Dividend aristocrats don't mean much to me anymore - I own two and both are down 50% presently, and both halted their 40 years of div. growth in '23-24. I could see JNJ joining that list if the current pending lawsuits turn out poorly. Some of these are very interesting, and some appear suspect to continue their flat to poor performances (ABM). Thanks Chuck - another A+ video.
Usually these lawsuits are settled after a long appeals process. A settlement of 10 bio plus and paid out over 5-10 years will hurt but won’t affect dividends in my opinion
@@yohjijames1413nah he's right. I've seen so many popular "dividend/value plays" and I've yet to see any do well. I remember some dude was hyping up T. T has been dead money forever. I've done better holding stocks in companies with growth/innovation plans that may be pricier or offer a lower dividend, but are growing instead of contracting
This type of analysis are quite educational, but you need to know more about the business, where the industry is going, competitions, etc to actually make any buy decisions. Because these graphs are showing past performance. The numbers may look great for a dieing industry/ stock and things are usually valued cheaply for a reason
Chuck, I have profited greatly from your recommendations, particularly your suggestion several years ago to buy AVGO at $300. That said, I have never liked CMCSA nearly as much as you do. The dividend is only about 20% higher than in 2018, and the share price is the same as it was in 2017. They don't hesitate to cut the dividend (2017 and 2019), and the share price swings wildly over relatively short time periods. I don't think CMCSA is a good stock to buy and hold, which is my investing preference. Thanks
Everything you said is wrong. Chasing past performance never worked. EPS doubled since 2017, which you did not mention. Comcast has 15 years of consecutive increases, so they obviously did not cut the dividend in 2017 and 2019. 5Y average increase is 9% annualy, which is not 20% higher than in 2018, obviously. Dividend is now around double than in Q1 2018.
@@Cap_management Thanks for your correction. You are right about the dividends. Charles Schwab website erroneously shows only 3 quarterly dividends for 2017 and 2019, resulting in a graph showing dividend cuts. That doesn't change the fact that the share price is about 14% lower that five years ago, when it was about $43. Also doesn't factor in cumulative inflation, which has been about 23% over the last 5 years.
At 13:04, Chuck mistakenly mentions GIS price as $140.41. I think the price was $71.22, 140.41 was the number of shares with $10,000 invested. But his point is well taken, because the current price $64.17 is lower than the price on 07/22/2016 due to very high valuation at that time.
Mr. Carnevale, MPW - Buy, hold, sell? Considering selling. Have held through the brutality of it all and at this point I'm considering just taking the losses and off setting other gains. Seriously worried this thing is going to $0.00. Any thoughts? (Obviously not advise, just looking for your opinion!) Thanks as always!
How many profitable companies went to $0.00? Its rare even for money losing company to go bankrupt these days. You exactly act as short sellers intended. Creating fake fear of company going bankrupt. People were calling for bankruptcy in 2024, which was insane.
@@Cap_management thank you for your message! I’m still holding. I think it’s pretty normal to feel the way I feel considering I’ve seen this company get cut down by 75%. But again I’m holding. And That’s for the reasons you mentioned.
@@jminter Why WHR? Why you dont talk about Meta, Amazon, Google and so many others, correctly predicted by FG and analysts as great investments two years ago? UGI will still double as share price is detached from reality. WHR is a cyclical company in middle of sharp housing slowdown. Analysts cant be right 100% of time and never will be. Past down cycles for WHR ended with 300-400% gains, so risk reward is not that bad. Share price of WBA is around 1/4 of fair value based on 2024 profits, so still can rebound like IBM, if earnings return to growth, which can happen ,as revenue is at all time high and problem is with expences, not sales. Why are so pessimistic? How do you invest? You invest based on past performance charts in turds like ARKK?
Latest dividend increase for General Mills was 1.7%. Even more mediocre than recent average of 2%. That is not raise. That is decrease every year in purchasing power. Thats why I removed GIS from my watchlist recently, despite low valuation. I would need two lifetimes to see doubling of my purchasing power of that dividend. It is better to pay 2 PE higher for SPY or any other faster growing stock or index and get higher returns with much lower risk.
