Apple Hospitality REIT (APLE)
Apple Hospitality (APLE) began trading as a publicly listed REIT in 2015. The firm's property portfolio consists of 243 Marriott and Hilton branded hotels located in 88 mostly large and urban markets throughout 34 states. Almost all of the REIT's hotels are located in high traffic locations such as suburbs, cities, or near airports. Source: Apple Hospitality Investor Presentation The strong brand recognition and loyalty programs of Marriott and Hilton branded hotels help them maintain stronger occupancy, higher revenue per available room (RevPAR), and thus more stable cash flow. As you can see, the company's hotels include various sub-brands as well as different levels of premium units and extended stay lodging. At the recently held REIT Week conference, Apple's [...]
ONEOK (OKE)
Founded in 1906, ONEOK (OKE) is a large energy midstream service provider with an especially dominant presence in the shale formations of Oklahoma. The firm's pipelines and storage facilities are connected to over 140 gas processing facilities across the country, making it incredibly valuable to its core natural gas liquid (NGL) customers. Source: ONEOK Fact Sheet Thanks to over $9 billion in investments made between 2006 and 2016, the company has diversified its operations to include some of America's largest and most important oil & gas shale formations including the Permian basin and the Bakken shale of North Dakota. ONEOK is now well-positioned to serve some of the fastest-growing shale formations in the country. Source: ONEOK Investor Presentation ONEOK has [...]
Blackstone Group L.P. (BX)
Founded in 1985, Blackstone Group L.P. (BX) is the world’s largest alternative asset manager with about 2,400 employees and $450 billion in assets under management. The firm specializes in private equity (direct ownership of private companies), real estate, hedge funds, and investing in private debt. Source: Blackstone Investor Presentation Blackstone earns its money by charging investors a base management fee (about 0.8%) plus performance fees (a percentage of profits above a certain hurdle rate) which can be extremely lucrative. In the past 12 months, 43% of the company's revenue was in the form of base management fees, while 54% was from performance fees. The remaining 3% was from net realized gains on investments. Here's a look at Blackstone's business [...]
Annaly Capital Management (NLY)
Founded in 1997, Annaly Capital Management (NLY) is the largest and oldest mortgage REIT (mREIT) in America with over $100 billion in assets. The firm primarily invests in residential mortgages that are guaranteed by Fannie Mae and Freddie Mac. Like all mREITs, Annaly’s business model involves borrowing at short-term (lower) interest rates, in order to fund the purchase of longer-term, higher-yielding assets, mostly residential and commercial mortgage-backed securities (MBS). Combined, these securities collectively make up 97% of the firm's asset base. Source: Annaly Investor Presentation The difference between short-term borrowing rates and the yields Annaly earns on its investments is the net interest margin, or “spread,” which is how the company makes money. Combined with a high amount of [...]
Stepan Company (SCL)
Founded in 1932, Stepan Company (SCL) produces and sells specialty and intermediate chemicals to other manufacturers for use in various end products around the world. The company operates in three segments: Surfactants (67% of sales, 56% of profits): offers surfactants that are used as principal ingredients in consumer and industrial cleaning products, such as detergents for washing clothes, dishes, carpets, floors, and walls, as well as shampoos and body washes. They are also used in lubricants, latex systems, plastics, and composites. Polymers (28% of sales, 39% of profits): provides polyurethane polyols that are used in the manufacture of rigid foam for thermal insulation in the construction industry, as well as a base raw material for coatings, adhesives, sealants and flexible [...]
Lancaster Colony (LANC)
Founded in 1961, Lancaster Colony (LANC) is a specialty food maker that owns several niche dip, bread, frozen roll, crouton, dressing, and flatbread brands, including Marzetti, New York Bakery, Sister Schubert’s, Flatout, Aunt Vi’s, Reames, Mamma Bella’s, Romanoff, and Chatham Lodge. In addition, Lancaster makes licensed products including Olive Garden dressing, Jack Daniel’s mustard, and Hungry Girl Flatbreads. Lancaster’s products are distributed through retail grocery channels, as well as to 17 of America’s 25 most popular national restaurant chains. In 2017, 68% of sales were in non-frozen foods, with 32% coming from frozen foods. In 2017, 95% of sales were generated in the U.S. Source: Lancaster Investor Presentation With 55 consecutive years of annual dividend increases, Lancaster Colony is [...]
General Electric: Another Dividend Cut Expected in 12 to 18 Months
General Electric (GE) announced a slew of major strategic initiatives today that will ultimately result in another dividend cut within 12 to 18 months. I estimate the dividend could be reduced by as much as 35%. Specifically, the company decided to spin-off its healthcare segment (23% of profits in 2017) and divest its ownership stake in energy company Baker Hughes (BHGE). The healthcare spinoff is expected to happen within the next 12 to 18 months, while the separation from Baker Hughes will take closer to 2 to 3 years. Source: GE Investor Presentation The remaining GE will consist of its Aviation, Power, and Renewable Energy businesses, along with GE Capital. The Wall Street Journal provided a helpful graphic [...]
Starbucks (SBUX)
Shares of Starbucks (SBUX) dropped 9% today as investors digested the company’s disappointing update about its expected growth this quarter. Specifically, management now expects just 1% growth in global same-store sales (locations open at least a year) in the current quarter, below prior expectations for 3% growth. Additionally, Starbucks announced plans to “optimize” its U.S. store portfolio at an accelerated pace in its 2019 fiscal year. Management plans to close about 150 underperforming stores, which is up from a historical average of around 50 annually. While 150 store closures represents only around 1% of the company’s total U.S. locations, it sends a signal that America’s coffeehouse market could be more saturated than investors previously believed. Perhaps increasing [...]
Big news: An all-new Simply Safe Dividends available today!
Have you ever wanted to receive email alerts when your holdings change their dividends, see a company's dividend yield history, track mutual funds in your portfolio, export your portfolio to a spreadsheet, or have table headers lock at the top of your screen? We've spent the last 18 months building, testing, and improving an all-new version of Simply Safe Dividends that makes all of those things possible and much more. Today you can begin using it! But first, this is not an upsell announcement or anything like that. Upgrading to the new site is completely free, and there is no obligation to switch. We will continue maintaining the original site you've been using in case you do not [...]
Thoughts on PPL’s Recent Underperformance
Regulated utilities are often a core component of a conservative income portfolio thanks to their predictable earnings, generous dividends, and defensive profile. However, PPL (PPL) has been anything but defensive lately. The stock has lost 26% over the past year, including dividends. While rising interest rates have weighed on the performance high-yielding, slow-growing companies, the broader utilities sector (XLU) is down just 5% during this time. Meanwhile, the S&P 500 Index (SPY) has returned 16%, outperforming PPL by an astounding 42%. Simply put, PPL has continued to be a big disappointment. The one thing PPL has going for it is that management has maintained and even increased its dividend during this period. When combined with its plunging [...]