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These are our most recent articles. Also see which stocks have been this week’s best and worst performers.
Caterpillar (CAT): 4.3% Dividend Yield, But Where is the Bottom?
From 2012 to 2014, CAT’s stock generated an annualized return of 2.8%, significantly trailing the market’s annualized return of 20%. Year-to-date, CAT is down 22% and lags the market by more than 20%. As the commodity super cycle fueled by China’s unsustainable infrastructure growth continues unwinding, it comes as no surprise to see CAT struggle over the last few years. The company expects revenue to be down another 5% in 2016, marking the first stretch of four consecutive years of revenue declines in the company’s 90+ year history. CAT has experienced cyclical downturns before, but the current depressed environment seems different, more prolonged. Unlike the typical V-shaped cycle, this one is coming off of 10+ years of what looks to [...]
Walmart (WMT): Profits Collapse, 3.3% Yield – What Now?
At Simply Safe Dividends, we love nothing more than to find an easy-to-understand, time-tested, high quality dividend grower trading at a reasonable valuation. Not surprisingly, we frequently review our list of all 52 dividend aristocrats to hunt for companies that have demonstrated great consistency. During our review, we look for businesses with strong competitive advantages that protect current cash flow and, importantly, allow a company to continue growing its earnings over long periods of time. In the case of WMT, there is no doubt it has substantial competitive advantages. With over $485 billion in sales last year, WMT sold the equivalent of $66.53 worth of merchandise to every single person in the world ($485.7 billion in sales divided by an estimated [...]
AT&T (T): A High Yield Dividend Aristocrat
AT&T (T) reports its first quarterly results including DirecTV this week. We think the cost synergies management expects to generate from the deal over the next three years are reasonable – greater negotiating power to buy content at cheaper rates, marketing synergies, more concentrated truck-rolls to service customers, supply chain benefits from set-top boxes, less SG&A redundancies, and more. With wireless and pay-TV markets looking saturated, buying more subscribers via acquisition and taking out costs is a logical strategy to further enhance market share and free cash flow generation. However, we believe T’s large move into pay-TV trades near-term synergies for greater long-term strategic uncertainty. Dividend investors only concerned with the safety of T’s 5.6% dividend yield do [...]
PepsiCo (PEP) Turns in Another Great Quarter
PEP reported quarterly results last week, beating expectations and reinforcing the key reasons why we have like the stock. We continue to believe PEP has a clearer and, as of today, brighter future than Coca-Cola (KO). The ongoing trends that drove PEP’s strong quarter suggest that the strategic differences between PEP and KO will only become more important going forward. For these reasons, PEP remains one of our favorite dividend stocks. Before we get into another PEP vs KO debate, let’s quickly review the points from PEP’s quarter that stood out to us. PEP’s organic sales grew more than 7% (compared to 5% growth last quarter), with strength in both snacks (+10%) and beverages (+5%). Earnings per share, excluding [...]