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Investing

Ideas and Strategies on Investing.

Previous Articles

Home Depot

2/26/2016

2 Comments

 
Home Depot is one of the best Big Box stories of all time going all the way back to 1978. It's consistency in increasing revenues, earnings and especially dividends is remarkable. If I could only own one stock that would prepare me for wealth and security in retirement, this is the one stock I'd buy.

Just today, Home Depot declared another increase in their dividend. The company now pays $0.69/share quarterly. That's a 16.9% increase
 from its prior dividend of $0.59. The company's forward yield is 2.25%. It's payable March 24 for shareholders of record March 10. It goes ex-dividend on March 8.
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The Home Depot, Inc. operates as a home improvement retailer. It operates The Home Depot stores that sell various building materials, home improvement products, and lawn and garden products, as well as provide installation, home maintenance, and professional service programs to do-it-yourself, do-it-for-me, and professional customers. The company offers installation programs that include flooring, cabinets, countertops, water heaters, and sheds; and professional installation in various categories sold through its in-home sales programs, such as roofing, siding, windows, kitchen and bath refacing, furnaces, and central air systems, as well as act as a contractor to provide installation services to its do-it-for-me customers through third-party installers. It primarily serves professional remodelers, general contractors, repairmen, small business owners, and tradesmen. The company also sells its products through online. As of the September 18, 2015, the company had 2,270 stores located in 50 states in the United States, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, Canada, and Mexico. The Home Depot, Inc. was founded in 1978 and is based in Atlanta, Georgia.
(Summary) (Company) (Chart)
25 February 2016
Price $126.86
1yr Target $142.05
Analysts 21
Dividend $2.76
Payout Ratio 51.68%

1yr Cap Gain 11.97%
Yield 2.17%

1yr Tot Return 14.14%
​
EPS (ttm) $5.34
EPS next yr $6.16
EPS next 5yr 14.39%
1yr Price Support $88.64
P/E 23.76
PEG 1.65
Beta 0.92
Market Cap $160.84 Bil
Revenues $86.70 Bil
Earnings $6.92 Bil

Profit Margin 7.98%
​
1yr EarnGR 25.26%
3
yr EarnGR 23.73%
5yr EarnGR 24.57%
1yr DivGR 21.95%
3yr DivGR 22.54%
5yr DivGR 17.05%
Quick Ratio 0.40
Current Ratio 1.20
Debt/Equity 2.74
ROA 16.20%

ROE 79.50%
​
Home Depot stores average 105,000 square feet and are organized warehouse-style, stocking a large range of supplies. Home Depot's two largest stores are located in Union, New Jersey, which encompasses 217,000 square feet of space, and in Anaheim Hills, California where it encompasses 204,000 square feet.

Home Depot Canada is the Canadian unit of the Home Depot and one of Canada's top home improvement retailers. The Canadian operation consists of 180 stores and employs over 35,000 people in Canada. Home Depot Canada has stores in all ten Canadian provinces and serves territorial Nunavut, Northwest Territories, and Yukon through electronic means (Online Sales). The Canadian head office is located in Toronto.

The Home Depot operates 106 stores in Mexico and has become one of the largest retailers in Mexico since it entered the market in 2001. The Home Depot increased its presence in Mexico in 2004, with the acquisition of Home Mart, the second largest Mexican home improvement retailer.

In December 2006, the Home Depot announced its acquisition of the Chinese home improvement retailer The Home Way. 
The acquisition gave the Home Depot an immediate presence in China, with 12 stores in six cities.
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​My Perspective


​Home Depot has been paying a dividend for decades but it isn't on the list of Dividend Aristocrats simply because they did not raise the dividend during the last recession. But they didn't reduce it either. And that's because management could see well past the recession to the beginning of the next expansion. Holders of the stock through that period are now being warmly rewarded for the wait with some hefty dividend increases. 

While Home Depot will always be subject to the overall economy, and especially the building and remodeling industry, their future looks bright. I intend to continue to add to my position in Home Depot in the years ahead through dividend reinvestment and out right purchases. 
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2 Comments

Wyndham Worldwide

2/18/2016

0 Comments

 
Wyndham Worldwide Corporation is the holding company for Wyndham Hotels & Resorts, RCI and other lodging brands. Wyndham Hotel Group offers brands in lodging franchising, vacation ownership, vacation rentals and vacation exchange. It is composed of nearly 7,400 hotels under 15 brands spanning 66 countries in 6 continents, competing in brand markets ranging from economy to upscale. Wyndham Worldwide is headquartered in Parsippany, New Jersey and has more than 40,000 employees around the world. Wyndham Vacation Ownership, headquartered in Orlando, Florida, is the largest vacation ownership program in the world. It includes a network of 203 properties, 25,000 individual units, and over 925,000 property owners. Locations are in North America, the Caribbean, and the South Pacific. Wyndham Vacation Ownership includes marketing and sales of vacation ownership interests, consumer financing in conjunction with the purchase of vacation ownership interests, property management services to property owners' associations, and development and acquisition of vacation ownership resorts.

