Dividend Stock Thoughts
An Investment in Knowledge Pays the Best Interest
Benjamin Franklin
Global Leader in Gold Seeks To Dig Out Copper Niche
• 4% projected dividend yield for 2024.
• Gold prices should benefit from economic instability, persistent inflation, deficit spending, high debt, and a global move away from the dollar.
• Newmont is the world’s top gold producer, annually outputting 5.3 million ounces of gold and significant quantities of silver, copper, zinc, and lead.
• NEM’s main production assets are strategically located in politically stable regions.
• NEM benefits significantly from gold price increases, adding $400 million in annual free cash flow for every $100/oz rise in gold prices.
• The major acquisition of Newcrest closed in November, significantly expanding the gold and copper asset base.
GFI Poised to Grow Its 3% Dividend with Expansion and Optimization
• 3% projected dividend yield for 2025.
• Gold prices should benefit from economic instability, persistent inflation, deficit spending, high debt, and a global move away from the dollar.
• Production is concentrated in geopolitically stable areas like Australia and the Americas, with limited geopolitical risk compared to competitors.
• Low-cost greenfield expansion and disposal of older mines should drive down company-wide all-in-sustaining costs.
• The Salares Norte project will open in April 2024 and add 600k ounces by 2025 at only $700/oz in all-in sustaining costs.
• Salares Norte will drive double-digit low-cost growth in production.
High Dividend Yield Remains Anchored by Grocery Stability
• 9.7% distribution yield, 125% coverage from funds from operations.
• Grocery Anchors drive traffic, as 94% of grocery demand is met through physical storefronts.
• Strong occupancy rates, with a 94.1% overall rate and 99.3% in grocery space.
• 100% renewal rate on grocery-anchor spaces, 90% on connected retail locations in the last quarter.
• Average new rent is 16.4% higher than the expiring rent in the quarter.
Video: Everest Group (EG) Raising Premiums and Profits with Compelling Low Valuation
• 1.9% dividend yield, EG is targeting over 13% shareholder return.
• Natural disasters are becoming more frequent and more intense, with primary insurers facing restrictions on premium hikes.
• Reinsurance rates have sustained tailwinds, with Everest realizing a 26.9% increase in premiums.
• Even in the face of increased catastrophe claims, the combined ratio in all segments of the company has improved. Reinsurance combined ratio dropped 340 bps to 88.2%, and primary insurance dropped 120 bps to 91.5%.
• International expansion effort in the primary insurance area resulting in premium growth of 13.5% year over year.
• Strong EPS growth to an expected $61 per share in 2024
• Compelling low valuation with a PE of 6
Civitas CIVI Permian Pivot Yields Massive 9% Dividend Yield
• 2.9% Base Yield, paying out 50% of average TTM quarterly Free Cash Flow as a variable dividend.
• 582k acres in low-cost basins in the US, expecting to have 280 Mboe/d in production by the end of 2023.
• Total 2024 production is expected to increase significantly, with quarterly production growing by at least 16% to 325 Mboe/d (thousands of barrels of oil equivalent per day).
• Entered the oil-rich Permian basin, significantly increasing its production targets by 101 Mboe/d in 2023 and 168 Mboe/d in 2024.
• These recent acquisitions are expected to surge earnings above $15/share in 2024, with 2024 guidance pointing to $1.8 billion in free cash flow.
• OPEC+ production cuts and Mideast uncertainty could put upward pressure on pricing, bringing WTI oil back to the $80/bbl area.
• Strong balance sheet, targeting a debt-to-EBITDA ratio of 0.9x by the end of fiscal 2024.
• 15.6% pullback from its $82.63 high is an attractive entry point in our opinion.
Video: Civitas CIVI Permian Pivot Yields Massive 9% Dividend Yield
• 2.9% Base Yield, paying out 50% of average TTM quarterly Free Cash Flow as a variable dividend bringing full yield to 9%.
• 582k acres in low-cost basins in the US, expecting to have 280 Mboe/d in production by the end of 2023.
• Total 2024 production is expected to increase significantly, with quarterly production growing by at least 16% to 325 Mboe/d (thousands of barrels of oil equivalent per day).
• Entered the oil-rich Permian basin, significantly increasing its production targets by 101 Mboe/d in 2023 and 168 Mboe/d in 2024.
• These recent acquisitions are expected to surge earnings above $15/share in 2024, with 2024 guidance pointing to $1.8 billion in free cash flow.
• OPEC+ production cuts and Mideast uncertainty could put upward pressure on pricing, bringing WTI oil back to the $80/bbl area.
• Strong balance sheet, targeting a debt-to-EBITDA ratio of 0.9x by the end of fiscal 2024.
• 15.6% pullback from its $82.63 high is an attractive entry point in our opinion.
JCI Using Green-Dominance to Pivot to High-Value Services
• 2.62% Dividend Yield.
• JCI’s focus on sustainable products, constituting about 55% of its revenue, aligns with global environmental goals and market trends.
• Building Solutions is shifting focus toward service-oriented business, allowing for predictable cycles and higher margins.
• Short-term weakness in the Global Products segment and Asia-Pacific installs, with secular tailwinds in sustainable product offerings and growth in the high-tech economy.
Toyota (TM) Hybrid Dominance Continues: Hybrid Cars are Having a Moment Amid Electric Car Skepticism
•Hybrids — which get great gas mileage and average under $40,000 — are a happy medium for many.
•That has some carmakers rethinking their product offerings, at least in the short term.
•Toyota and its Lexus luxury brand now offer 26 “electrified” models — more than any other carmaker
•Toyota has long favored a mix of powertrain choices, and has stood apart from rivals for its reluctance to race too quickly into pure EVs.
General Dynamics’ Diverse Defense Portfolio Key Part of Modernization
• 2.16% Dividend Yield
• The Navy aims to procure 55 ships over the next five years, indicating sustained demand for maritime defense capabilities.
• Notable increase in ordnance production due to global conflicts, with plans for a 600% output increase as soon as 2025.
• Army and Navy are covering significant expansion expenses as part of an “industrial base modernization” program.
• Nearly $100 billion backlog, with a company-wide 1.4-to-1 book-to-bill.
Hasbro’s 6.1% Dividend Yield Pays as We Wait for Recovery
• 6.13% Dividend Yield.
• The company is undergoing major restructuring to focus on its core brands, offload the costly entertainment segment, and implement cost-saving measures.
• The company aims to save $220 million annually by the end of 2023, increasing to $300 million by 2024, by reducing its workforce and offloading non-core divisions.
• The Wizards of the Coast and Digital Gaming segment shows robust growth and high margins, now constituting 30% of Hasbro’s revenue.
• The Consumer Products segment faces challenges due to the macroeconomic environment but contains high-selling brands like Transformers.
Insuring Success Through $380 Million in Cost Savings
• 1.38% Yield, $1 billion left on repurchase authorization.
• Expecting an increase in free cash flow in to $1 billion in 2024.
• WTW’s strategic cost-saving program aims to deliver $380 million in annualized savings by fiscal 2024.
• Strength in every business, with new clients and higher fees driving results.
• Demographic trends provide secular tailwinds.
Video: Perrigo’s Pivot to OTC Products Produces a Bulwark Against Economic Uncertainty
• 3.63% dividend yield, we believe the company’s earnings will grow by 10% per year.
• Repositioning toward consumer-facing health brand progressing with divestitures and acquisitions. Power player in consumer staples.
• Opill prescription birth control approved for moving to OTC (Over The Counter) usage.
• Baby formula operation is undergoing expansion to allow for an additional 100 million units in volume per year, in the face of global shortages of baby formula.
