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These are our most recent articles. Also see which stocks have been this week’s best and worst performers.
Valero (VLO) Offers a High Yield, But is the Dividend Safe?
As Warren Buffett continues adding to his stake in oil refiner Phillips 66 (PSX), many investors are wondering if Valero (VLO), another refiner, is an equally attractive dividend stock. Valero offers a high yield of 4.4%, trades at less than 10x trailing earnings, and has more than doubled the S&P 500’s return over the last five years. Dividend growth has been outstanding as well. Valero’s quarterly dividend payment has increased from 5 cents per share in 2010 to 60 cents most recently. Offering a strong combination of yield and income growth, many conservative dividend investors are wondering if Valero is a good fit for their portfolios or if the company’s best days are behind it. After [...]
Target (TGT) Lowers 2016 Guidance. What About the Dividend?
Target (TGT) reported disappointing second-quarter earnings results this morning, sending the stock down more than 5%. The company lowered its full-year guidance and, like many other brick-and-mortar retailers, remains challenged as it tries to navigate the evolving consumer landscape. With Warren Buffett recently reducing his stake in Wal-Mart by nearly 30%, many dividend investors are wondering if Target offers value or is a trap. As the company struggles to generate sustainable growth, the health of its dividend is worth revisiting as well. Let's take a closer look at Target's earnings results and whether or not the stock is attractive for conservative income investors. Investors interested in a deep-dive on Target's business can review my earlier thesis [...]
Dividend Safety Analysis: General Motors (GM)
The record level of new car sales registered in the U.S. in 2015 certainly has many in the automotive industry celebrating. General Motors (GM) is even one of Warren Buffett’s top dividend stocks. However, industry groups are predicting the auto production seasonally adjusted annual rate (SAAR) to decline over the next few years. Given its tumultuous history, General Motors is nowhere close to becoming a dividend king, but can GM at least sustain its dividend during the next downturn in the auto cycle? Business Analysis Overall, the automotive industry is not a great industry to invest. It is characterized by cyclicality, tense labor relations, and high levels of competition and capital intensity. Unlike many of the dividend [...]
Dividend Safety Analysis: Cummins (CMI)
Cummins (CMI) reported a double-digit sales decline during the second quarter of 2016 and expects full-year revenue to slump about 10%. Lower truck production in North America and dismal global demand for off-highway vehicles and power generation equipment are weighing on the company. As the company’s key end markets continue reeling, investors are beginning to wonder how safe Cummins’ dividend payment is. After all, cyclical industrial businesses are not often the best place to find safe dividends. Before analyzing Cummins’ dividend, let’s quickly review the business itself. My full thesis on the company can be seen here. Cummins has been in business for nearly 100 years and recorded total sales of $19.1 billion in 2015. [...]