive companies like Lancaster Colony. Still, it's hard to call the stock a "table-pounding" buy when the valuation probably needs to continue cooling off for a while longer.
Still, Lancaster Colony is a simple yet effective business with a multi-decade track record of success. If investors get the opportunity to buy shares at a more reasonable valuation, it could prove to be a long-term winner in any dividend portfolio. For now, the stock may be best as a name on your watchlist.
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Crown Castle Intl - >>> 4 Dividend Stocks to Supplement Your Social Security in 2022
Income-minded investors have plenty of good options still available as we move into the new year.
Motley Fool
by James Brumley
Dec 29, 2021
https://www.fool.com/investing/2021/12/29/dividend-stocks-supplement-social-security-2022/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Crown Castle
Dividend yield: 3%
Crown Castle International (NYSE:CCI) isn't a household name. But there's a good chance you or someone in your household relies on Crown Castle's service without even knowing it.
This company owns more than 40,000 cellphone towers and around 80,000 miles worth of fiberoptic cable, leasing access to its infrastructure to more familiar outfits like AT&T and Verizon. As long as you and other consumers need to remain connected to the rest of the world, the telco industry will need a means of keeping those connections in place. This makes for very reliable recurring revenue for Crown Castle.
That reliable revenue has allowed Crown Castle to dish out a dividend in every quarter since 2014 and to raise its annual payout every year since 2018. The yield of 3% may not be thrilling, but given its relatively low risk and secure future, that's a fair payout.
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>>> Why American Tower Can Continue Its Rapid Growth
GuruFocus
by Nathan Parsh
December 27, 2021
https://finance.yahoo.com/news/why-american-tower-continue-rapid-194211064.html
Many investors own real estate investment trusts, or REITs, for their generous dividend yields. There are some REITs that offer a lower yield, and though they might not meet the objectives of an income-focused investor, this doesn't mean that low yielding REITs should be avoided. While some might have low yields due to business problems, there are others that have low yields due to faster growth and higher valuation multiples, and these can sometimes prove to be extremely profitable in the long run.
Take American Tower Corporation (NYSE:AMT), for example. This company's dividend has compounded at a rate of more than 20% since becoming a REIT. Despite this level of dividend growth, American Tower yields just 2% today as the strength in the business has caused the stock to rise more than 166% over the last five years. For context, the S&P 500 Index has returned a cumulative 111% over this period of time. Lets take a closer look into American Tower to see why I believe it will remain a high growth REIT.
Business overview and recent earnings highlights
American Tower began as a subsidiary of a radio systems company in the mid-1990s. It was spun off from its parent company in 1998 and converted to a REIT in 2012. American Tower is valued at $127 billion today and generated annual revenue of slightly more than $8 billion last year.
The REIT has an incredible size and scale as the largest independent operator of wireless telecom and broadcast towers in the world. It is also one of the largest REITs in the world regardless of type of real estate.
American Tower has approximately 43,000 towers in the U.S., giving it a leadership position in what has become an incredibly important industry over the years. This same infrastructure will be vitally important as the rollout of 5G service continues.
American Towers most recent quarter, for which it announced earnings results on Oct. 28, shows that the company continues to capitalize on tailwinds in its business. Revenue for the quarter grew almost 22% to $2.45 billion, topping Wall Street analysts estimates by $40 million. Adjusted funds from operation of $2.49 per share was a 26 cent, or 10.3%, improvement from the prior year and was 17 cents ahead of expectations.
Property revenue surged 19.2%. Organic tenant billings growth, which reflects just properties that the trust has owned since the beginning of the prior year period, was up 4.9%. International was the real driver during the quarter as organic tenant billings growth was 5.9% for the period. The best performing region was Africa, up more than 9%, but Latin American wasn't far behind at 7%.
Prospects for growth
American Tower has expanded from just a U.S.-based business into international markets. As of the end of last year, American Tower had nearly 76,000 towers in the Asia/Pacific region, 41,500 in Latin America, 20,000 in Africa and 5,330 in Europe. American Tower has just begun entry into certain markets such as Australia, Canada, France, Niger and Spain, all of which occurred within the past five years.
