Dividend Stock Thoughts

• Current Dividend Yield 6.22%.
• WBA is scaling in the healthcare service sector and is expected to boost adjusted operating income in FY24, with sales growth increasing 22% to $2 billion in this segment.
• Growth in commitments from insurance payors, adding 2 million additional customers to the network.
• Significant cost savings program targeting $800 million for FY24, bringing the total to $4.1 billion in cost savings since FY19 This does not include the nearly $5 billion in divestitures since FY22.
• Continued commitment to dividend even amidst stronger-than-expected headwinds.

• Despite the current high prices and shortages in the automotive market, Toyota expects strong unit and net income in FY24 and new expansion in North America opening by FY25.
• Pledges will expand BEV (Battery Electric Vehicle) production to reach 1.5 million by 2026 and 3.5 million by 2030.
• Announced a buyback and dividend policy change, with a $2 billion per year maximum repurchase agreement and a dividend policy reflecting cash-on-hand.
• Strong management, willing to sacrifice short-term revenue gains for long-term customer loyalty and sales volume.
• Vehicle unit sales are expected to increase 7.8% companywide. Revenue is expected to increase by 2.5-5% for FY24 depending on Forex.
• Due to a more favorable mix of EVs and alleviating supply constraints will boost operating income, growing it 9.6% year over year.

These stocks look good from a valuation perspective. Many people elected to delay surgeries until COVID-19 died down and hospitals resumed normal operations. Even in the face of macroeconomic conditions these companies are recession resistant.

Energy stocks have pulled back dramatically with weak oil and natural gas pricing. 4 stocks with strong fundamentals, good valuation and healthy dividends.

Broadcom (AVGO) has been sold as the stock has spiked to well above our estimate of value. AVGO has stock has gotten caught up in the AI (Artificial Intelligence) bubble and is due to retrace in our opinion.

• 3.3% dividend yield, 100% operating cash flow conversion and further growth in EPS expected for FY23.
• Repositioning toward consumer-facing health brand progressing with divestitures and acquisitions. Power player in consumer staples.
• Tax situation resolved, $974 million in losses mitigated.
• Potentially game-changing approval with 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.

AT&T (symbol T) has streamlined its business by divesting AT&T TV, Warner Media, and DirecTV. Fiber expansion and streamlined business combined with cost improvements of $6 billion in run rate should drive improved profitability. However, we do have concerns about the debt level and the company’s ability to reach its FY25 goals. AT&T offers income generation and an option on the expectations that a streamlined business will produce better profitability which should drive near-term earnings improvements even though the secular long-term growth potential is very modest.

SAMG is a stable company with a solid business model in a difficult industry. Its focus on ultra-high net worth is the best area of the industry. OCIO, Institutional and International give SAMG some nice runways for growth. We believe in management and that SAMG provides a stable dividend distribution that will grow over time. We believe the stock is undervalued.

• 6.3% Dividend Yield.
• TV and Media business units have been divested.
• Fiber and cellular 5G are the focus.
• Pullback in price marked an attractive entry point for dividend-seeking investors.
• Fiber expansion offers a growth opportunity.

• 2.9% yield with 60 consecutive years of dividend increases.
• Spending 15% of revenue on R&D, over 50 drugs in the 5-year approval pipeline. Strong blockbuster portfolio, with 3 novel therapies expected to be approved in FY23.
• Spin-off of consumer segment, repositioning primary JNJ business unit to be more pharmaceutical and medical device oriented.
• Potential settlement on the horizon for Talc lawsuit, the independent legal unit reportedly has the 75% of claimants required for bankruptcy to move forward.

• 4.3% forward yield, paying out $0.72 per year. Expecting EPS growth of around 12%.
• Expanding offerings to include OCIO (Outsourced Chief Investment Officer).
• Strong free cash conversion, converting 57% of EBITDA to free cash flow.
• Despite downturn in market, SAMG still has strong AUM growth of 28% since its inception in 2003.