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Tim McAleenan Jr.

 
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  • Nathan's Hot Dogs: Perfect Balance Sheet And 12.5% Annual Growth
    Thu, Sep. 4 NATH 3 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 76 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 33 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.
  • Avery Dennison: The Opportunity Created By The 2010 Dividend Cut
    Wed, Jul. 30 AVY 2 Comments

    Summary

    • Avery Dennison cut its dividend to $0.80 in 2010, and this has provided an avenue for the company to repurchase meaningful amounts of stock and clean up the balance sheet.
    • The company is currently repurchasing over 5% of its stock annually, and growing earnings by 7% organically.
    • This stock is not for everyone, as profits declined considerably during the financial crisis and some investors may prefer to avoid the potential volatility during recessions.
  • My 2 Concerns About General Electric's Synchrony Spin-Off
    Wed, Jul. 30 GE 64 Comments

    Summary

    • General Electric intends to repurchase stock with the proceeds of the Synchrony share swap, and GE does not have a great track record of repurchasing stock.
    • This spin-off has an element of "throwing the baby out with the bathwater" to it, as the consumer private label credit card division is a sturdy cash cow.
    • These concerns are hopefully offset by the strong industrial business that is growing by 8% annually, and the slightly low dividend payout ratio that sets the stage for dividend growth.
  • A High-Quality Dividend Stock Never Covered Before On Seeking Alpha
    Wed, Jul. 30 BMTC 22 Comments

    Summary

    • Bryn Mawr, despite its small size, managed to grow its dividend during the financial crisis from $0.54 to $0.56 per share.
    • Bryn Mawr has a clean balance sheet, with no pension obligations, preferred stock, or debt obligations due within 5 years.
    • This stock is not for everyone, as some investors are reasonably hesitant to pay almost 2x book value for a bank stock.
  • The Linn Energy 2-Step: Reinvest, Then Stop Reinvesting
    Tue, Jul. 29 LINE, LNCO 29 Comments

    Summary

    • While portfolio construction typically begins with owning the highest-quality names first, I wanted to outline a strategy that begins with selecting high income generating companies initially.
    • Someone who has owned Linn Energy and reinvested the distributions over the past five years would now have an annual yield-on-cost of over 30%.
    • After reinvesting for a period of time (such as five years), it can be an act of prudent risk management to take those distributions and deploy them elsewhere.
  • Why It Can Be Self-Destructive To Compare Yourself To The S&P 500
    Tue, Jul. 29 SPY, ABBV, ABT 160 Comments

    Summary

    • Many high-quality investments, such as Johnson & Johnson and Abbott Laboratories, underperform against the S&P 500 for extended periods before delivering long-term outperformance.
    • In IBM's case, the company has been growing at 9-10% annually while only delivering 4% returns, suggesting it could be foolish to sell a growing company prematurely.
    • If you are personally underperforming against the S&P 500, it can be tempting to engage in the practice of "selling low" by exiting a stock at an inopportune time.
  • What Happens When Berkshire Hathaway Pays A Dividend A Decade From Now?
    Mon, Jul. 28 BRK.B, BRK.A 30 Comments

    Summary

    • The benefit of buying a company like Berkshire Hathaway years before a dividend payout arrives is that you can build a nice capital gain and simultaneously avoid tax interference.
    • Buffett and Munger have dropped hints over the years that Berkshire Hathaway will eventually pay a dividend, although neither man has explicitly come out to say it.
    • The best investors to benefit from buying Berkshire today are those that are buying shares within a taxable account and possess a 10+ year time horizon.
  • $3,000 Annual AT&T Dividends Are Like An Aesop Fable Sprung To Life
    Mon, Jul. 14 T 118 Comments

    Summary

    • Because AT&T has only grown at 2% in the past ten years, it can be easy to dismiss the company as a potential investment.
    • Despite the slow growth, AT&T has added 70% to your share count total if you chose to reinvest over the past decade.
    • Over the course of a ten-year investment in AT&T, you can reasonably collect almost $0.16 in annual dividends if you reinvest on the path to getting there.
  • Ensco Seems Primed For 20% 5-Year Annual Returns
    Sun, Jul. 13 ESV 31 Comments