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​Wyndham Worldwide Corporation provides hospitality services and products to individual consumers and business customers worldwide. It operates three in segments: Lodging, Vacation Exchange, and Rentals, and Vacation Ownership. The Lodging segment franchises hotels in the upscale, upper midscale, midscale, economy, and extended stay segments, as well as provides property management services for full-service and select limited-service hotels. As of October 6, 2015, the company had approximately 7,700 franchised hotels and 668,500 hotel rooms. The Vacation Exchange and Rentals segment provides vacation exchange services and products to owners of intervals of vacation ownership interests (VOIs); and markets vacation rental properties on behalf of independent owners. The Vacation Ownership segment develops, markets, and sells VOIs to individual consumers; and provides consumer financing in connection with the sale of VOIs, as well as offers property management services at resorts. The company offers its hospitality services and products under the Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, Howard Johnson, Wingate by Wyndham, Microtel Inns & Suites, Tryp by Wyndham, RCI, Landal GreenParks, Novasol, Hoseasons, cottages4you, James Villa Holidays, Wyndham Vacation Rentals, Wyndham Vacation Resorts, Shell Vacations Club, and WorldMark by Wyndham brand names. Wyndham Worldwide Corporation is headquartered in Parsippany, New Jersey.
​(Summary) (Company) (Chart)
15 February 2016
Price $65.59
1yr Target $79.75
Analysts 10
Dividend $1.68
Payout Ratio 36.36%

1yr Cap Gain 21.58%
Yield 2.56%

1yr Tot Return 24.14%
​
EPS (ttm) $4.62
EPS next yr $5.61
EPS next 5yr 12.94%
1yr Price Support $72.59
P/E 14.20
PEG 1.10
Beta 1.35
Market Cap $7.62 Bil
Revenues $5.46 Bil
Earnings $552.00 Mil

Profit Margin 10.10%
​​
1yr EarnGR 30.21%
3
yr EarnGR 18.33%
5yr EarnGR 21.02%
1yr DivGR 20.68%
3yr DivGR 32.26%
5yr DivGR 54.31%
Quick Ratio 0.80
Current Ratio 1.00
Debt/Equity 5.10
ROA 6.90%

ROE 61.10%
​
My Perspective
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This is a tremendous company with great earnings and dividend growth over the one, three and five year period. They also have a great estimated return on invested capital over the next year. The single drawback is their debt level at five times equity. While this may not be as detrimental when the economy is booming, this level of debt can be a tremendous drag on earnings when the economy goes south. 

By operating in a wider range of businesses than just hotel management, Wyndham Worldwide is better insulated to withstand any downturn in business or consumer travel or in vacation property ownership or rentals. This is an asset that others in the industry do not offer. 

I like this company and will place it on my watch list for further review. Despite the fact that the stock price has fallen in the last few months, I just don't feel the necessity to immediately start a position today. But I'm sure it'll happen at some point. 


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0 Comments

Yum! Brands

2/16/2016

0 Comments

 
Yum! Brands, Inc. and formerly Tricon Global Restaurants, Inc., is an American fast food company. Yum operates the licensed brands Taco Bell, KFC, Pizza Hut, and WingStreet worldwide. Prior to 2011, Yum! also owned Long John Silver's and A&W Restaurants.
Based in Louisville, Kentucky, it is one of the world's largest fast food restaurant companies in terms of system units—more than 41,000 restaurants around the world in over 125 countries. In 2014, Yum!'s global sales totaled more than $13 billion.
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​YUM! Brands, Inc., together with its subsidiaries, operates quick service restaurants. It operates in five segments: YUM China, YUM India, the KFC Division, the Pizza Hut Division, and the Taco Bell Division. The company develops, operates, franchises, and licenses a system of restaurants, which prepare, package, and sell various food items. As of October 20, 2015, it operated approximately 41,000 restaurants in approximately 125 countries and territories primarily under the KFC, Pizza Hut, and Taco Bell brands, which specialize in chicken, pizza, and Mexican-style food categories. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in May 2002. YUM! Brands, Inc. was founded in 1997 and is headquartered in Louisville, Kentucky.
(Summary) (Company) (Chart)
15 February 2016
Price $67.34
1yr Target $84.05
Analysts 19
Dividend $1.84
Payout Ratio 63.01%

