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Tim McAleenan Jr.

 
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  • This Is The Third Most Attractive Time To Buy AT&T In The Past Generation
    Yesterday, 7:07 PM T 49 Comments

    Summary

    • AT&T has only traded at a cheaper valuation twice in the past twenty years (during 2009 and 2010).
    • For every 100 shares of AT&T that you owned and reinvested since 2004, you would have an additional 70 shares today due to the power of reinvestment.
    • The recipe for success with AT&T is: buy at an attractive valuation plus reinvest the annually rising dividend each year.
  • A Few Financial Concerns About Philip Morris International
    Fri, Dec. 12 PM 85 Comments

    Summary

    • Philip Morris International has raised its dividend payout ratio from 30% in 2008 to 78% today.
    • The company now carries $29.5 billion in debt, compared to $13.3 billion in 2010.
    • The high debt load and payout ratio mean the days of financial engineering to fund dividend growth are over, and investors should demand a discount before buying new shares.
  • Edwards Lifesciences: A Quiet, Mid-Cap Gem Sitting In Plain Sight
    Wed, Nov. 26 EW 3 Comments

    Summary

    • This is an excellent company that has delivered 20% annual returns since 2000.
    • The core earnings per share ought to grow by 15%-20% annually in the coming years.
    • The most significant concern about Edwards Lifesciences is the current valuation, which is a bit high.
  • Take Advantage Of Deere's Small Dip From Excellency
    Wed, Nov. 26 DE 30 Comments

    Summary

    • Deere is an excellent company that grows revenues, earnings, and dividends at north of 10%.
    • The company is attractively valued in the 10x earnings range.
    • The profits and share price are volatile over time, and this is something that investors may be wise to take into account.
  • Building Wealth With An Overvalued Stock?
    Tue, Nov. 25 NKE 10 Comments

    Summary

    • By historical accounts, the current P/E ratio of 32 indicates that Nike is overvalued compared to historical norms.
    • Despite this overvaluation, Nike is still building wealth as earnings per share are growing at 14% annually.
    • Holding an overvalued stock has benefits, such as receiving the recent 16.7% dividend hike.
  • Rarely Discussed: The Double Margin Of Safety Dividend Approach
    Tue, Nov. 25 BBL, BHP 52 Comments

    Summary

    • A great way to achieve a double margin of safety is to insist on both a cheap valuation plus a high dividend yield.
    • A good example of a company that meets both of these criteria is BHP Billiton, trading at only 10x-11x profits and offering a well-supported 4.6% dividend yield.
    • The inevitability of P/E expansion, plus the accumulation of dividends, will provide investors two layers of safety in the coming years.
  • Why You Shouldn't Buy Automatic Data Processing Now
    Fri, Nov. 14 ADP 10 Comments

    Summary

    • ADP's payout ratio in the past decade has increased from 30% to 60%.
    • The P/E ratio is approaching 30 (the highest valuation in the past decade).
    • The company lost its AAA credit rating after the spin-off of CDK Global.
  • The Conditions Are Ripe For Value Investing With This Stock
    Mon, Nov. 3 MTW 4 Comments

    Summary

    • Manitowoc has fallen 36% since this summer in response to stagnating revenues, creating a valuation well below traditional P/E metrics.
    • It has compounded at a rate of 12.86% since the 1990 IPO, and at a rate of 11.52% over the past ten years.
    • This stock is not for everyone, as the price of the stock fell from a high of $48 in 2008 to a low of $2 during the recent financial recession.
  • Paccar: An Excellent Investment If You Can Stand The Heat
    Mon, Nov. 3 PCAR 4 Comments

    Summary

    • Over the past twenty years, shares of Paccar have compounded at an annual rate over 17%.
    • The company continues to grow revenue in the range of 10%, and replacement truck parts is a growing portion of this company's business.
    • However, this company experiences significant profit declines and dividend cuts during economic recessions, and therefore, this company will not be attractive to everyone.
  • The Search For Current Income And Nearly 11% Annual Returns
    Mon, Nov. 3 NU 3 Comments

    Summary

    • With dividends reinvested, Northeast Utilities has returned 14% over the past decade. Currently, it seems primed to offer 11% annual returns from here.
    • It is able to offer sound returns by only paying out 60% of profits as dividends, and reinvesting the retained capital at a rate of 8%.
    • A concern about the stock is that it may not secure such lofty rate hikes in the future, as the Federal Energy Regulatory Commission forced Northeast to lower some rates.
  • Safety Insurance: A 4.5% Dividend Yield Growing At 12% Annually
    Sun, Nov. 2 SAFT 22 Comments

    Summary

    • Safety Insurance is one of the few financial firms that managed to grow its dividend payout during the financial crisis.
    • It offers investors a starting yield of 4.5%, especially impressive in today's low-interest climate.
    • The company has a perfectly clean balance sheet with only minimal liabilities in the form of annual rentals.
  • Becton, Dickinson And Co. Continues To Print Money Like It's Going Out Of Style
    Wed, Oct. 29 BDX 21 Comments

