Founded in 1984, National Retail Properties (NNN) is one of America's oldest triple net lease, or NNN, REITs. The company follows a "sale-leaseback" model in which it will buy a property from an existing tenant and then rent the property back to the former owner under long-term (15 to 20-year) contracts. The average remaining lease term is 11.4 years, and just 5% of leases expire through the end of 2020. Triple net lease contracts require the tenant to pay for insurance, maintenance, utilities, and property taxes. National Retail Properties thus serves purely as a landlord, collecting a recurring stream of rent from which it pays its steadily growing dividend. These leases also have annual rental escalators built in (about 1.5% [...]

Founded in 1919 in Richmond, Virginia, Altria (MO) is America’s largest tobacco company. The business split into three separate firms in 2007 and 2008 (Altria, Phillip Morris International, and Kraft), with Altria retaining all domestic tobacco operations. Altria has exclusive U.S. rights to sell cigarettes primarily under the Marlboro, Parliament, Virginia Slims, and Benson & Hedges brands. The company also markets cigars (Black & Mild), chewing tobacco (Copenhagen and Skoal, Red Seal, and Husky brands), and table wines under the Chateau Ste. Michelle, Columbia Crest, and 14 Hands brands. In recent years, Altria has invested heavily into non-combustible reduced-risk products to adapt its long-term business model for an eventually smoke-free world. One area of focus is the IQOS nicotine delivery [...]

Philip Morris International (PM) was spun off from Altria (MO) in 2008, with Altria serving the U.S. and Philip Morris owning the international rights to all of Altria’s most famous brands, including Marlboro, Merit, Parliament, Virginia Slims, L&M, Bond Street, Chesterfield, Lark, Muratti, Next, and Red & White. Philip Morris markets its cigarette brands to more than 150 million customers in over 180 countries and has close to 30% international market share (excluding China and the U.S.). That's largely due to selling Marlboro, which is the No. 1 cigarette brand in the world and accounts for approximately 35% of the company's total volumes. While traditional tobacco products still generate the vast majority of the company's profits, reduced-risk products, or RRPs, [...]

Minnesota Mining and Manufacturing, or 3M (MMM), was founded in 1902 in St. Paul, Minnesota. The global industrial conglomerate markets over 60,000products used in homes, businesses, schools, and hospitals in more than 200 countries around the world. 3M is a highly diversified company with five main business segments that cover over 45 technology platforms, ranging from adhesives and abrasives to ceramics and nanotechnology.

Realty Income (O) was founded in 1969 and is one of the largest REITs in America. The company owns more than 5,600 properties located in 49 states and leases its buildings to 260 commercial tenants operating in 48 diverse industries. In recent years the REIT has begun diversifying into non-retail properties, including offices (4% of rental revenue), industrial warehouses (12%), and farmland (2%). However, retail properties still generate 81% of total rental revenue. All of the company's properties are under long-term triple-net lease agreements, which provide solid cash flow visibility and shift property operating expenses such as maintenance, utilities, insurance, and taxes to the tenant. In other words, the rental revenue received by Realty Income has substantially fewer expenses and [...]

Chevron (CVX) was founded in 1879 and became a standalone company after the breakup of Standard Oil in 1911. Today Chevron is one of the largest integrated oil companies in the world, with major operations in over 30 countries. The business operates across four segments: U.S. Upstream Operations (18% of operating earnings): Chevron explores for, develops, and produces crude oil and natural gas. The firm is also involved in the processing, liquefaction, transportation, and regasification associated with liquefied natural gas. Chevron transports crude and natural gas as well. International Upstream Operations (59% of operating earnings):key production regions include Australia, Nigeria, Thailand, Indonesia, Angola, Bangladesh, and Canada. U.S. Downstream Operations (14% of operating earnings): Chevron owns refineries that use crude oil to make [...]

Founded in 1890, Emerson Electric (EMR) is a global industrial conglomerate that serves a variety of industries including oil and gas, refining, chemicals, power generation, pharma, food and beverages, pulp and paper, metal and mining, and municipal water supply. Emerson Electric brings together technology and engineering to provide solutions for customers in the process, industrial, commercial, and residential markets. Whether it’s monitoring food temperatures throughout the supply chain or replacing a deteriorating valve that could cause costly downtime, the company helps customers optimize their operations and increase reliability, efficiency, and safety. Emerson completed a number of strategic actions in recent years to streamline its portfolio and refocus on its core businesses. The company divested more than $5 billion worth of [...]

The vast majority of dividend cuts can be spotted in advance. Dividend cutters often possess some combination of a dangerously high payout ratio, falling earnings, and too much debt. Unfortunately, Vale's (VALE) announcement on January 27 to suspend all dividends, share repurchases, and management bonuses was triggered by a swift and severe tragedy – the collapse of a dam at one of its iron ore mines in Brazil killed at least 60 people, with over 250 people still missing. The affected families will never be the same, and while it could take several years to reach a settlement, Vale will certainly be on the hook for substantial environmental and civil damages related to this disaster. Suspending the dividend helps preserve cash to [...]

Exxon Mobil (XOM) is one of the world’s oldest oil companies, founded in 1870. It’s also the world’s largest publicly traded integrated oil conglomerate, with nearly 30,000 oil & gas wells on six continents. In fact, thanks to its refining and petrochemical business, Exxon has a presence in almost every country on earth. The company operates in three distinct but interconnected business segments: upstream oil & gas production, downstream refining, and specialty chemicals. The logic behind such an integrated business, in which Exxon controls all aspects of the fossil fuel business (from production to refining and retail gasoline sales), is that it diversifies Exxon’s sales, earnings, and cash flow. For example, low oil prices resulted in almost no profits from [...]

Department store retailer Macy's (M) has fallen about 40% since August 2018, including a single-day plunge of nearly 20% on January 10. Meanwhile, Macy's dividend yield has soared to over 6%, a level that causes many investors to start questioning the retailer's dividend safety. Let's take a look at why Macy's is being so badly punished by investors to assess whether this high-yield stock appears to represent a potentially solid long-term investment opportunity or an unsafe value trap to avoid.