1yr Cap Gain 24.81%
Yield 2.73%

1yr Tot Return 27.54%
​
EPS (ttm) $2.92
EPS next yr $4.07
EPS next 5yr 11.29%
1yr Price Support $45.95
P/E 23.06
PEG 2.04
Beta 0.66
Market Cap $29.04 Bil
Revenues $13.11 Bil
Earnings $1.29 Bil

Profit Margin 9.83%
​​
1yr EarnGR -1.70%
3
yr EarnGR -5.35%
5yr EarnGR 0.88%
1yr DivGR 10.63%
3yr DivGR 13.24%
5yr DivGR 14.28%
Quick Ratio 0.50
Current Ratio 0.50
Debt/Equity 4.37
ROA 15.70%

ROE 86.00%
​
My Perspective
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Yum has had its problems in expanding into China these last few years that have been well documented in all the press. For those who don't remember, the problems surrounded the company's suppliers of chicken. While these weren't specifically Yum's problems, KFC became the face that the Chinese put on the problem and hence, avoided the restaurants. With that behind them, it appears that the company is getting back on track. 

But prepared fast food is a tough business for any company and the typical consumer is usually not loyal to any one fast food franchise. Their also price conscious so they'll often substitute one fast food store for another on a whim. So besides food costs and personnel costs, advertising can take a large bite out of profits.

I like this company and I like their products. But this company's fundamental unfortunately look like so many other dividend growth companies. They continue to raise the dividend even though earnings have stopped increasing. And they've been able to do that by allowing the payout ratio to increase. But that can't go on forever. Yum's payout ratio now is 63%. The company is expecting to increase earnings next year to offset this statistic but that has yet to be seen. If they can finally get on track and increase earnings at a double digit pace, this may be a great company to own. But until I actually see evidence of that happening, this company will stay on my watch list. 

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0 Comments

Leveraged ETFs

2/15/2016

0 Comments

 
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I can often tell which way the market is trending easier than I can tell which way a particular stock will trend. It’s really not a mystery. It’s simply the result of sample size. Individual stocks can often be moved by just a few buyers or sellers reacting or over reacting to their own interpretation of what they think is relevant news. They can also buy or sell for personal reasons, like many executives do when granted stock options. But these unique situations tend to be washed away when you start to look at a basket of stocks. And the bigger the basket, the less individuals can influence the trends.

For many investors who like to invest in the overall trend of the market instead of individual stocks tend to invest in the ETF “SPY” which was created to track the S&P 500 index. By in vesting in SPY, many investors are avoiding the things that can happen to individuals stocks by investing in 500 stocks. It’s a smoothing affect that allows momentum indicators to react to, or predict, movements more accurately. Combined with moving averages, Bollinger Bands and daily and weekly charts, I’ve found that the momentum indicators are pretty effective in assessing the trends in the marketplace. 

So when do I use this strategy? First of all, this isn’t an investing strategy. By buying the SPY an investor is not actually buying securities of a company. Their really only investing in an index. So for me this isn’t a long term strategy. It’s a trading strategy. I’m simply buying into trends so I only hold the position as long as the trend remains in place. When the trend changes, so do my positions. 

Instead of investing in the SPY, I tend to use leveraged ETFs. My favorites are the 3X ETFs. They’re basically three times more volatile than the market averages and I can buy them for a market moving higher or a market moving lower. The ones I use for a market moving lower are simply referred to as inverse leveraged ETFs. 

For investing in a basket of DJIA stocks moving higher I use the ETF “UDOW”. For a similar basket of stocks moving lower I use the ETF “SDOW”. For a basket of S&P 500 stocks moving higher I use the ETFs “SPXL” and "UPRO", and for moving lower I use the ETFs “SPXS” and "SPXU". There are other ETFs that relate to just about any area of the market a trader wishes to trade but these six are my personal favorites. If used properly these ETFs can produce a lot of wealth very quickly, but it can also reduce a traders wealth just as quick. These are not for beginner traders and their nor for anyone who isn’t able to watch the markets regularly. But I use these instruments to create wealth that I subsequently use to accumulate shares of dividend growing securities. I’m a dividend growth investor after all.

