Category: Equity Investing

Dividend Yield Should Not Drive Your Stock Selection Process

I received an email from a new follower asking me for my opinion regarding Southern Company (NYSE: SO) given that it has a dividend yield of ~4.75%. I quickly looked at the 5 year compound average dividend growth rate (“CADGR”) and noticed an anemic 3.50%.

This brings me to the objective of this post which is to demonstrate that dividend yield should not drive your stock selection process. I will compare SO’s projected dividend income stream with that for 3 companies with far lower current dividend yields but much higher CADGR. Continue reading “Dividend Yield Should Not Drive Your Stock Selection Process”

Broadridge Stock Analysis – It Continues to Meet My Expectations

Summary

  • As a long-term Broadridge investor I am pleased with its FY2017 results and optimistic it will meet its FY2018 projections. Both were released August 10, 2017.
  • Broadridge continues to make bolt-on acquisitions to enhance its product/service offering with the Spence Johnson acquisition being the most recent.
  • The repurchase of Issued and Outstanding shares and Dividend increase trends continue.
  • BR’s shares are very rarely inexpensive but are currently reasonably valued if you use consensus adjusted EPS estimated for FY2018.

Continue reading “Broadridge Stock Analysis – It Continues to Meet My Expectations”

ADP Stock Analysis FY2017 – Pershing Square’s Interference is Not Warranted

Summary

  • This ADP Stock Analysis is based on FY 2017 results as at June 30, 2017 and FY2018 projections.
  • ADP is currently the 3rd most heavily shorted company in the data processing and outsourced services sector.
  • Pershing Square Capital Management L.P. has accumulated an 8% stake and has put forth an amended proposal in an effort to gain 3 seats on ADP’s Board.
  • ADP has a history of 42 consecutive years of dividend growth and its shares have appreciated considerably in value over the long-term.
  • I view ADP shares as expensive at the moment. I do not, however, have any intention of selling our shares even though wealthy influential investors feel a correction is overdue.

Continue reading “ADP Stock Analysis FY2017 – Pershing Square’s Interference is Not Warranted”

Alimentation Couche-Tard Stock Analysis – A Canadian Success Story on Which I Will Pass

Summary

  • This Alimentation Couche-Tard analysis is based on FY2017 results as at April 30, 2017 released August 3, 2017.
  • Alimentation Couche-Tard is the second largest convenience store operator in the world behind Japan’s Seven & I Holdings.
  • The company has taken on considerable debt to assist with its dramatic growth over recent years.
  • Operating margins are thin and FCF/share as at FYE2017 was lower than as at FYE 2014 and FYE2015 although it did bounce back from the FYE 2016 level.
  • Any expected return on an investment in this company will need to come from capital appreciation as the dividend is immaterial.
  • Alimentation Couche-Tard does not fit my investor profile and I will not be investing in the company.

Alimentation Couche-Tard Inc. (TSX: ATD.B) reports its financial results in USD. Its stock, however, is only traded on the TSX. The stock price and per share values reflected in this post are, therefore, reflected in CDN dollars. Continue reading “Alimentation Couche-Tard Stock Analysis – A Canadian Success Story on Which I Will Pass”

Enbridge Inc. Stock Analysis – An Investment Opportunity Right Under My Nose

Summary

  • This Enbridge stock analysis is based on Q2 2017 results and management’s forecast for the remainder of fiscal 2017 which was presented August 3, 2017.
  • Enbridge has excellent long-term growth opportunities and currently has one of the strongest portfolios of in-service and future growth pipeline projects.
  • It currently has $31B of diversified low-risk projects in various stages of development of which $7B are to be placed in service in the 2nd half of 2017.
  • Enbridge has a track record of rewarding dividend conscious investors with steadily increasing dividends over the past 22 years.
  • I recently acquired Enbridge shares for the FFJ Portfolio after completing my analysis.

All figures are expressed in Canadian dollars unless otherwise noted. Continue reading “Enbridge Inc. Stock Analysis – An Investment Opportunity Right Under My Nose”

MasterCard Stock Analysis – This and VISA are 2 Stocks I Will Never Sell

Summary

  • This MasterCard stock analysis is based on Q2 2017 results released July 27, 2017.
  • MA’s projected EPS for FY 2017 and FY 2018 from multiple analysts have been revised upward subsequent to my February 1, 2017 post.
  • MA recently received a favorable ruling from the Competition Appeal Tribunal (CAT) and no longer faces the $18B British Class Action Suit filed against it.
  • While MA’s dividend yield is currently sub 1% I expect dividend income and capital gains will yield a high single digit or a low double digit return over the long-term.
  • MA and VISA are two stocks I will never sell.

Continue reading “MasterCard Stock Analysis – This and VISA are 2 Stocks I Will Never Sell”

Genuine Parts Company Stock Analysis – This Company Suits My Investor Profile

Summary

  • This Genuine Parts Company stock analysis is based on its Q2 2017 results which were reported July 20, 2017.
  • Total sales were up 5% to a record setting $4.1B, net income was $0.19B, and EPS increased 1% to $1.29 versus Q2 2016.
  • YTD FY2017, businesses with approximately $0.18B in annual revenues have been acquired. GPC has also made a minority investment in a market leading industrial distributor in Australia.
  • Management is of the opinion the long-term fundamental drivers for its U.S. automotive aftermarket business remains sound.
  • With a track record of 61 consecutive years of dividend increases, GPC is a member of the exclusive Dividend King group of companies (50 consecutive years of dividend increases).

Continue reading “Genuine Parts Company Stock Analysis – This Company Suits My Investor Profile”