Outside of the U.S., most of American Tower's markets haven't completed 4G networks yet. Regardless, data consumption is surging, with some international markets seeing 100% growth year-over-year. The demand for additional towers will mean higher capital spending budgets on the part of carriers in order to improve infrastructure, putting the REIT in a sweet spot to benefit from higher global demand for its properties.
As a result, American Tower expects nearly all of its regions to see organic growth in the coming years. In total, the REIT expects organic billings growth of 4.5%. The U.S. and Canada are projected to return as much as 4%, primarily due to 5G rollout. International markets should grow at a rate of 5% to 6%. These markets are led by Africa, with expected growth of at least 8%; Latin America, which is projected to be higher by more than 7%; and Europe, up at least 5%. Asia is expected to be flat, as other companies are dominant in this region.
International regions haven't experienced as much development as its domestic market, which should provide American Tower a long runway for growth as these markets should see increased demand for wireless telecom and broadcast service going forward.
The REIT has long-term contracts with most carriers that provide automatic rent escalators. In the U.S., the typical yearly increase is close to 3% with many international markets tied to inflation, giving some visibility to future revenue totals.
American Tower hasnt been shy about acquiring additional businesses to augment its core portfolio. For example, the REIT announced on Nov. 15 that it was acquiring CoreSite, which owns 25 data centers and more than 32,000 interconnections in the U.S., for $10 billion in cash. This will grant American Tower entrance into new markets that it doesn't already touch. The transaction will add $655 million in annual revenues to American Towers business, which would have represented more than 8% of last years total.
The REIT has been very successful as adjusted funds from operation (AFFO) have a compound annual growth rate (CAGR) of 15% over the last 10 years. This growth rate would have been higher if the share count had not increased by 13% over the same time frame.
Dividend analysis
Business results have enabled American Tower to grow its dividend at a level rarely seen amongst REITs. Unlike most in the real estate sector, the trust increases its dividend almost every quarter instead of once per year. Shareholders received 20% more in dividends per share this year than they did in 2020. The trust raised its dividend 6.1% for the Jan. 14, 2022 payment date. American Tower has a nine-year dividend growth streak while the dividend has a CAGR of 22.3% since 2012.
With an annualized dividend of $5.56, American Tower has a forward dividend yield of 2%. As REITs go, this is a low dividend yield, but this tops the stocks historical average yield of 1.8%. It is also superior to the 1.25% average yield for the S&P 500 Index.
The REIT distributed $4.33 of dividends per share in 2021. Wall Street analysts expect American Tower to earn $10.25 per share in adjusted funds from operation this year, resulting in a projected payout ratio of 42%. Adjusted funds from operation are predicted to rise to $10.30 for the next fiscal year. Using the new annualized dividend, the payout ratio is 54%. American Tower has averaged a payout ratio of 44% over the past five years. Both the average and projected payout ratios are very low for a REIT, putting American Tower in a good position to continue to raise its dividend moving forward.
Valuation analysis
Shares of American Tower trade close to $279. Using analysts estimates for 2021 and 2022, the stock has a forward price-to-funds-from-operation ratio of just over 27 for both years. This is a premium to the stocks five-year average price-to-funds-from-operation ratio of 23.4.
Shares are also trading ahead of their GuruFocus Value, but not overly so.
Why American Tower Can Continue Its Rapid Growth
American Tower has a GF Value of $269.72, equating to a price-to-GF-Value ratio of 1.03. The stock is rated as fairly valued by GuruFocus.
Final thoughts
American Tower might not offer the type of yield that REIT investors are accustomed to seeing from this sector of the economy, but this isn't due to a lack of raising dividends on the company's part. The dividend has compounded at an extremely high rate since the REIT was formed. Shareholders of the REIT have benefited from incredible share price returns over the medium-term, easily outperforming the broad market.
American Tower is set to benefit from several catalysts for growth, especially 5G rollout in the U.S. and growing demand in developing markets, which should position the REIT to continue its streak of strong earnings results.. In turn, dividend growth will likely remain elevated.
The stock isn't cheap, either on a historical basis or compared to the GF Value, but quality names with excellent fundamentals and high expectations for future growth rarely are.