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0 Comments

Viacom

2/10/2016

0 Comments

 
Viacom, Inc. (an acronym for Video & Audio Communications) is an American global mass media company and it's the world's sixth largest broadcasting and cable company in terms of revenue. The top five are Comcast, The Walt Disney Company, Twenty-First Century Fox, Time Warner, and CBS Corporation. Viacom operates approximately 170 networks reaching approximately 700 million subscribers in 160 countries.

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Viacom, Inc. operates as an entertainment content company in the United States and internationally. The company creates television programs, motion pictures, short-form content, applications, games, consumer products, social media, and other entertainment content. It operates through two segments, Media Networks and Filmed Entertainment. The Media Networks segment provides entertainment content and related branded products for consumers approximately through 250 locally programmed and operated TV channels, including Nickelodeon, Comedy Central, MTV, VH1, SPIKE, BET, CMT, TV Land, Nick at Nite, Nick Jr., Channel 5 (UK), Logo, Nicktoons, TeenNick, Paramount Channel, and others, as well as through online, mobile, and apps. The Filmed Entertainment segment produces, finances, acquires, and distributes motion pictures, television programming, and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, Paramount Animation, Insurge Pictures, Nickelodeon Movies, MTV Films, and Paramount Television brands. This segment exhibits motion pictures theatrically through home entertainment, television, and digital licensing and ancillary activities. The company releases its content through download-to-own, download-to-rent, DVDs, Blu-ray discs, transactional video-on-demand, pay television, subscription video-on-demand, basic cable television, free television, and free video-on-demand, as well as airlines and hotels. Viacom, Inc. is headquartered in New York, New York. Viacom, Inc. operates as a subsidiary of National Amusements, Inc.
(Summary) (Company) (Chart)
9 February 2016
Price $32.86
1yr Target $56.30
Analysts 30
Dividend $1.60
Payout Ratio 23.91%

1yr Cap Gain 71.33%
Yield 4.86%

1yr Tot Return 76.19%
​
EPS (ttm) $6.69
EPS next yr $6.16
EPS next 5yr 8.93%
1yr Price Support $55.00
P/E 4.72
PEG 0.53
Beta 1.24
Market Cap $13.12 Bil
Revenues $13.27 Bil
Earnings $1.92 Bil

Profit Margin 14.46%
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1yr EarnGR -7.80%
3
yr EarnGR 8.53%
5yr EarnGR ---
1yr DivGR 15.87%
3yr DivGR 11.49%
5yr DivGR ---
Quick Ratio 1.00
Current Ratio 1.20
Debt/Equity 3.47
ROA 8.60%

ROE 63.70%
​
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The current Viacom organization was created on December 31, 2005, when it was spunoff from CBS Corporation. At the time it changed its name from Viacom to CBS. The original company CBS, not Viacom, retains control of the over-the-air broadcasting, TV production, outdoor advertising, subscription pay television (Showtime) and publishing assets (Simon & Schuster) previously owned by the pre-split company. Other predecessor firms of Viacom include Gulf+Western, which later became Paramount Communications and Westinghouse Electric Corporation.

​Voting control of Viacom is held by National Amusements, Inc., a privately owned theater company controlled by billionaire Sumner Redstone. Incidentally, Mr. Redstone also holds, via National Amusements, a controlling stake in CBS Corporation, but he has recently relinquished control of CBS due to his age. It is expected that he will relinquish control of Viacom later this year.

​
My Perspective

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Those that are familiar with this website and several of the articles I've written over the years know that I have an stock ownership in all six mass media companies listed above. And all of these are great investments simply for the fact that I believe more and more of the income of the American family will be spent on entertainment in the years ahead.

​I also believe that this in not simply an American phenomenon. As the economies of the world grow and countries develop a larger middle class, those individuals will spend that new found wealth on entertainment also. To that extent I feel this is a growth industry that will continue well into the future. 

I expect to continue to increase my position in Viacom in the years ahead by reinvesting dividends as well as making direct purchases in the open market. 