    Summary

    • Ensco historically trades at 8-9x cash flow; currently, the company is on sale for 6.3x cash flow.
    • The company is still growing earnings substantially due to Floater growth and high profit margins with ultra-deepwater operations.
    • Furthermore, the company pays a $3 dividend, which is a nice cushion against the stock's historically strong volatility that could understandably scare some investors away.
  • Anheuser-Busch And SABMiller Merger: Don't Count On It
    Sun, Jul. 13 BUD, SBMRY 8 Comments

    Summary

    • The company currently carries $49.1 billion in debt, as a result of its 2008 bid to buy St. Louis-based Anheuser-Busch.
    • It is expected that if the company would have to take on $60 billion in debt to buy SABMiller, it would make Anheuser-Busch a company with $100 billion in debt.
    • Furthermore, anti-trust regulators would likely require significant shedding of SABMiller assets before such a deal ever materializes.
  • Visa Is Only Expensive If You Can't Think 5 Years Ahead
    Sun, Jul. 13 V 109 Comments

    Summary

    • A cursory analysis may indicate that Visa looks expensive at almost 27x earnings.
    • However, investors may have been thinking the same thing in 2010 when the stock climbed from $65 to $97 per share and traded at 25x earnings.
    • If you accept the consensus that Visa will be making $16 per share five years from now, then the company looks quite intriguing.
  • Bank Of America Is My Best Subversive Dividend Idea
    Fri, Jul. 11 BAC 46 Comments

    Summary

    • Bank of America currently makes $10-$11 billion in annual profit and can readily support a $3 billion dividend payout.
    • Bank of America presents a margin of safety in terms of stock price, as the $15 share price trails the $21 per share book value.
    • The value lies in the fact that too many folks are looking to the bank's admittedly troubled past and are ignoring its intriguing future ability to create wealth.
  • Gilead Sciences Has A Realistic Path To $100
    Mon, Jul. 7 GILD 58 Comments

    Summary

    • Gilead does an excellent job of maintaining ownership over its active drug ingredients, and this creates cash cows that add significant contributions to cash flow per share figures.
    • The company is ruthless at repurchasing its own stock (it even repurchased its stock throughout the financial crisis) and is set to retire 5-6% of its outstanding shares.
    • The only concern with Gilead is that it may not be able to maintain its 44% profit margins indefinitely, as charging $1,000 per pill for Sovaldi may prove unrealistic.
  • I Found The Cheapest Stock In The Stock Market
    Sun, Jul. 6 ANR 162 Comments

    Summary

    • Alpha Natural Resources only trades at 20% of its book value, making it effectively the cheapest stock in the stock market.
    • In times of normal profitability, the company regularly trades at 2-3x book value, suggesting room for significant capital appreciation if steam and coal rebounds.
    • This stock is not for conservative or retirement investors, as the lack of profitability in the past 3-4 years puts this company in the realm of speculative investing.
  • Micron Is Up 135% In The Past Year: Should That Bother Anyone?
    Sun, Jul. 6 MU 25 Comments

    Summary

    • Although Micron's price increase of over 135% in the past year might seem excessive, the price growth is backed up by cash flow growth and improving fundamentals.
    • Most significantly, sales figures are expected to double when comparing the 2014 figures to 2012 figures, and yet, the 2014 figures should report higher operating margins as well.
    • The cash flow growth and improving margins more than compensate for Micron's 135% price hike in the past twelve months, indicating that the criticism of Micron's valuation is incorrect.
  • Linn Energy: Intriguing 5-Year Investment If You Want Lots Of Income
    Sun, Jul. 6 LINE, LNCO 77 Comments

