Dividend Stock Thoughts
An Investment in Knowledge Pays the Best Interest
Benjamin Franklin
Cigna Delivering Growth at a Great Price
• 1.58% Dividend Yield.
• Growing customers 9% to 165 million total relationships as of 3Q23.
• Diversified portfolio for sustained growth and resilience.
Diageo Targets Robust Market Share and Market Growth in Spirits
• 2.56% dividend yield
• $1 billion in share buyback program for fiscal 2024.
• Focusing on “Super-premium” brands as younger consumers shift toward quality over quantity.
• Dominant Spirits Portfolio makes up 80% of sales.
• Tequila is growing globally with European consumption doubling every year since 2021.
• The global alcoholic beverage market expected growth of 10.3% per year to 2028.
Pet and International Area Provide new Aisle for Growth for General Mills
• 3.6% dividend yield.
• A dominant force in the consumer-staples market, with a strong foothold in North America.
• Despite volume decreases in 1Q24, it recorded a net sales growth of 4%.
• As North American growth moderates, GIS’s pet and international segments present significant growth opportunities. Existing business is recession-resistant .
Video: Riley Exploration Permian (REPX) Looks Attractive for Dividend at 4.5% Yield
• $6 EPS for E2023, with earnings rising to $9 for E2024 if oil prices stay elevated.
• Acquisition did add leverage to the balance sheet, but the company has strong free cash flow.
• Mostly, 60%, oil, which is beneficial with crude prices holding up better than natural gas prices.
• Dividend increase, expecting to make regular dividend payments on a go forward basis.
PAAS Has Glittering Prospects with Asset Optimization
• 2.64% dividend yield, new capital allocation policy pending.
• Increasing demand in the industrial sector, especially for electrification and photovoltaic cells, is expected to continue driving silver demand.
• 2023 estimates project significant increases in output in silver and gold: 21-23 Moz of silver (a 19% YoY increase) and 870-970 Koz of gold (a 63% YoY increase).
• Development in silver with La Colorada Skarn, approval expected in 2H23. The gold expansion focuses on Phase 3 of the Jacobina mine, which could boost production significantly by 2025.
• PAAS divested from several non-core assets, expecting to save over $80 million annually in maintenance charges and increase its cash position by almost $600 million while still retaining specific royalties.
BTG’s Golden Horizons with Growth Footing
• 1.9% dividend yield, EG is targeting >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.
Everest Reaches Peak Performance with Rising Premiums and Business Expansion
• 1.9% dividend yield, EG is targeting >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.
CVS Offers Recession-Resistant Growth with Transformation
• 3.5% Dividend Yield, $14.5 billion in stock repurchase remaining.
• M&A period over, now focusing on integrating new businesses and strengthening the balance sheet.
• Healthcare as a sector is recession-resistant.
• Sees cost recovery by 2H24, with the conclusion of a cost optimization program expected to yield $700-800 million in savings.
• Expected addition of $2 billion to EBITDA by FY26 from Oak Street and a significant internal referral network from Signify Health.
Qualcomm Drives into the Future with Apple Renewal and Auto Deals
• 2.8% Dividend Yield, $5.5 billion in stock repurchase remaining.
• QCOM’s renewed agreement with Apple to supply 5G chips through FY26.
• The company anticipates significant growth in the Automotive sector, underscored by recent partnerships with BMW and Mercedes to supply infotainment chip systems.
• QCOM holds 140,000 patents across over 18 billion devices, an estimated 38% market share in RF IoT technology.
• Nuvia SoC ARM chipset to launch in FY24 for Windows, competing with Apple’s M1 and M2.
Aging Demographics and Medicare Advantage Growth Heal Outlook for Healthcare Sector
• On a secular basis, a demographic shift toward an older population has tailwinds in care needs and individual spending per visit. Medicare Advantage (Medicare Part C) will grow to become the largest payor by 2026.
• Healthcare is recession-resistant, with the largest payors, Medicare and Medicaid, being price agnostic toward care.
• A concentrated effort in the sector to expand margins through rate increases, cutting administrative costs, and reducing contract labor.
• US spending on healthcare will grow at a 7.1% 5-year CAGR – outpacing GDP by an estimated 240bps.
LHX Growth Prospects Take Off with Space wins and Defense Spending
• 2.72% Yield.
• Huge backlog which expanded by 25% year over year to $25 billion. Increased book-to-bill to 1.18x across the entire company.
• Global rearmament campaign, NATO militaries ex United States increasing equipment spending by 24.9% year over year. The US approved the largest defense spending package in history.
• Expanding the total addressable market in space, with a 1.7x book-to-bill, and the acquisition of Aerojet Rocketdyne, adding $2 billion per year in revenue.
VFC Has Deep Value Proposition with a 6.2% Dividend Yield
• 6.2% dividend yield.
• Stock has pulled back 81% from January 2020 and now represents a deep value proposition with low PE and a big dividend yield.
• VFC’s strongest brands, Vans and The North Face, are pivoting to a more digital DTC (Direct-to-Consumer) presence.
• VFC is guiding towards a minor recovery for this 2024 holiday season and is entering the holiday season in an improved logistical and inventory position.
• Despite headwinds, there is significant brand recognition and value in VFC’s premium retail brands.