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0 Comments

Domtar Corp

2/9/2016

0 Comments

 
Domtar Corporation is the largest integrated producer of uncoated freesheet paper in North America and the second largest in the world based on production capacity, and is also a manufacturer of papergrade pulp. The firm designs, manufactures, markets and distributes a wide range of business, commercial printing, publication as well as technical and specialty papers with recognized brands such as Cougar, Lynx Opaque Ultra, Husky Opaque Offset, First Choice, Sandpiper (premium 100% recycled unbleached), and Domtar EarthChoice Office Paper, part of a family of environmentally and socially responsible papers. Domtar owns and operates Domtar Distribution Group, an extensive network of paper distribution facilities.
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​Domtar Corporation designs, manufactures, markets, and distributes communications papers, specialty and packaging papers, and absorbent hygiene products in the United States, Canada, Europe, Asia, and internationally. It operates in two segments, Pulp and Paper, and Personal Care. The company provides business papers, including copy and electronic imaging papers that are used with ink jet and laser printers, photocopiers, and plain-paper fax machines, as well as computer papers, preprinted forms, and digital papers for office and home use. It also offers commercial printing and publishing papers comprising offset papers and opaques used in sheet and roll fed offset presses; publishing papers, such as tradebook and lightweight uncoated papers for publishing textbooks, dictionaries, catalogs, magazines, hard cover novels, and financial documents; design papers for brochures and annual reports; and base papers that are converted into envelopes, tablets, business forms, and data processing/computer forms. In addition, the company provides papers for thermal printing, flexible packaging, food packaging, medical gowns and drapes, sandpapers backing, carbonless printing, labels, and other coating and laminating applications; and papers for industrial and specialty applications, such as carrier papers, treated papers, security papers, and specialized printing and converting applications. Further, it designs, manufactures, markets, and distributes adult incontinence products and absorbent hygiene products under the brand name of Attends, IncoPack, and Indasec. It provides branded and private label briefs, protective underwear, underpads, pads, and washcloths, as well as baby diapers and infant training pants for acute care, long-term care, homecare, and retail channels. The company serves merchants, retail outlets, stationers, printers, publishers, converters, and end-users. Domtar Corporation is headquartered in Montreal, Canada.
​(Summary) (Company) (Chart)
8 February 2016
Price $31.03
1yr Target $43.04
Analysts 13
Dividend $1.60
Payout Ratio 71.42%

1yr Cap Gain 38.70%
Yield 5.15%

1yr Tot Return 43.85%

EPS (ttm) $2.24
EPS next yr $2.98
EPS next 5yr 3.00%
1yr Price Support $8.94
P/E 13.85
PEG 4.62
Beta 1.49
Market Cap $1.97 Bil
Revenues $5.26 Bil
Earnings $142.00 Mil

Profit Margin 2.69%
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1yr EarnGR 388.23%
3
yr EarnGR 13.36%
5yr EarnGR 25.18%
1yr DivGR 33.33%
3yr DivGR 28.81%
5yr DivGR ---
Quick Ratio 1.00
Current Ratio 2.00
Debt/Equity 0.48
ROA 2.40%

ROE 5.30%
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My Perspective
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This is another great company paying a great growing dividend, but it's also rather expensive. And the reason it's expensive is because Dividend Growth Investors are too often willing to push up the price of companies that continue to increase their dividend year after year. DGIs are often more interested in securing a stream of dividend income than preserving the value of their portfolio. They tend to over pay for the stocks there interested in and this seems to be the case with Domtar today. I believe it's priced higher than it should be. 

If the five year earnings growth rate really ends up being three percent as estimated by the analysts, then I just don't see how this company can continue to raise it's dividend above the rate of inflation. The money's just not coming in fast enough to do that. Especially since the payout ratio is already above 71%. I think if the company is able to increase the dividend at all, the high payout ratio will limit those future increases.

I Like the one year estimated return on invested capital and the current yield, but unless this company can find a way to increase its earnings growth rate I just don't see how they can increase their stock price or their dividend for long. I'll continue to monitor this company but it's currently not on my buy list.