The long-term track record for adjusted funds from operation and dividend growth suggests that American Tower could be a solid investment for those looking for more than just yields from a REIT investment.
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Chevron - >>> My Top Picks To Play A Weakening US Dollar Entering 2022
Zacks
by Daniel Laboe
December 22, 2021
https://finance.yahoo.com/news/top-picks-play-weakening-us-204308136.html
Chevron (CVX) and its best-in-class operations provide the perfect way to buy the dip in this momentum-charged sector with the highest return potential.
Chevron is an energy powerhouse with LNG operations that position it for the future of (lower emission) energy. With its savvy purchases across the Permian and Marcellus basins, the enterprise has established itself as a leader in the US oil industry (2nd largest US energy company behind ExxonMobil). I dare to call CVX an oil growth stock, but it has all the makings of a long-term winner.
Despite what oil critics say, I can assure you that the world economy is far from kicking its addiction to fossil fuels. Analysts project that natural gas and oil demand will continue to rise over the next decade with revving energy needs (LNG is expected to be a winner). CVX is poised to drive substantial profits throughout the roaring 20s.
I deem that Chevron's 4.7% dividend yield is almost as safe as US Treasury Note. The oil industry's commitment to maintaining its dividend regardless of financial adversity (short of bankruptcy) is unprecedented. Chevron has proven to have the liquidity to support its endlessly growing yield in even the most devastating economic environments. Chevron maintained its dividend through the past 18-months of economic shutdowns and actually raised its quarterly payout in Q2, which none of its major competitors can boast of.
The firm has already returned to pre-pandemic profitability levels, remarkably faster than most of its competitors, yet its share price remained below its pre-COVID high in January 2020. I expect that currency tailwind will further fuel CVX's upside potential.
Sell-side analysts have been getting increasingly optimistic about CVX, with 13 out of 17 analysts calling this a buy today and a consensus price target of nearly $130 (more bullish targets above $150).
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>>> You could be a landlord for Amazon, FedEx and Walmart with these REITs that net up to a 4.4% yield — you can even collect on a monthly basis
Money Wise
by Jing Pan
December 18, 2021
https://finance.yahoo.com/news/could-landlord-amazon-fedex-walmart-180000530.html
You could be a landlord for Amazon, FedEx and Walmart with these REITs that net up to a 4.4% yield — you can even collect on a monthly basis
Being a landlord is one of the oldest ways to earn a passive income. And these days, you don’t have to buy a house to get a piece of the action.
Check out real estate investment trusts, which are publicly traded companies that own income-producing real estate.
REITs collect rent from their properties and pass it along to shareholders in the form of dividends. That means investors don’t have to worry about screening tenants, fixing damages or chasing down late payments. Instead, they simply sit back and enjoy the dividend checks rolling in when they pick a winning REIT.
Of course, the COVID-19 pandemic did impact some commercial real estate. And not all REITs are the same. If you are a landlord for e-commerce giant Amazon, for instance, you should have no problem collecting a steady stream of rental income.
With that in mind, let’s take a look at two REITs paying oversized dividends to investors — one could be worth pouncing on with some of your extra cash.
Amazon’s landlord
The first one is STAG Industrial (STAG), a REIT that owns and operates single-tenant industrial properties throughout the U.S. Its biggest tenant is Amazon.
The company’s portfolio consists of 517 buildings totaling approximately 103 million rentable square feet across 40 states.
Note that 434 of the 517 properties are warehouses, which happen to be an essential part of e-commerce.
Moreover, a tenant survey in 2020 revealed that around 40% of the REIT’s portfolio handles e-commerce activity.
To see how solid STAG Industrial is, take a look at its dividend history.
Since the company went public in 2011, it has paid a higher dividend every single year.
While most dividend-paying companies follow a quarterly distribution schedule, STAG Industrial pays shareholders every month. The monthly dividend rate stands at 12.08 cents per share, which translates to an annual yield of 3.2%.
STAG Industrial shares are up 50% year to date. If you don’t feel comfortable picking individual stocks in this elevated market, you can always build a diversified passive income portfolio automatically just by investing your spare change.
Walmart’s landlord
When it comes to paying monthly dividends, one company stands out above all — Realty Income (O).
