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Philip Morris Ends Merger Talks With Altria, Removing Some Uncertainty

This morning Philip Morris (PM) announced that merger discussions with Altria had ended without a deal. Investors responded positively to the news, lifting PM's stock price by about 5% in early trading. As we discussed earlier this month, shareholders were concerned that a merger would increase Philip Morris's risk profile by exposing the company to a more dynamic and challenging business environment in America, where cigarette volumes are declining at a faster rate. The firm's U.S. exposure would have increased from 0% to nearly 40% of net revenues, and Philip Morris would be roped into the latest regulatory drama with Juul (Altria owns a 35% stake in the controversial vaping company). Instead of combining, the companies will focus on working together to make Philip [...]

September 25th, 2019|

Altria’s Dividend Safety Score Downgraded to Borderline Safe on Increased Merger Uncertainty

Increasing regulatory headwinds in recent weeks have clouded the long-term outlook for part of Altria's (MO) business. These issues appear unlikely to threaten Altria's dividend assuming the company remains independent. However, they have created greater uncertainty about the terms Altria would receive if management decides to push forward with a merger with Philip Morris (PM). Due to this uncertainty, which has potential to result in a moderate (10-15%) dividend reduction for Altria shareholders if a merger takes place, Altria's Dividend Safety Score is downgraded to Borderline Safe until more clarity is provided. We plan to continue holding our Altria shares in our Top 20 Dividend Stocks portfolio and expect more information on a potential merger to be known within the next quarter or two.

September 24th, 2019|

Lowe’s: A Quality Dividend King With Enduring Advantages

Lowe's (LOW) was founded in 1946 and is the world’s second largest home improvement retailer. The company operates over 2,100 home improvement and hardware stores (almost all in the U.S.) and helps homeowners, renters, and other customers complete a wide array of projects. The company’s stores are famous for being a one-stop shop for both do-it-yourself (DIY) customers (75-80% of revenue) and professional contractors (20-25% of revenue). A typical Lowe's store stocks more than 34,000 products across virtually every home improvement product category (lumber, paint, appliances, flooring, tools, cabinets, etc.). Approximately 5% of Lowe’s sales are made online today, but the company’s strategy is focused on omni-channels sales to capitalize more of the e-commerce trend.

September 23rd, 2019|

Royal Bank of Canada: Paying Dividends Every Year Since 1870

With roots tracing back to the 1860s, Royal Bank of Canada (RY), or RBC, is one of the oldest and largest banks in the world. The firm is well-diversified across businesses, geographies, and client segments, serving 16 million customers across Canada, the U.S., and more than 30 other countries. RBC operates through five business segments:  Personal & Commercial Banking (49% of earnings): provides a broad suite of financial products and services to individuals and businesses for their banking, investing, and financing needs. Offerings include home mortgages, personal loans, checking and savings accounts, mutual funds, credit cards, auto financing, and commercial loans.  Capital Markets (22% of earnings): RBC is one of the top 10 largest investment banks in the world with with core markets [...]

September 23rd, 2019|
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