Check your numbers, that was a quarterly rate. The dividend for 2024 increased 9.26%. Furthermore, the SPY is significantly overvalued and only yields 1.26%. Also, all these companies generate very strong cash flow growth. Nevertheless, you should invest according to your own objectives and beliefs.
@@FASTgraphs Dividend was raised by 1.7% from 0.59 to 0.60. 5 year average is 4%. They raise dividend in June. So next 4 quarters, dividend will be higher by just 1.7%. Which is understable, as company faces decreasing sales and no growth in earnings.
Yes, a 15 PE is considered a maximum PE that I am willing to pay for the average company, primarily because it represents a minimum earnings yield of 6.47%. In other words, I am not interested in investing in a company that grows at rates of 15% or lower that doesn’t at least offer me that minimum return from all of its current earnings. And yes, because of that, it also includes a minimum if you will, margin of safety at that level. And yes, for those reasons and others, I do consider it fair value at the same time. My point being that fair value does have a built-in margin of safety implied. In other words it’s a conservative valuation level that is both prudent and simultaneously empowers you to fully participate in the operating results of the company. However, it’s also important to add that it does not automatically imply a good rate of return. The P/E ratio (earnings yield) coupled with the earnings growth the company achieves will be the determinant of your future returns. Now with all that said, obviously valuations lower than a 15 P/E with the accompanying higher earnings yield provides higher and higher levels of safety. Hope that clarifies it for you, Chuck
@@FASTgraphs Math says that 14% grower is much more valuable, than General Mills growing 2% annualy. I dont think that surpassing 15% growth should be some magical number, which is given to us by 11th amendment from God and anything below is worth flat PE 15. Company growing 14% annualy will cut PE ratio in half in 5 years. Also the only reason why we use PE 15 is, that human brain likes rounded numbers. It has no other logical meaning. It could be as well 15.35 or 16. Any change in PE multiple also gets annualized over many years and EPS growth over time is 10 times more important than PE multiple change.
And your point is? It can go to $1 and than rebound to $70. Or it can go to zero. That's how market works. Stocks are very volatile and usually way overshoot to the upside and downside.
Presently, I have to wonder why anyone would be investing in any of these stocks when they can receive 5% +/_ on their cash. I intend to continue reducing positions and leave that money in cash until we see more reasonable P/Es. I am not convinced that the Fed will be reducing rates anytime soon and may very well have to make decision to raise them in the near future. Either way, I intend to wait for the proverbial market correction and then buy my preferred dividend stocks at a discount. General Mills & JNJ are very consistent in their growth but of greater value once the S&P corrects itself. Stocks like Amgen are downright scary IMO. Though revenue estimates were met this past Q, EPS was down 104% with net income dropping to a loss of ($113M) from $2.84B the year prior. One has to go to diluted earnings to see they are projecting a 36% drop for the year yet the stock trades at a premium P/E 30.32 as of 6/28....well ABOVE the normal P/E of 20.78 .....go figure
Because they can earn significantly more than the 5% yield over time as the dividend increases. Plus they have the opportunity for capital appreciation. Therefore, the total return potential is significantly higher than a 5% fixed return .
Long term return from stocks is 10-12% annualy, last decade even 16%. That is far above 5% in CDs. Thats why my friend. These stocks will outpace 5% CDs in 5 years and than make more money every year. Once FED cuts, your cash will go to 2%, while these stockswill keep growing dividends. Amgen is scary? 18% sales growth in 2024, 54% EBITDA growth, 70% cash flow growth and finally 107% free cash flow growth per share. GAAP earnings are not real earnings and as you can see, most probably they had some non cash impairment, as other metrics are growing strongly. You also dont deduct decrease in value of your house from your annual income. Thats why we see very little correlation between dilluted EPS and share prcie, while almost perfect correlation between real (operating) EPS and share price.