Realty Income has been paying uninterrupted monthly dividends since its founding in 1969. That’s 616 consecutive monthly dividends paid.
Better yet, since the company went public in 1994, it has announced 114 dividend increases.
Realty Income has a diverse portfolio of nearly 11,000 commercial properties located in all 50 states, Puerto Rico, the UK and Spain. It leases them to around 650 tenants operating across 60 industries.
This means even if one tenant or industry enters a downturn, the impact on company-level financials will likely be limited.
For instance, while Realty Income rents some properties to AMC Theaters — whose business was hurt by COVID-19 — it also has Walgreens, FedEx and Walmart as some of its top tenants. And these businesses turned out to be largely pandemic-proof.
Earlier this week, the REIT increased its monthly cash dividend to 24.65 cents per share, giving the stock an annual dividend yield of 4.4%.
To put things in perspective, the average dividend yield of S&P 500 companies is just 1.3% today.
Looking beyond REITs
Of course, stocks are volatile. And even the best REITs are not immune to the market’s ups and downs.
Diversification is key — and you don’t have to stay in the stock market to get it.
If you want to invest in something insulated from stock market swings, take a look at some lesser-known alternative assets.
Traditionally, investing in sectors like exotic vehicles or multifamily apartment buildings or even litigation finance have only been options for the ultrarich.
But with the help of new platforms, these kinds of opportunities are available to retail investors, too.
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Gladstone Land - >>> 2 Stocks That Cut You a Check Each Month
These two very successful niche operators have been handing out monthly dividends for many years running.
Motley Fool
by Eric Volkman
Dec 17, 2021
In this current era, where change often moves with lightning speed, who wants to wait three months to receive a dividend? Is it because the decades-old standard quarterly dividend is still very much the norm? Why can't it be the exception?
Well for a select group of dividend-paying companies, distributing a chunk of profits in the form of a regular monthly dividend is the norm. Let's take a closer look at two of them -- Realty Income (NYSE:O) and Gladstone Land (NASDAQ:LAND) -- and see if getting paid each month by these dividend stocks is right for you.
1. Realty Income
Realty Income, a real estate investment trust (REIT) that focuses on retail properties, is the standard-bearer for monthly dividend payers. There's a reason it has trademarked its descriptor as "The Monthly Dividend Company." It's been doling out a steadily increasing payout every turn of the calendar since its shares were listed on the New York Stock Exchange way back in 1994.
The company has thousands of sources of revenue. At the end of its most recently reported quarter, its massive portfolio comprised 7,018 properties. Nearly all of these were located in the U.S., but the company is branching out; in September, it closed its first transaction on the European continent -- a 93 million euro ($105 million) sale/leaseback deal with French supermarket operator Carrefour on seven properties in Spain.
Given this financial commitment, and the obvious enthusiasm with which the company announced it, we can expect much greater expansion in this huge new market for the REIT.
Meanwhile, Realty Income continues to grow its fundamentals at admirable rates. In the third quarter, it managed to lift its total revenue by almost 22% on a year-over-year basis. Growth in the company's adjusted funds from operations (AFFO), the most important profitability metric for REITs, soared even higher at 26%.
Nearly all of those 7,000-plus properties are home to active businesses, as Realty Income's occupancy rate is just under 99%. The company rents its spaces out on triple-net leases that have very long terms (the average is nearly nine years). This provides a very solid tenant base for the REIT and effectively locks in years of sturdy cash flow. No wonder the company is willing to share its wealth so frequently.
Realty Income's latest monthly dividend was a shade under $0.25 per share. At the latest closing share price, this yields 4.4%.
2. Gladstone Land
Elsewhere in the REIT sector, we have Gladstone Land. This company's focus is on farmland and assets related to the same, i.e., properties that are rented under triple-net leases to their tenants. Gladstone owned 160 farms covering more than 108,000 acres across 14 U.S. states as of November. All of its properties are under lease.
Are you saying you've never heard of an agricultural properties REIT? That's not surprising. There are only very few on the market and of that small group, Gladstone is far and away the largest and most significant.
Gladstone tends to favor farms that grow fresh produce and select "permanent" crops like nuts and blueberries. It believes these are more profitable and can thus produce higher rental income. These crops also tend to require lower storage expenses and are less volatile in price than commodity crops such as wheat and corn.
