Dividend Stock Thoughts
AN INVESTMENT IN KNOWLEDGE PAYS THE BEST INTEREST ~ Benjamin Franklin
Recent Sale: Leggett & Platt
We have sold Leggett & Platt (LEG) based on macroeconomic slowdown. As we enter an economic downturn, consumers will be spending less money on furniture and bedding, and auto manufacturers will sell less vehicles. This means that LEG will enter a more difficult operating environment and will see contraction on its earnings and cashflow
8.5% Dividend for Hanes Brands Is Compelling
• 8.5% forward dividend yield, with a 37% payout ratio.
• Dividend yield is highest amongst its peers.
• Valuation, as measured by, price to earnings remains better than sector.
• Consolidation of operations, offloading unprofitable brands and moving distribution to a more centralized model.
• Increasing inventory and repositioning with recession resistant SKUs.
Big 10% Dividend – Inflation Growth Kicker – Medical Properties Trust
• Big Dividend of 10% that grows with inflation.
• Estimated fair value of $14.50.
• Stock down over 50% from its high of $24.13
• One of the largest hospitals owners with 45,000 beds across 10 countries.
• Rent increases based on inflation are permanent even once inflation returns to normal.
• Managed COVID crises without cutting dividend.
• Improving balance sheet with selective sales.
• Improving tenant cashflows makes cashflows less risky
Big 10% Dividend with Inflation Growth Kicker – Medical Properties Trust – MPW
Medical Properties Trust (MPW) is a global REIT focused on investment in hospital real estate with 434 properties across 10 countries, with a footprint across 4 continents. MPW is one of the largest non-government owners of hospitals in the world, with a portfolio of roughly 45,000 beds and just over $19 billion in assets.
Video: 8 Dividend Stocks That Look Compelling Today
High Dividend stocks that look to be compelling from both a dividend and valuation standpoint are worth investigating even in this volatile market. While I believe in keeping larger than normal cash positions and am doing so myself, here are some stocks that we own and are compellingly valued:
Everest RE Premiums and Margins Climb
• 2.4% Dividend with 9% expected dividend growth.
• Well-managed reinsurer, consistently growing portfolio without substantially changing the risk profile.
• Improving loss ratio combined with increasing premium revenues expanding margins and profits.
• Investment income bolstered by rising interest rates.
• Expanding into European markets.
• Experienced management targeting over 13% shareholder returns.
4.6% Dividend Yield for Suncor – Free Cash and Favorable Market
• 4.6% Dividend Yield.
• Exceeding revenue targets amid favorable oil markets.
• Activist investor focused on efficiency improvements has replaced 3 board members, forcing Suncor to look at extensive divestitures.
• Improvement campaign expected to clear up $2.15 billion in free cash by 2025.
• Working on reducing carbon emissions.
• Undervalued with Estimated Fair Value of $51.00 per share.
Sachem Capital: Disciplined, Diligent, and Lightning Fast
• 12.9% forward dividend yield with announced increase in 1Q22.
• Focused lender in Real Estate with no distractions.
• Huge advantage in being able to adapt quickly.
• Extremely fast by focusing on experience and collateral value of as differentiated from traditional cash flow lending.
• Sub 3% foreclosure rate, with weighted average yield reaching 11.6% at end of FY22.
Lincoln National’s Fortress Balance Sheet Pays Out Consistently
• 3.7% forward yield, paying out $1.80 a share in FY22.
• Strong risk-based capital ratio of 400%, with risk-sharing measures in place for COVID-19 related mortality.
• Lowest in sector risk based on net amount at risk divided by account value
• Strong return on investments, with 97% of investments receiving an investment grade rating
Big 5.1% Dividend Yield for B2Gold Driven by Strong Free Cash
• Highest dividend in the sector at 5.13% forward yield. Annualized Dividend of $0.16 per share.
• Strong pool of development and exploratory assets, with some of the lowest costs in the sector.
• Very strong free cash position.
• Strong valuation with high gross margin (63.5%).
• Capex spending to add onto existing mines and fund growth and replacement.