@@Cap_management I fully understand the concept. I pointed out that I don't believe the Feds will be cutting rates anytime soon. Countless companies are lowering guidance and laying off employees. Credit defaults are on the rise.....significantly. This video started out showing how bloated the SPY is. My point is that it makes no sense to me to invest in a company like Amgen with an annual decrease in their EPS of 11%, almost 90% debt/capital and after having the quarter they just had where they reported a YoY reduction in EPS of 104%. Diluted earnings estimates are $8 for the year while analysts are estimating basic earnings of $19.44...which makes absolutely no sense to me. And to top it off...I am not sure they have many more Qs ahead of them where FCF can cover their dividends.... What does Warren say.....be greedy when others are fearful and fearful when others are greedy! Well, others are greedy and have been for some time. I intend to take advantage of that greed and wait it out while collecting 5%. Granted....I am still 60% invested but will continue to harvest profits in my retirement accounts. Thanks for your comments.
While compounding is great, what most people don't get is that DRIP is REALLY BAD for any stock that has a low yield and high growth. The stock value outpaces the dividend, meaning your DRIP becomes less valuable per year. Year 1, your DRIP might be +5 shares, by year 20 it'll be +0.1 share. You can only really get these types of stocks in the first 5-10 years of investing, assuming a 20-30year investment plan. After this, the compounding effect is no longer going to benefit you in time for your retirement. Anything beyond 10years should be 4-10% stocks like BDCs, REITS, CEFs and some specific safe large cap companies that pay 5%+. Unless ofcourse your aim is to build a future for your family, in which case, by all means, you'll pass on incredible benfits regardless. Obviously if you're smart enough to start investing between the ages of 18-20 then you can get growth stocks for maybe 15 years before throwing all DRIP and deposits into higher yield stocks.
Most companies raise dividends in tandem with growth in earnings and cash flows, so share price does not outgrow dividend over longer periods of time. So basically yield of blue chip stocks tends to stay at similar levels over time. UNH yielded 1.5% in 2010 ad yield 1.7% today. Share price grew 21% annualy while dividend 24% annually. So actually dividend outpaced share price and you would buy 2 more shares from dividends this year than in 2011. So you are wrong. It would be true only if company pays flat dividend or grow dividend much slower than ePS growth, which is not that common. Reinvesting would add just 1% to total return anyway, so it has nothing to do with retirement. Who cares if you made 22% annualy or 23% annualy? Retiree will be much better off owning 23% return and driped UNH, than value traps with high yields like most BDCs.
@@Cap_management You proved his point, the first 14 years of UNH were when a person needed to be invested to have the great return, not the same 2024 on with a well established company. These companies are all well established and past their prime growth phase, a company barely growing that pays a 3% dividend is far worse than one growing 1-2% less but paying a 5-7% dividend.
Most of these stocks have flat to declining cash flows in recent years. Does not this bother you? It means payout ratio is rising and managament keeps focusing on short term and short term share price gains, but puts company into worse and worse situation. They raise dividends on flat cash flows, than all it takes is one bad year and company is in dumpster. We can look at VFC, where dumb management raised dividend by 80% during period of no growth, and company since than eliminated the dividend and got eaten alive by debt. Medtronic has flat free cash flow for 9 years now and raised payout ratio from 30 to 70%. That does not scream safety, in my opinion and makes past dividend raises irrelevant to be any indication of future raises. General Mills is so slow growing company, that it makes no sence to even consider it. Analyst forecast is for 2% EPS growth, so dividend will grow, but slower than inflation. Keep that money in US short term treasuries and wait for SPY to be below PE 18. GIS has zero appeal compared to SPY.
@@FASTgraphs Why? Amgen has growing free cash flow and some others as well. Medtronic on the other hand has lower free cash flow than in 2013, thats why payout ratio went from 24% to 70%, which is not exactly safe payout ratio. Inflation adjusted, free cash flow is down about 35% in a decade. Analysts expects Medtronic to return to growth, but that yet have to be seen. I will avoid dividend growers with no growth in cash flow, like GIS. Company growing free cash flow 2-3% annualy cannot be a good dividend growth stock. Their good days ended in 2015. Since than they barely keep with inflation.