This focus makes for a good business strategy. Thanks to organic growth (no pun intended) and net additions to its property portfolio (33, to be exact), Gladstone posted a robust 40% year-over-year increase in revenue in its Q3 (to just under $19.6 million). AFFO saw an even higher leap, bounding 66% upwards to nearly $5.3 million.
That's entirely in character for Gladstone, which over the past few years has seen dramatic improvements in both revenue and AFFO.
All this means Gladstone has plenty in its financial tank for a dividend that gets distributed 12 times per year. The dividend has been paid without fail since the company listed on the stock market in 2013.
The payout isn't immense in either absolute terms (the latest one was less than $0.05 per share) or yield, which these days is 1.8%. However, the regularity of this reliable monthly dividend, Gladstone's strong position in its very limited niche, and its vast scope for expansion make it a compelling stock worth considering. After all, this is a huge country that still has plenty of agricultural lands available to develop.
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Gladstone Land - >>> 10 Monthly Dividend Stocks to Buy in December
Insider Monkey
by Fatima Farooq
December 7, 2021
https://finance.yahoo.com/news/10-monthly-dividend-stocks-buy-140107425.html
Gladstone Land Corporation (NASDAQ:LAND)
Number of Hedge Fund Holders: 7
Dividend Yield: 1.87%
Gladstone Land Corporation (NASDAQ:LAND) is a real estate investment trust based in Virginia. The company was founded in 1997 and has raised its dividend for seven years so far.
B. Riley's Craig Kucera just this November raised the price target on shares of Gladstone Land Corporation (NASDAQ:LAND). The analyst also holds a Buy rating on the stock.
The FFO for Gladstone Land Corporation (NASDAQ:LAND) in the third quarter was $0.17, beating estimates by $0.02. The revenue for the company was $19.59 million, up 40.05% year over year and beating estimates by $1.64 million. Gladstone Land Corporation (NASDAQ:LAND) has gained 18.92% in the past six months and 98.05% year to date.
Insider Monkey's data shows that seven hedge funds held stakes in Gladstone Land Corporation (NASDAQ:LAND) in the third quarter of 2021, worth $7.9 million. In the previous quarter, six hedge funds held stakes in the company worth $5.4 million.
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>>> Warren Buffett is holding these stocks for the huge free cash flow — with inflation at a 31-year high, you should too
MoneyWise
by Brian Pacampara, CFA
December 7, 2021
https://finance.yahoo.com/news/warren-buffett-holding-stocks-huge-175400129.html
Warren Buffett is holding these stocks for the huge free cash flow — with inflation at a 31-year high, you should too
Wall Street pays a ton of attention to company earnings.
But reported earnings are often manipulated through aggressive or even fraudulent accounting methods.
That’s why risk-averse investors need to focus on companies that generate gobs of free cash flow.
Cold, hard cash is real, and can be used by shareholder-friendly management teams to:
Pay inflation-fighting dividends.
Repurchase shares.
Grow the business organically.
Investing legend and Berkshire Hathaway CEO Warren Buffett is famous for his love of cash flow-producing businesses.
Let’s take a look at three stocks in Berkshire’s portfolio that boast double-digit free cash flow margins (free cash flow as a percentage of sales).
Chevron (CVX)
Leading off our list is oil and gas giant Chevron, which has generated $13.9 billion in free cash flow over the past 12 months and consistently posts free cash flow margins in the ballpark of 10%.
The shares have been hot in recent months on the strong rebound in energy prices, but with inflation continuing to heat up, there might be plenty of room left to run.
Management’s recent initiatives to cut costs and improve efficiency are starting to take hold and should be able to fuel shareholder-friendly actions for the foreseeable future.
Just last week, Chevron announced that it would boost its buyback program to as much as $5 billion a year, about 60% higher than previous guidance.
The stock still offers an attractive dividend yield of 4.7%, which investors can pounce on using some extra cash.
Moody’s (MCO)
With whopping free cash flow margins above 30%, credit ratings leader Moody’s is next up on our list.
