Dividend Stock Thoughts

• 4.2% base dividend, 50% of free cash flow going toward share repurchases.
• Colorado regulatory uncertainties have historically pressured valuations, but the early 2024 agreement has delayed major risks until 2028.
• Civitas has partially shifted to the Permian Basin, emphasizing cost reduction in drilling operations rather than outright production gains.
• Still some minor expansion in DJ Basin, advancing with 4-mile lateral drills in premium-priced high-grade oil.

• 2.2% Dividend Yield
• Loyal customer base, with loyalty members making up 80% of sales.
• 85% of the supply chain originated in North America, mitigating tariff risk.
• Produces 55% of its end products in-house, with 40% of products on offer being seasonal only.
• Peer leader in sales per square foot with $1,074/sqft in sales.
• Expanding into ‘adjacent’ markets like products marketed at men and products marketed to Gen Z to boost new-customer growth.

• 3.14% Dividend Yield
• 13 consecutive years of dividend increases, most recently increasing by 2% in November 2024.
• Despite overlapping downcycles in pork and beef markets, Tyson generated $1.5 billion in free cash flow.
• Shifting more production to high margin value-added products like pre-made food and pre-seasoned meat across all segments.
• Targeting leverage ratio of net debt to EBITDA of under 2.0x, currently 2.6x with most debt maturing past 2027.

• 2.0% Yield.
• Strong secular volume tailwind from aging population, with Medicare Advantage holders having a higher average revenue-per-test.
• AI (Artificial Intelligence) in pathology testing should drive high margin growth.
• Tailwind from more bespoke testing, with genetic testing seeing a market-wide spending growth of 8% and 5% volume growth according to Avalon.
• Increasing leverage to 2.5-3.0x debt to EBITDA to enable more freedom in aggressive acquisitions.
• Strong M&A profile, purchasing Canadian provider LifeLabs for $1 billion, which will generate $710 million in additional annual revenues by 2025.

• 2.84% Yield.
• Industry-leading 90% of revenue comes from working timberland rather than leasing it for harvesting rights (stumpage)
• Largest timberland holdings in North America with more than 10.5 million acres.
• Long-term tailwinds from historic pent-up demand and lows in new housing.
• Timber assets generally appreciate with inflation and tree growth.

• 5.0% Yield.
• Offering services to enhance margin including more small-business mix and specialized medical logistics services.
• Consolidating 200 sorting centers, with the new automated counterparts offering a reported 30% efficiency improvement.
• Expects to generate $5.8 billion in free cash in 2024, adding to its already massive $6.3 billion cash position.
• Industry-leading capital efficiency, with a return on invested capital median of 27% for the last 3 years.

• FedEx’s DRIVE and Network 2.0 programs aim to streamline operations, saving $6 billion annually by 2028 without sacrificing top line growth.
• Despite a recent 9% stock price drop, FedEx offers a 4.0% buyback yield and 2.1% dividend yield, making it attractive for long-term investors.
• The expiration of the USPS airmail contract poses short-term challenges but could improve margins through better fleet utilization and cost management.
• FedEx maintains strong financials with $5.9 billion in cash and a net debt to EBITDA of 1.9x, ensuring stability amid economic uncertainties.

• 2.2% Yield.
• LW holds #1 market share in North America, and #2 for the rest of the world for frozen-potato products.
• Dominance in the frozen-potato product market, being the provider for French-fries for customers such as McDonalds, Chic Fil A, Arby’s and Sonic.
• Transitioning to a volume-focused growth strategy rather than pricing-focused.
• Expects headwinds in restaurant traffic to begin to alleviate in the middle of 2025.