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0 Comments

Johnson and Johnson

2/8/2016

0 Comments

 
Johnson & Johnson is an American multinational medical devices, pharmaceutical and consumer packaged goods manufacturer headquartered in New Brunswick, New Jersey. The corporation includes some 250 subsidiary companies with operations in over 57 countries and products sold in over 175 countries. Johnson & Johnson's brands include numerous household names of medications and first aid supplies including the Band-Aid Brand line of bandages, Tylenol medications, Johnson's baby products, Neutrogena skin and beauty products, Clean & Clear facial wash and Acuvue contact lenses. On December 31, 2012, the Food and Drug Administration approved Sirturo (bedaquiline), a Johnson & Johnson tuberculosis drug that is the first new medicine to fight the infection in more than forty years.
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Johnson & Johnson researches and develops, manufactures, and sells various products in the health care field worldwide. It operates in three segments: Consumer, Pharmaceutical, and Medical Devices. The Consumer segment offers baby care products under the JOHNSON’S brand name; oral care products under the LISTERINE brand name; skin care products under the AVEENO, CLEAN & CLEAR, DABAO, JOHNSON’S Adult, LE PETITE MARSEILLAIS, LUBRIDERM, NEUTROGENA, and RoC brand names; women’s health products, such as sanitary pads under the STAYFREE and CAREFREE, and o.b. tampon brand names; wound care products, including adhesive bandages and first aid products under the BAND-AID and NEOSPORIN brand names; and nutritional products comprising no calorie sweetener under the SPLENDA brand name. This segment also offers over-the-counter medicines, including acetaminophen products under the TYLENOL brand name; cold, flu, and allergy products under the SUDAFED brand name; allergy products under the BENADRYL and ZYRTEC brand names; ibuprofen products under the MOTRIN IB brand name; and heartburn products under the PEPCID brand name. The Pharmaceutical segment provides various products in the areas of immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolic diseases. The Medical Devices segment offers orthopaedic, and trauma and neurological products; general surgery, and biosurgical and energy products; products to treat cardiovascular disease; infection prevention products; diagnostics products; blood glucose monitoring and insulin delivery products; and disposable contact lenses. The company distributes its products to general public, retail outlets and distributors, wholesalers, hospitals, and health care professionals for prescription use in the professional fields by physicians, nurses, hospitals, and clinics. Johnson & Johnson was founded in 1885 and is based in New Brunswick, New Jersey.
(Summary) (Company) (Chart)
7 February 2016
Price $100.54
1yr Target $109.24
Analysts 17
Dividend $3.00
Payout Ratio 54.74%

1yr Cap Gain 8.65%
Yield 2.98%

1yr Tot Return 11.63%
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EPS (ttm) $5.48
EPS next yr $6.91
EPS next 5yr 5.55%
1yr Price Support $38.35
P/E 18.35
PEG 3.31
Beta 0.64
Market Cap $278.19 Bil
Revenues $70.07 Bil
Earnings $15.41 Bil

Profit Margin 21.99%

1yr EarnGR 18.50%
3
yr EarnGR 17.57%
5yr EarnGR 5.65%
1yr DivGR 6.56%
3yr DivGR 6.97%
5yr DivGR 7.41%
Quick Ratio 2.20
Current Ratio 2.50
Debt/Equity 0.28
ROA 11.70%

ROE 22.00%
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My Perspective
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Johnson & Johnson is included in list of Dividend Kings, which means that they've been increasing their dividend annually for at least the last 50 years. In fact they've been increasing their dividend for the last 53 years. That's an incredibly long time and only a very few companies (18) have been able to accomplish that. But that fact alone makes these companies valuable in the eyes of investors so they're rarely on sale. In fact, for the most part they're generally considered to be very expensive. And as a result they're rarely a bargain. So any investor thinking of accumulating a position in this company should consider it a long term hold. Over time the Dividend Kings generally work out well but in the short term it's hard to justify the elevated price of the shares.

I like this company and it's obvious just by looking at the dividend history chart above that as a dividend growth investor it fits well into the type of security that interests me. But it only interests me if I can get it at the right price. This company may seem reasonably priced at a P/E near 18, but with a 5 year estimated earnings growth rate of just 5.55%, it's hard to justify a P/E that high. I'll wait for a lower price. But there's no doubt this company needs to be in my accounts.


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0 Comments

Investing in the Trend

2/7/2016

0 Comments

 
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Sometimes being a Dividend Growth Investor is the hardest job in town. That's because DGIs spend most of their time researching companies to find those unique companies that consistently increase their revenues, earnings and dividends over an extended period of time only to buy them at the wrong time and they go down in price. That's what has happened to a lot of dividend growth companies over the last year or so. And while it's always nice to see my dividends increasing each year, it's also disheartening to see the overall value of my portfolio dropping. 

In some cases even reinvesting the dividends back into the stock can't keep the value of my accounts from falling. That's where selling options come into my strategies. Selling options can be a great way to increase the amount of money coming into my accounts on a monthly or weekly basis. And just like dividends, I use the option income to buy additional stock. 