Moody’s shares held up incredibly well during the height of the pandemic and are up nearly 290% over the past five years, suggesting that it’s a recession-proof business worth betting on.
Specifically, the company’s well-entrenched leadership position in credit ratings, which leads to outsized cash flow and returns on capital, should continue to limit Moody’s long-term downside
Moody’s has generated about $2.4 billion in trailing twelve-month free cash flow. And over the first nine months of 2021, the company has returned $975 million to shareholders through share repurchases and dividends.
Moody’s has a dividend yield of 0.6%.
Coca-Cola (KO)
Rounding out our list is beverage giant Coca-Cola, which has produced $8.1 billion in trailing twelve-month free cash flow and habitually delivers free cash flow margins above 20%.
The stock has had plenty of ups and downs in recent months, but patient investors should look to take advantage of the short-term uncertainty. Coca-Cola’s long-term investment case continues to be backed by an unrivaled brand presence, massive scale efficiencies, and still-attractive geographic growth tailwinds.
And the company is back to operating at pre-pandemic levels.
In the most recent quarter, Coca-Cola posted revenue of $10 billion, up 16% from the year-ago period, driven largely by a 6% increase in unit case volume.
Coca-Cola shares offer a dividend yield of 3.1%.
Generate income outside of the shaky stock market
Even if you don't like these specific stock picks, you should still look to implement Buffett's time-tested strategy of investing in real assets that produce cold, hard cash.
And you don't have to limit yourself to the stock market.
For instance, some popular investing services make it possible to lock in a passive income stream by investing in a wide variety of alternative assets — including fine art, commercial real estate, and even luxury vehicle finance.
You’ll gain diversified exposure to alternative asset classes that big-time investment moguls usually have access to, and you’ll receive regular payouts in the form of monthly or quarterly dividend distributions.
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>>> Bill Gates is using these dividend stocks to generate a giant inflation-fighting income stream ?— you might want to do the same
MoneyWise
by Clayton Jarvis
December 8, 2021
https://finance.yahoo.com/news/bill-gates-using-dividend-stocks-194300892.html
With elite investors like Michael Burry and Jeremy Grantham predicting a reckoning for today’s overheated stock market, it might be time to look at dividend stocks.
Dividend stocks are a way to diversify a portfolio that may be chasing growth a little too obsessively. They generate income in good times, bad times and, particularly important today, times of high inflation.
They also tend to outdo the S&P 500 over the long run.
One prominent portfolio that’s heavy on dividend stocks belongs to The Bill & Melinda Gates Foundation Trust. With the trust being used to pay for so many initiatives, income needs to keep flowing into it.
Dividend stocks help make this happen.
Here are three dividend stocks that occupy significant space in the foundation’s holdings. You may even be able to follow in its footsteps with some of your spare change.
Waste Management (WM)
Waste Management Inc, is an American waste management & environmental services company. It’s not the most glamorous of industries, but waste management is an essential one.
No matter what happens with the economy, municipalities have little choice but to pay companies to get rid of our mountains of garbage, even if those costs increase.
As one of the biggest players in the space, Waste Management remains in an entrenched position.
The shares have more than doubled over the past five years and are up about 42% year to date. Management is projecting 15% revenue growth this year.
Currently offering a yield of 1.4%, Waste Management’s dividend has increased 18 years in a row.
The company has paid out almost $1 billion in dividends over the last year, and its roughly $2.5 billion in free cash flow for 2021 means investors shouldn’t have to worry about receiving their checks.
Caterpillar (CAT)
As a company whose fortunes typically follow that of the larger economy — that’ll happen when your equipment is a fixture on building sites the world over — Caterpillar is in an intriguing post-pandemic position.
The company’s revenues are feeling the effects of a paralyzed global supply chain, but still-historically low interest rates and President Joe Biden’s recently passed $1.2 trillion infrastructure bill mean there could be an awful lot of building going on in the U.S. in the near future.
Caterpillar’s mining and energy businesses also provide exposure to commodities, which tend to do well during times of high inflation.
The company’s stock has ridden higher raw material and petroleum prices to an almost 15% increase this year.
After announcing an 8% increase in June, Caterpillar’s quarterly dividend is currently at $1.11 per share and offers a yield of 2.2%. The company has increased its annual dividend 27 years straight.
