Sunday, February 18, 2018

Weekend Reading Links - February 18, 2018

For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:


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Friday, February 16, 2018

Diageo: Shiny Bottles Lead to Shiny Dividends

Summary

  • Diageo is a leader in premium spirits industry, it will surf the current economic tailwind.
  • Emerging markets start to get some traction as middle class seeks recognitions and claim a higher status through their lifestyle.
  • Unfortunately, DEO is overpriced right now.

Investment Thesis

DEO will benefit from the good standing of the current economy. Consumers around the world are optimistic in their future, and they are more willing to spend. DEO enjoys strong pricing power, and its brand portfolios are protected with premium names. Diageo also invests in an important sales team in order boost its product’s popularity at all times. The company will continue to pay a solid 2.50% dividend. Finally, the rising income in emerging markets will eventually lead to additional customers for Diageo and its premium spirits. Unfortunately, the DDM calculation doesn’t justify the current price.


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Thursday, February 8, 2018

BUD-WEIS-ER, Frogs & Fuss Aren’t Enough for Me to Drink

Summary

  • After its merger with SAB Miller, Anheuser-Busch InBev has proven to the world that it will “own the beer market” across the world.
  • The company is dominant in many countries with 50%+ market share in Brazil, Latin America and Belgium.
  • Unfortunately, the dividend perspectives don’t justify the current price.

Investment Thesis

Do you remember those BUD-WEIS-ER frogs in the company’s commercial a long time ago? I’m not sure I was old enough to drink beer back then but I surely enjoyed the frogs. In fact, Anheuser-Busch InBev (BUD) always had this magic touch to create viral ads. Over the years, the beer maker has expanded its brand portfolio to the limit of the world.
BUD is a leader in a stable market that is not ready to decrease. The company is producing over 500 million of hectolitres (as compared to 204 million for Heineken) and enjoys economy of scale. The brewer will continue to grow through acquisitions and will also increase its presence in emerging market, notably in China. BUD is a solid dividend payer with a 3.50% yield offering income seeking investors the opportunity to invest in a well-diversified company. Unfortunately, BUD seems overvalued at this time.


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Wednesday, February 7, 2018

Top Investment Picks for 2018

As the new year rolls out, its time to share the annual investment pick contest that I run. This is the 3rd year in the running. This is merely meant to be a fun experiment to run and collect top investment picks for 2018 from a community of investors I regularly interact with. There are still some great picks from the 2016 & 2017 top picks, and I invite you to check them for ideas. Remember that investing is a long game — so, focusing on short intervals like a year is not prudent — even though this contest focuses on one year return. Plenty of older picks may still present long term value.
The rules were simple: Pick one investment (stock, bond, fund, commodity, cryptocurrency or any other form of investment security), and present a short & quick investment reason behind the pick. I will track this progress over the year and provide quarterly updates on this blog.

Top Investment Picks for 2018

Before I present the picks, I would like to remind the readers that these are simply picks based on current outlook and each investor should not take this as investment advice. If you decide to pursue these investments, please do your due diligence before investing in any of the securities mentioned.
Without further ado, here are the top picks from the investing community for 2018.
All About the DividendsBank of America Corp (BAC)
“The bank’s financials continue to recover after the financial crisis, with rising interest rates forecasted next year I think investors will see more stock buybacks and dividend increases.”
Angry Retail BankerAT&T Inc (T)
“I’ll go a bit more conservative than everyone here and say $T. Last I checked, the dividend for AT&T was pushing 6%. People are overreacting to the pushback on the Time Warner deal. It’s still a great business with a strong legacy and steady cash flow. The only real problem is its debt, but either the deal goes through and that extra cash flow pays down the debt, or it doesn’t go through and they don’t take on that extra debt. Either way, AT&T is an amazing and safe company that’s yielding in the high 5%’s, and it’s one of the rare exceptions to the time tested rule of avoiding high yielding stocks due to their danger.”
Arbor Investment PlannerGamestop Corp (GME)
“As a deep value investor I like to buy companies that are completely out of favor. Investors believe GME is Blockbuster Video, but I believe they are wrong. This stock is priced as if GME will eventually go bankrupt. However, management has been preparing for declining revenues by diversifying and preparing for future growth. In the meantime they are generating tons of cash flow and sell at a bargain basement price of 3.3 EV/EBITDA, a 14% Free Cash Flow Yield, and a dividend yield in excess of 8.4% at the current price of $18.07.”
David BradySilver
(no reason provided)
Dependable DividendsUEX Corp (TSE:UEX)
“I’m repeating my pick from last year. Obviously, UEX doesn’t represent the safe, dividend growth type stocks I usually write about. But seeing as this is a stock picking competition, I always like to swing for the fenses. Last year, UEX performed good enough to earn me a 7th place finish. This year, I think it could get me to the top of the pack… or dead last.
Mr. Market has still priced uranium irrationally low. Spot rates still sit below the industry’s cost of production. That means miners lose money on every pound of uranium they haul out of the ground and make it up in volume. This situation is clearly not sustainable. As we saw last year from Cameco, miners will cut production, supplies will tighten, and uranium prices will slowly rise. That could send beaten down names like UEX soaring.”
DGIfortheDIYExxon Mobil Corp (XOM)
“I’m bullish on crude in 2018, as I think this run to $60 is just the beginning. XOM shares haven’t really participated in the run-up yet like CVX has, so I think there is some catching up to do. XOM isn’t as levered to the price of oil as some other smaller E&P’s, but the risk/reward at a 3.7% is compelling.”

This article was written by Roadmap2Retire. If you enjoyed this article, please consider subscribing to my feed at Roadmap2Retire.com/feed


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