But I'm always looking for ways to augment the dividend and option income. One additional tactic I use is leveraged directional ETFs. They're a very special brand of ETFs. My favorites are the 3X ETFs. Like all other ETFs, there are many leveraged ETFs that cover just about any segment of the investing universe. I primarily use just four ETFs, although I'll use any ETF that fit my needs. The four I use most are the SPXL, SPXS, UDOW and SDOW. These mimic the SPX and the DOW while moving three times faster than the averages, and therein lies the benefits of leverage. 

There's not much fundamental analysis going on when you use these derivatives. They're really only understood by investors who understand technical analysis. They're also not long term investments. I've found them to be most successful when used for a period of one week or less, but I imagine they could be successfully used for longer periods. For me they're pretty lucrative but I would have never tried them if I hadn't already had a good foundation in options trading and technical analysis.  

During tough periods like we've seen recently in the markets where stock prices continue to deteriorate from the inside out, it's nice to be able to generate income simply by identifying the direction of the overall market. By buying and selling leveraged ETFs I generate funds to buy additional solid dividend growing companies. And if my timing's not exactly perfect when I'm buying those individual companies, I can at least sleep better at night knowing that my overall portfolio is growing. Despite the economy.


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0 Comments

Amgen

2/3/2016

1 Comment

 
AMGen (formerly Applied Molecular Genetics) is a multinational biopharmaceutical company headquartered in Thousand Oaks, California, and it is the largest independent biotechnology company in the world. Amgen's largest selling product lines are Neulasta and Neupogen, two closely related drugs used to prevent infections in patients undergoing cancer chemotherapy, and Enbrel, a tumor necrosis factor blocker used in the treatment of rheumatoid arthritis and other autoimmune diseases. Other products include Epogen, Aranesp, Nplate, Vectibux,  Sensipar/Mimpara, Prolia and XGEVA.
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​Amgen Inc., a biotechnology company, discovers, develops, manufactures, and delivers human therapeutics worldwide. It focuses for the treatment of illness in the areas of oncology, hematology, inflammation, bone health, nephrology, cardiovascular, and general medicine. The company's principal products include Neulasta, a pegylated protein to decrease the incidence of infection associated with chemotherapy-induced febrile neutropenia in cancer patients; NEUPOGEN, a recombinant-methionyl human granulocyte colony-stimulating factor for reducing the incidence of infection as manifested by febrile neutropenia for patients with non-myeloid malignancies; and Enbrel to treat rheumatoid arthritis, plaque psoriasis, and psoriatic arthritis in adult patients. Its principal products also comprise EPOGEN for the treatment of dialysis; Aranesp for treating anemia; XGEVA for the prevention of skeletal-related events; Prolia to treat postmenopausal women with osteoporosis; and Sensipar/Mimpara products for use in the treatment of secondary hyperparathyroidism in chronic kidney disease patients on dialysis. The company's other marketed products include Kyprolis, a proteasome inhibitor to treat patients with multiple myeloma and small-cell lung cancer; Nplate, a thrombopoietic compound; Vectibix, a human monoclonal antibody; and BLINCYTO for the treatment of patients with Philadelphia chromosome-negative relapsed or refractory B-cell precursor acute lymphoblastic leukemia. It also develops various products that are in various clinical trials. The company serves pharmaceutical wholesale distributors; and physicians or their clinics, dialysis centers, hospitals, and pharmacies, as well as consumers. It has collaborative agreements with Xencor, Inc., AstraZeneca Plc, Takeda Pharmaceutical Company Limited, UCB, Novartis AG, Bayer HealthCare Pharmaceuticals Inc., and Merck & Co. Inc. The company was founded in 1980 and is headquartered in Thousand Oaks, California.
(Summary) (Company) (Chart)
2 February 2016
Price $150.11
1yr Target $185.00
Analysts 15
Dividend $4.00
Payout Ratio 47.78%

1yr Cap Gain 23.24%
Yield 2.66%

1yr Tot Return 25.90%
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EPS (ttm) $8.37
EPS next yr $12.10
EPS next 5yr 9.53%
1yr Price Support $115.31
P/E 17.93
PEG 1.88
Beta 0.78
Market Cap $113.23 Bil
Revenues $21.46 Bil
Earnings $6.43 Bil

Profit Margin 29.96%
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1yr EarnGR 54.92%
3
yr EarnGR 23.17%
5yr EarnGR 16.72%
1yr DivGR 21.53%
3yr DivGR 29.60%
5yr DivGR ---
Quick Ratio 5.10
Current Ratio 5.40
Debt/Equity 1.14
ROA 9.20%

ROE 23.90%
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My Perspective
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Amgen has been moving sideways in a very broad band since the middle of 2014. For swing traders, this has been an ideal platform for trading the stock. This is also the kind of situation that lends itself to option sellers. But it's not the best situation for those investors who have simply held the stock over all these years. 