    Summary

    • Becton, Dickinson and Co. has a storied dividend history, with annual raises dating back to 1973.
    • The medical firm is currently growing earnings per share at a healthy 9% rate.
    • This stock is not for everyone, as its low starter yield may be below some investors' entry requirements.
  • Altria Is Priced Like A Riskless Stock
    Wed, Oct. 29 MO 47 Comments

    Summary

    • Altria the business is currently trading at a valuation of over 20x earnings, a historical high this millennium.
    • The core business is still growing along nicely, but the price of the stock does not offer a margin of safety.
    • This is still a company experiencing unit volume declines of 3-4% annually, and 84% of the company's profits come from cigarettes.
  • What Getting Ahead Of The Dividend Growth Curve Looks Like
    Tue, Oct. 28 ADT 8 Comments

    Summary

    • To capture a high dividend growth rate with an investment holding, it is useful to own a company that is growing profits per share and increasing its payout ratio simultaneously.
    • An example of this type of company is ADT, which is growing its payout ratio and has reduced its share count by 26% during the 2012-2014 stretch.
    • The company is still repurchasing its stock, growing organically at a moderate pace, and offering current investors the opportunity to own a company that is increasing its payout ratio.
  • Plains All American Can Give You A 22% Yield On Cost Within 10 Years
    Wed, Oct. 1 PAA 7 Comments

    Summary

    • Investors in Plains All American have generated a 22% yield on every dollar invested ten years ago, as the result of distribution growth and reinvestment.
    • Because the firm is growing cash flow per unit at a rate of 14% annually, it seems reasonable to conclude that distribution growth in the 10% range is likely.
    • The firm is not perfect, as it funds its heavy investments and large distribution growth by accessing the debt markets to issue new shares and carries $8 billion in debt.
  • Elbit Systems: Finally, A Cheap Stock With High Growth
    Tue, Sep. 30 ESLT 4 Comments

    Summary

    • Elbit Systems, which currently trades in the 13-14x earnings range, is only trading at a slight premium to the 11x earnings valuation that the stock saw during the financial crisis.
    • The company has a $6 billion backlog of work to perform and has an impressive record of double-digit growth.
    • The company does, however, regularly cut its dividend, and this may deter some income-oriented investors.
  • Corning: Some Warts, But Ultimately A $30 Stock Within 5 Years
    Tue, Sep. 30 GLW 19 Comments

    Summary

    • Corning has recently gotten serious about a stock buyback program, taking off 100 million shares, or about 7% of company stock, within the past twelve months.
    • The optical fiber/cable division, which accounts for 10% of Corning's business, has been growing at north of 20% and ought to spike the company's stock price.
    • Corning does come with some warts in terms of past record, as its current profits are still lower than 2007 levels.
  • Ingersoll-Rand: This Is What Unpopular Management That Creates Value Looks Like
    Tue, Sep. 30 IR 8 Comments

    Summary

    • Ingersoll-Rand took 50 million shares off the market in the financial crisis year of 2009.
    • This shrewd move helps explain why the company has experienced 36% annual returns since 2009.
    • However, the company created value at the expense of the dividend, and its approach is not appropriate for every investor.
  • AmerisourceBergen: Pricey, But With A Growth Record To Justify It
    Tue, Sep. 30 ABC 2 Comments

    Summary

    • AmeriSource is currently trading at its highest valuation in the past five years since the financial crisis.
    • However, the company has grown earnings per share at 16.5% annually over the past five years.
    • Although this stock is not for everyone, lucrative partnership deals that require little capital investment may warrant a higher market multiple to pay for the company and still do well.
  • Airgas: One Of Those Great Dividend Stocks That Nobody Notices
    Tue, Sep. 30 ARG 10 Comments

    Summary

    • Airgas has raised its dividend at a rate of 33.5% annually over the past five years, and offers the prospect of dividend growth in the 10% range going forward.
    • This stock is not for everyone, as the 1.96% starting dividend yield may prove too low for some.
    • The company trades on the high end of its fair value range, which is typically 20x-22x earnings during normal economic conditions over the past decade.
  • Marathon Petroleum: Great Buybacks, Good Dividends, So-So Organic Growth
    Tue, Sep. 30 MPC 2 Comments

    Summary

    • Marathon Petroleum generates less total profits in 2014 than 2011.
    • However, the company maintains a low dividend payout ratio in the 20%-25% range to permit for significant stock repurchases.
    • Because Marathon has reduced the share count from 357 million in 2011 to 270 million-275 million in 2014, it has actually increased earnings per share from $6.67 to over $7.50.
  • Northrop Grumman: Using Buybacks To Cover Up Years Of Poor Revenues
    Tue, Sep. 30 NOC 5 Comments

