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  • SABMiller Makes Altria A Strong Dividend Idea [View article]
    Ernie Mac,

    That's a fantastic statement. Thanks for the comment.

    Kind regards,

    The Valuentum Team
    Oct 20 10:11 PM | 3 Likes Like |Link to Comment
  • Why Clorox Is Slowly Going Private [View article]
    alf2011,

    That's correct. It does not equal, but it is similar, and makes for a good discussion -- especially if readers are to think about just how many shares Clorox has bought back in recent years. We think that's the most important takeaway, not getting caught up on the specifics of buybacks, LBOs, or MBO. If you're interested in learning more about investing, please do visit our website. There's not further need to respond. Thanks again.

    Kind regards,

    The Valuentum Tam
    Oct 19 12:01 PM | Likes Like |Link to Comment
  • A Calculation Of Philip Morris International's Fair Value [View article]
    Thanks DividendDeveloper. We appreciate the comment.

    The Valuentum Team
    Oct 18 08:50 PM | Likes Like |Link to Comment
  • Estimating E.ON's Intrinsic Value [View article]
    malc9141:

    Thanks for your contribution, and I hope you'll continue sharing your thoughts in the future.

    Kind regards,

    The Valuentum Team
    Oct 18 08:49 PM | Likes Like |Link to Comment
  • Why Clorox Is Slowly Going Private [View article]
    Thanks for the comment TF17. That's one of the points of the article.

    Kind regards,

    The Valuentum Team
    Oct 18 08:47 PM | 1 Like Like |Link to Comment
  • Why Clorox Is Slowly Going Private [View article]
    analysis first,

    Thanks for the observation. Clorox's shares are trading above the fair value estimate, as outlined in the article.

    Kind regards,

    The Valuentum Team
    Oct 18 08:44 PM | 1 Like Like |Link to Comment
  • Why Clorox Is Slowly Going Private [View article]
    Hi Rudester,

    Thanks for the comment. Per the graph in the article, there were 214 million shares in 2004. During the past 10 years, Clorox has bought back roughly 40% of shares outstanding.

    Kind regards,

    The Valuentum Team
    Oct 18 08:44 PM | Likes Like |Link to Comment
  • Why Clorox Is Slowly Going Private [View article]
    Hi johnsleyba,

    It's an interesting way to look at the company, thanks. Typically, in a LBO, a firm can be leveraged and its shares bought. In an MBO, management buys the shares. In this case, Clorox is slowly going private itself by buying back its shares in the open market. It's not something that you're going to read about in a textbook, but it is essentially the same concept. Thanks for the comment.

    Kind regards,

    The Valuentum Team
    Oct 18 08:42 PM | 1 Like Like |Link to Comment
  • Why PPL Is Our Favorite Utility [View article]
    Thanks investing4me!

    The Valuentum Team
    Sep 30 10:39 AM | Likes Like |Link to Comment
  • Raise Of Dividend To 18.5% Makes Western Asset Mortgage Look Attractive [View article]
    Why not start at this one:

    http://bit.ly/1rnMUfJ

    Thanks,

    The Valuentum Team
    Sep 29 02:18 PM | Likes Like |Link to Comment
  • Why We Like Campbell Soup [View article]
    dealraker,

    Thank you for the question. Pasted below is a link to our firm's information:

    http://www.valuentum.com

    Kind regards,

    The Valuentum Team
    Sep 27 11:24 AM | Likes Like |Link to Comment
  • What We Think Of Southern Company [View article]
    Thanks richjoy403.

    I think the key consideration is the difference between the near term and the long term when it comes to dividend analysis. Management teams and boards can do just about anything in the near term. For example, there are numerous examples of boards raising their dividends only to have to cut them in the ensuing months.

    The Dividend Cushion is a measure of risk to the dividend and a measure of capacity for future dividend increases. Southern Company's management is targeting a $0.07 per share annual increase in the dividend. This is achievable in the near term. However, just because the board can do what it wants in the near term doesn't mean the risk isn't there.

    Importantly, however, we're not expecting a dividend cut at Southern Company. We've outlined that in the article. However, because of the structure of the firm, Southern doesn't have significant capacity to keep raising the dividend, even at a 5%-8% annual rate, a pace one might expect for an entity with good dividend growth prospects. Southern's dividend growth rate is ~3%, and we'd rate that as poor to very poor. This may be fine for some investors, but when compared to other companies with mid-single-digit, high-single-digit and dougle-digit growth rates, it is ranked accordingly. Again, it is what it is. We help investors sort through stocks.