But this stagnation has allowed the company to grow its fundamentals while the price of the stock remains range bound. This has allowed some of those fundamentals that were relatively high to come back within a range that makes the stock more desirable. 

With a P/E ratio under twenty, a dividend yield above two percent, and a payout ratio less than fifty percent, this stock is now on a list of stock I'll start to accumulate. This company will fit in nicely with my shares of Gilead Sciences and I expect these two companies to provide a growing dividend and a nice return on investment capital.

 

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1 Comment

Targa Resources Corp

2/2/2016

0 Comments

 
Targa Resources is a midstream energy corporation and is one of the largest providers of natural gas and natural gas liquids in the US. Their operations are based largely along the Texas and Louisiana Gulf Coast and their headquarters is located in Houston, Texas. 

Targa Resources Corp owns the general and limited partner interests, including incentive distribution rights ("IDRs"), in Targa Resources Partners, a publicly traded limited partnership that's a leading provider of midstream natural gas and natural gas liquid services in the US. The company's IDRs entitle them to receive increasing percentages, up to 48%, of all cash distributed by Targa Resources Partnership. The company's interests in the Partnership consist of a 2% general partner interest which they hold through their 100% ownership in the general partner of the Partnership (Targa Resources GP LLC), all of the outstanding IDRs, and the common units of the Partnership.
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The company's primary business objective is to increase shareholder dividends by assisting the Partnership in executing its business strategy and generating cash flows from the cash distributions received from the Partnership.

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​Targa Resources Corp., through its general and limited partner interests in Targa Resources Partners LP, provides midstream natural gas and natural gas liquid (NGL) services in the United States. The company operates in two divisions, Gathering and Processing, and Logistics and Marketing. It is involved in gathering, compressing, treating, processing, and selling natural gas; storing, fractionating, treating, transporting, terminaling, and selling NGLs and NGL products; gathering, storing, and terminaling crude oil and refined petroleum products. The company also purchases and resells component NGL products; sells propane and provides related logistics services to multi-state retailers, independent retailers, and other end-users; offers NGL balancing services; and provides transportation services to refineries and petrochemical companies in the Gulf Coast area. It operates approximately 11,400 miles of natural gas pipelines, including 12 owned and operated processing plants; and 39 storage wells with a net storage capacity of approximately 64 million barrels. As of December 31, 2014, the company leased and managed approximately 716 railcars; 75 owned and leased transport tractors; and 22 company-owned pressurized NGL barges. Targa Resources Corp. was founded in 2005 and is headquartered in Houston, Texas.
​(Summary) (Company) (Chart)
31 January 2016
Price $22.47
1yr Target $38.29
Analysts 14
Dividend $3.64
Payout Ratio 308.47%

1yr Cap Gain 70.40%
Yield 16.19%

1yr Tot Return 86.59%
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EPS (ttm) $1.18
EPS next yr $1.92
EPS next 5yr 3.10%
1yr Price Support $5.95
P/E 19.04
PEG 6.14
Beta 1.84
Market Cap $1.26 Bil
Revenues $7.04 Bil
Earnings $56.90 Bil

Profit Margin 0.80%
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1yr EarnGR 56.77%
3
yr EarnGR 48.04%
5yr EarnGR ---
1yr DivGR 29.09%
3yr DivGR 32.88%
5yr DivGR ---
Quick Ratio 1.00
Current Ratio 1.20
Debt/Equity 4.10
ROA 0.50%

ROE 5.20%
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​My Perspective
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It's hard to see how a company like Targa Resources can sustain their dividend at this level when the company is paying out more than three times its current EPS. That puts the chart of their dividends on the left in jeopardy. I realize that this level of consistent dividend growth is a desirable attribute, but the company's ability to maintain this growth will probably not continue without taking on additional debt. 

At this point in time I intend to pass on investing in this company. It's not because this isn't a great company, it's because there are so many better investments available for my limited funds. Anyone buying this company would have to be buying it simply for the estimated growth in the company's stock price. Personally I don't see this happening but I've been wrong before. 


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    I am an Individual Investor with specific interest in long term growth and then enhancing my returns with income from dividends and derivatives. I don't recommend stocks to anyone (it's a good way to lose friends) and no one reading this should misinterpret my blog as a recommendation for any type of investment. I am writing this solely for myself and my kids.


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