    Summary

    • From 2011 to 2014, Northrop Grumman has reduced its share count from 253 million to the 204 million-207 million range.
    • This has allowed the company to report revenue per share growth of $104 per share to $116 per share over that timeframe.
    • However, revenue-per-share growth is entirely driven by buybacks, as the company actually generates less total revenue now compared to 2011.
  • Nathan's Hot Dogs: Perfect Balance Sheet And 12.5% Annual Growth
    Thu, Sep. 4 NATH 5 Comments

    Summary

    • Nathan's Famous Hot Dogs has reduced its share count by 27% since 2007.
    • Sales have been growing at 15.5% and earnings have been growing at 12.5% for the past five years.
    • The company has a perfect balance sheet, with no debt, pension obligations, leases, or preferred stock.
  • Kohl's: A Dividend Growth Company That Passes All 3 Tests
    Mon, Aug. 25 KSS 9 Comments

    Summary

    • Kohl's trades at an attractive valuation of under 15x earnings, a price the company never saw before the financial crisis.
    • The company has been able to grow earnings per share at a healthy clip, largely due to a buyback program that has eliminated 40% of outstanding shares since 2005.
    • The company ought to be able to increase its dividend payout ratio in the coming years, as the dividend is only a few years old and moving towards the industry.
  • Philip Morris International: The Dividend Stock To Buy In 2014
    Sun, Aug. 24 PM 78 Comments

    Summary

    • Because the company hasn't grown earnings per share significantly in the past two years, Philip Morris International's stock trades at a fair valuation.
    • Most likely, the opportunity to buy the stock at a good price will dissipate once the company's usual 9% earnings per share growth rate makes a comeback.
    • The reason for optimism is that, despite difficulties, revenues have been growing at 4.5% and the Marlboro brand has been gaining market share worldwide.
  • The Truly Battle-Tested Bank With 8%-9% Growth
    Mon, Aug. 18 CM 26 Comments

    Summary

    • The Canadian Imperial Bank is one of the very few large-cap banks that did not cut its dividend during the most recent financial crisis.
    • Over the past ten years, the company has grown earnings and dividends by 8%-9% while also having a conservatively managed balance sheet to maintain dividends.
    • This stock may not be for everyone as the current valuation is over twice book value.
  • Kellogg: Waiting For A 10% Drop Shouldn't Be Hard
    Mon, Aug. 18 K 16 Comments

    Summary

    • Kellogg investors should be patient, as the opportunity to purchase the stock in line with historical norms occurred during eight of the past fifteen years.
    • Kellogg does not show signs of growth that would warrant a higher than usual valuation.
    • For dividend investors, holding onto Kellogg likely makes sense because the dividend will keep growing and the quality of its profits are extraordinarily high.
  • Molson Coors: No, Don't Buy It Now
    Mon, Aug. 18 TAP 1 Comment

    Summary

    • On a P/E basis, Molson Coors is trading at its highest valuation since the 2005 merger between Molson and Coors.
    • The price of the stock has increased 55-60% since last August, yet the company's business prospects have not improved commensurately.
    • This stock may appeal to dividend investors who like the 13% dividend growth rate over the past five years and a dividend payout ratio that is only 42% of profits.
  • AGL Resources: The 1998 Dividend Has Been A Haunting Ghost
    Sun, Aug. 17 GAS 3 Comments

    Summary

    • AGL Resourced held its dividend steady at $1.08 per share in 1998, at a time when it did not generate profits to support the payout.
    • Since AGL kept its dividend payment throughout its turbulent times, the company suffered a much lower earnings growth rate because the dividend consumed so much of the company's profits.
    • Going forward, AGL is a much more attractive investment opportunity because revenues are growing by 7.5% and the dividend only accounts for half of the company's profits.
  • The Only Beer Stock That Could Realistically Triple Over The Medium Term
    Tue, Aug. 5 BREW 35 Comments

    Summary

    • Craft Breer is attractive because it has low debt and low capital spending per share relative to the cash flow it generates.
    • The company is slated to grow earnings per share at north of 20% annually due to leveraging its distributorships through Anheuser-Busch's independent vendors.
    • The company is not for everyone, as it pays no dividend and frequently reports losses in the first quarter.
  • What The Coca-Cola Critics Are Missing
    Sat, Aug. 2 KO 36 Comments

    Summary

    • Despite reasonable concerns about soda volume declines, the company is still able to grow earnings at 7% due to price increases.
    • The company has a rather diversified brand of non-soda offerings, with over a third of its business consisting of juices, water, and sports drinks.
    • The eponymous Coke brand only accounts for a little over a quarter of profits.
  • Consolidated Edison: You're Only Buying The Dividend
    Thu, Jul. 31 ED 25 Comments

    Summary

    • Consolidated Edison is posting $1 billion less in revenues this year compared to 2014.
    • Regulatory challenges, capital investment requirements, and a high debt load make significant growth unlikely for this venerable electric utility.
    • The positive is that the starting dividend yield is 4.4% and has been growing for four decades, but the dividend increases have been minimal this past decade.