    Summary

    • Linn's ability to offer a starting distribution yield of nearly 9% is enticing for income investors.
    • More importantly, that distribution appears safe, as the distribution payout should only be around 60% of this year's expected cash flow.
    • This company, however, is not for everyone as it carries over $9.4 billion in debt.
  • The Truth About IBM No One Comes Out To Say
    Fri, Jul. 4 IBM 88 Comments

    Summary

    • The notion that IBM needs to grow revenues in order to be a successful investment is a myth that underestimates the extent of the company's buyback.
    • Even though revenues have declined 3-4% in total since 2008, the company has still managed to grow profits per share by over 60% and raise dividends by over 90%.
    • Despite lower revenues entering 2014 compared to 2008, IBM has still managed to return 8.84% annually.
  • The Goldilocks Approach To Bank Stock Dividends
    Thu, Jun. 19 BAC, WFC, C 10 Comments

    Summary

    • If you want the "hot porridge" bank stocks that offer significant potential for capital appreciation and dividend growth, look to Citigroup and Bank of America.
    • If you want to purchase the banks situated in the middle, look to JPMorgan and Wells Fargo.
    • And on the "cold" end of the growth spectrum is M&T Bank, which offers great stability but little likelihood of significant capital appreciation and substantial dividend growth.
  • Philip Morris International Is Where The Fairly Valued Dividends Are Hiding
    Thu, Jun. 19 PM 12 Comments

    Summary

    • Seeking fairly valued dividends in this market? Look no further than Philip Morris International, which is trading at under 17x earnings and growing earnings by 9% annually.
    • The reason why the stock is not trading at a premium, like most S&P 500 companies, is because volume shipments declined by 7.5% in the European Union this past year.
    • Despite the concerns about Philip Morris International's volume shipments in the EU, the tobacco firm still managed to increase profits from $5.17 to $5.26 per share.
  • Bank Of America Reminds Us That Value Investing Is Not Popular Investing
    Wed, Jun. 18 BAC 45 Comments

    Summary

    • Although Bank of America is not a darling stock after its mortgage woes have persistently refused to dissipate, the company offers opportunity for long-term shareholders because of its ongoing legal woes.
    • The discrepancy between the company's $15-$16 share price and $20-$21 book value should catch your attention as a potential value investment.
    • Gut check: Bank of America made over $11 billion in net profits last year, and is creating $0.30 per share in normalized profits every ninety days.
  • What Would Benjamin Graham And John Neff Pay For Realty Income?
    Sun, Jun. 15 O 44 Comments

    Summary

    • For investors who are satisfied paying fair value for Realty Income, a price range in the $37-$41 area would be appropriate (depending on whether you use 2013 or 2014 figures).
    • Investors that demand a 33% discount from intrinsic value won't find Realty Income appealing until its price hits the middle of the twenty dollar per share range.
    • Given the generally upward direction of the firm's funds from operations figure and a high starting dividend yield, paying slightly above fair value may make sense to some investors.
  • What Is Annaly's Dividend Payout Over A Full Business Cycle?
    Sun, Jun. 15 NLY 19 Comments

    Summary

    • Annaly currently trades at a 3-5% discount to book value, which puts the mortgage REIT on the radar of value investors.
    • The last time Annaly offered investors a 10% starting yield before the financial crisis, it gave investors $1.18 in dividend income on every $1 invested over ten years.
    • However, this stock is almost certainly not for everyone, as volatile earnings and steep dividend cuts are an inevitable reality of this company's business cycle.
  • Discover Financial Is Using A Financial Crisis Transformation To Fuel Higher Dividends
    Sat, Jun. 14 DFS 15 Comments

    Summary

    • Discover Financial is not the same company today as 2007: it has increased its cash on hand eight-fold, almost tripled its profit, and diversified its earnings stream away from loans.
    • Despite a recent dividend hike of 20%, the current payout ratio is still only 19.35% relative to last year's earnings.
    • This stock may not appeal to all income investors, however, as its current dividend yield is only 1.5%.