Walmart (WMT)
With grocery stores deemed essential businesses, Walmart was able to keep its more than 1,700 stores in the U.S. open throughout the pandemic.
Not only has the company increased both profits and market share since COVID coughed its way across the planet, but its reputation as a low-cost haven makes Walmart many consumers’ go-to retailer when prices are rising.
Walmart has steadily increased its dividends over the past 45 years. Its annual payout is currently $2.20 per share, translating into a dividend yield of 1.6%.
After trending slightly downward over the past month, Walmart currently trades at roughly $136 per share. If that's still too steep, you can get a smaller piece of the company using a popular app that lets you to buy fractions of shares with as much money as you are willing to spend.
Look beyond the stock market
Aerial side view head of cargo ship carrying container and running near international sea port for export.
At the end of the day, stocks are inherently volatile — even those that provide dividends. And not everyone feels comfortable holding assets that swing wildly every week.
If you want to invest in something that has little correlation with the ups and downs of the stock market, take a look at some unique alternative assets.
Traditionally, investing in fine art or commercial real estate or even marine finance have only been options for the ultra rich, like Gates.
But with the help of new platforms, these kinds of opportunities are now available to retail investors, too.
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Name | Symbol | % Assets |
---|---|---|
Johnson & Johnson | JNJ | 3.75% |
Procter & Gamble Co | PG | 3.47% |
JPMorgan Chase & Co | JPM | 3.08% |
Verizon Communications Inc | VZ | 2.45% |
Pfizer Inc | PFE | 2.05% |
Walmart Inc | WMT | 2.01% |
AT&T Inc | T | 2.00% |
Comcast Corp Class A | CMCSA | 1.99% |
Merck & Co Inc | MRK | 1.97% |
Intel Corp | INTC | 1.95% |
Name | Symbol | % Assets |
---|---|---|
Qualcomm Inc | QCOM | 4.38% |
BlackRock Inc | BLK | 4.33% |
Texas Instruments Inc | TXN | 4.19% |
United Parcel Service Inc Class B | UPS | 3.98% |
Pfizer Inc | PFE | 3.97% |
PepsiCo Inc | PEP | 3.93% |
3M Co | MMM | 3.90% |
Coca-Cola Co | KO | 3.87% |
Verizon Communications Inc | VZ | 3.84% |
International Business Machines Corp | IBM | 3.69% |
Name | Symbol | % Assets |
---|---|---|
AT&T Inc | T | 9.13% |
Exxon Mobil Corp | XOM | 8.47% |
Johnson & Johnson | JNJ | 6.53% |
Verizon Communications Inc | VZ | 6.47% |
Chevron Corp | CVX | 5.60% |
Pfizer Inc | PFE | 5.55% |
Coca-Cola Co | KO | 4.07% |
PepsiCo Inc | PEP | 3.70% |
Cisco Systems Inc | CSCO | 3.66% |
Merck & Co Inc | MRK | 3.66% |
Name | Symbol | % Assets |
---|---|---|
Apple Inc | AAPL | 6.18% |
Microsoft Corp | MSFT | 5.23% |
Procter & Gamble Co | PG | 3.60% |
PepsiCo Inc | PEP | 2.65% |
JPMorgan Chase & Co | JPM | 2.34% |
Philip Morris International Inc | PM | 2.18% |
Williams Companies Inc | WMB | 2.12% |
Chevron Corp | CVX | 1.96% |
Linde PLC | LIN.L | 1.92% |
Altria Group Inc | MO | 1.87% |
Name | Symbol | % Assets |
---|---|---|
Enbridge Inc | ENB.TO | 8.89% |
Kinder Morgan Inc Class P | KMI | 8.59% |
TC Energy Corp | TRP.TO | 8.48% |
Williams Companies Inc | WMB | 8.00% |
ONEOK Inc | OKE | 6.89% |
Cheniere Energy Inc | LNG | 6.46% |
Targa Resources Corp | TRGP | 4.99% |
Antero Midstream Corp | AM | 4.63% |
Energy Transfer LP | ET | 4.54% |
Equitrans Midstream Corp | ETRN | 4.48% |
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