    The Dividend Cushion is completely consistent in highlighting the lack of excess cash capacity for Southern to be a top-tier dividend growth idea. For income, investors should be cognizant of the balance sheet and the dividend obligations already expected. There is tremendous value in the Dividend Cushion in this respect. Just like one has to get familiar with certain measures of valuation and how the agencies rate credits, the Dividend Cushion is similar. It speaks of the risks and excess capacity.

    Thanks again for the comment. We appreciate your thoughts, as always!

    The Valuentum Team
    Sep 26 09:48 AM | 1 Like Like |Link to Comment
  • What We Think Of Southern Company [View article]
    richjoy403,

    Thanks for your continued contributions to our work.

    One thing we wanted to say richjoy403: do remember the dot-com bubble? Do you remember at that time when everyone started to value and evaluate companies differently? They used to say, hey, let's value XYZ.com on the number of clicks it gets (and not on earnings or free cash flow).

    Or perhaps you may even remember the phase in the 70s/80s, when every company changed their name to XYZ 'Tech' (adding the Tech to the name) to show how innovative they are, and why investors should apply a larger multiple to shares (because of the name). Do you remember?

    The suggestion we have is to understand that adjusting the framework is a classic no-no. When investors start ignoring traditional metrics like those in the Dividend Cushion--specifically the three items: free cash flow (CFO-capex), net balance sheet (cash less debt), and cash dividends paid--there's only trouble lurking.

    It's important to recognize the pure objectivity of the Dividend Cushion, which considers a firm's future free cash flows relative to its oncoming dividend payments (and net cash/debt position). Think of it like a PE ratio but for dividend health. No PE ratio is going to fit every company. They're different. Utilities get low PEs, while fast growing tech companies get big ones.

    But should we run out and say, this PE ratio doesn't make sense, let's change it. No. The PE ratio is derived from the stock price and earnings. It just IS. In a similar light, the Dividend Cushion IS. We know that for utilities, the ratio is going to be poor. Just like we know the PE for utilities is going to be lower than for high-growth tech companies. Just like it's important to understand why the PE ratio is lower for utilities, it is also important to understand why the Dividend Cushion ratio is lower for utilities.

    Every company generates free cash flow, and for dividend payers, a cash flow coverage measure is helpful, not only in conjunction with a dividend payout ratio, but also in assessing the future capacity for additional increases. For emphasis: every company generates free cash flows (either a source or a use). This is the one universal metric to value any asset. Accounting earnings can be manipulated, top-line growth rates enhanced, but cash is cash. It is not clicks on a website or a change in the name. It is cash. Real hard cash. And this is what investors count on.

    The Dividend Cushion ratio for Southern Company is not 0 because we think it should be. It is 0 because the firm's net cash/debt position plus its future expected free cash flows--the sum of which dividend by its future expected cash dividends (including management's estimates for $0.07 per annum growth) says it is. Just like the PE ratio for Southern Company is what it is. Investors should know why. Investors need to ask the questions why about the Dividend Cushion. In doing so, they become better investors.

    The value of the Dividend Cushion has tremendous value, and especially with utilities. There are two specific examples in utilities, which the Dividend Cushion highlighted as having severe risk of a cut: Exelon and First Energy. The Dividend Cushion has also highlighted other companies risks of being cut. The ratio is a numerical calculation based on a numerator and a denominator. Its track record is as follows:

    http://bit.ly/124FCv4

    We're not going to change our dividend assessment to a basis on the number of clicks per site or to give a firm a higher multiple because of its name. The Dividend Cushion IS.

    UNCK:24hrs

    Thank you for your comment.

    The Valuentum Team
    Sep 25 03:56 PM | 2 Likes Like |Link to Comment
  • Teva: On The Auction Block? [View article]
    Well said Brendan. Thanks for the comment!

    Kind regards,

    The Valuentum Team
    Sep 24 03:00 PM | Likes Like |Link to Comment
  • General Mills Overpaid For Annie's, But It Probably Had To [View article]
    Thanks Alex. It is fixed now.

    Kind regards,

    The Valuentum Team
    Sep 20 03:43 PM | Likes Like |Link to Comment
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