US Dividends Aristocrats thread

[Mr. Wood]

It’s Time for McDonald’s Stock to Shine. Here’s Why.
July 25, 2020

McDonald’s was hit hard during the first stages of the pandemic. A quarter of its stores were forced to close. Sales tumbled, and the company had to aid franchisees who saw business collapse because of Covid-19. From the market’s peak on Feb. 19 through its low on March 23, McDonald’s stock fell 36%. The stock has trailed even as the market recovered: Its shares are down 7.3% from the market’s Feb. 19 peak, to a recent $198.72, while the S&P 500 is roughly flat. Even worse, competitors like Chipotle Mexican Grill (CMG) and Domino’s Pizza (DPZ)—with app-driven delivery businesses—have seen their stocks surge.

Now it’s McDonald’s turn. Signs point to big improvements for fast-food generally and McDonald’s in particular. And with Americans back in their cars—but still preferring not to dine in restaurants—the drive-through is the place to go.

Earnings won’t be good. McDonald’s is expected to report a profit of 74 cents a share, according to FactSet, down 63% from $2.05 a year earlier, while U.S. and global same-store sales are forecast to fall 8% and 20%, respectively. Of course, the second quarter includes April—perhaps the hardest hit of all the months—and May, which was still awful. At the same time, McDonald’s breakfast business has yet to recover, while Europe remains in a tough spot.

 

[Mr. Wood]

Under Armour Falls After Founder, CFO Are Named in SEC Probe
July 27, 2020

Plank and Chief Financial Officer David Bergman received Wells Notices informing them that the U.S. Securities and Exchange Commission is likely to “allege certain violations of the federal securities laws,”

Under Armour and the executives “maintain that their actions were appropriate,” according to the latest filing. They intend to respond to the Wells Notices and “engage in a dialogue” with the SEC to resolve the matter.

 

[Mr. Wood]

Target joins Walmart in ending Thanksgiving store shopping
28 July 2020

The move, announced Monday, comes as stores are rethinking this year's Black Friday shopping bonanza weekend — along with other key retail days during the holiday season — as the country battles the coronavirus pandemic.

“Historically, deal hunting and holiday shopping can mean crowded events, and this isn’t a year for crowds,” Minneapolis-based Target said in a corporate blog posted. It said its holiday deals would come earlier than ever — starting in October.

people before profits. responsible company.

 

[Mr. Wood]

3M Reports Second-Quarter 2020 Results
July 28, 2020

Sales of $7.2 billion, down 12.2 percent year-on-year
Organic local-currency sales declined 13.1 percent year-on-year
GAAP EPS of $2.22; adjusted EPS of $1.78
Both GAAP and adjusted EPS affected by COVID-19 impacts and actions (including associated restructuring charge of $58 million, or $0.08 per share)
Operating cash flow of $1.9 billion, up 15 percent year-on-year; adjusted free cash flow of $1.5 billion, up 18 percent year-on-year
Improving sales trends; July month-to-date sales up low-single digits year-on-year
Guidance remains withdrawn, company to continue to provide monthly sales updates

3M has been aggressively responding to the COVID-19 pandemic given its critical role as a provider of personal protective equipment in the U.S. and across the world. The company continues to adjust and adapt quickly with a focus on mitigating the near-term impact while positioning 3M’s businesses for success coming out of the crisis.

 

[Mr. Wood]

Altria Reports 2020 Second Quarter and First-Half Results; Reestablishes 2020 Full-Year Earnings Guidance; Announces IQOS Expansion Plans; Board Declares Dividend Increase
7/28/2020

“With a better understanding of COVID-19 impacts on adult tobacco consumer purchasing behavior and an additional quarter of ABI earnings contributions, we’re reestablishing full-year 2020 adjusted diluted EPS guidance,” said Billy Gifford, Altria’s Chief Executive Officer.

“We’re pleased to announce that yesterday, our Board declared a quarterly dividend of $0.86 per share, representing a new annualized dividend rate of $3.44 per share and an increase of 2.4% from the previous annualized rate of $3.36 per share. This dividend increase marks the 55th dividend increase in the past 51 years,” said Sal Mancuso, Altria’s Chief Financial Officer.

 

[Mr. Wood]

PFIZER REPORTS SECOND-QUARTER 2020 RESULTS
July 28, 2020

Second-Quarter 2020 Revenues of $11.8 Billion, Reflecting 9% Operational Decline; Excluding the Impact from Consumer Healthcare, Revenues Declined 3% Operationally

Raised Midpoint of 2020 Financial Guidance for Revenues by $0.1 Billion to $48.6 to $50.6 Billion and Adjusted Diluted EPS by $0.03 to $2.85 to $2.95; Reaffirmed All Other 2020 Financial Guidance Components

Initiated Four Different Registration-Enabling Vaccine Candidate Programs Since May 2020, Including for Pneumococcal 20-Valent in Infants, Meningococcal Pentavalent, Respiratory Syncytial Virus and for COVID-19, Which Started Dosing Patients in the U.S. Yesterday

 

[Mr. Wood]

Raytheon Technologies Reports Second Quarter 2020 Results
Accelerated cost reduction and cash conservation actions

July 28, 2020

The company recorded a net loss from continuing operations in the second quarter of $3.8 billion, and included $4.4 billion of net significant and/or nonrecurring charges and acquisition accounting adjustments. Adjusted net income was $598 million. Operating cash flow from continuing operations in the second quarter was $210 million and better than expected primarily due to the timing of collections and execution on cash conservation actions. Capital expenditures were $458 million, resulting in a free cash outflow of $248 million. Free cash flow included $165 million of merger costs and restructuring.

 

[Mr. Wood]

Opinion: What would Sir John do? How to use Templeton’s 16 rules for investment success in today’s stock market
July 27, 2020

1. Invest for maximum total real return
2. Invest — don’t trade or speculate
3. Remain flexible and open-minded about types of investments
4. Buy low
5. When buying stocks, search for bargains among quality stocks
6. Buy value, not market trends or the economic outlook
7. Diversify. In stocks and bonds, as in much else, there is safety in numbers
8. Do your homework or hire wise experts to help you
9. Aggressively monitor your investments
10. Don’t panic
11. Learn from your mistakes
12. Begin with a prayer
13. Outperforming the market is a difficult task
14. An investor who has all the answers doesn’t even understand all the questions
15. There’s no free lunch
16. Do not be fearful or negative too often

 

[Mr. Wood]

Gold Is Rallying. The Mining Stocks Are the Best Way to Play It.
July 27, 2020

There could be more room for the mining stocks to rally since their profits are leveraged to gold prices. Newmont’s free cash flow increases $400 million annually for each $100 move in gold prices with a base of $1 billion of free cash flow at $1,200 an ounce, according to a company presentation.

At current gold prices, Newmont’s annual free cash would be more than $3.8 billion annually, based on that analysis. The company’s market value is about $55 billion.

Gold tends to move inversely with the dollar and the dollar has continued to weaken with the U.S. Dollar Index off 0.78 to 93.66, its lowest level since 2018. The dollar index is down nearly 10% from its March peak.

Gold is also being supported by ultralow nominal U.S. interest rates and negative real rates in the U.S. The yield on the 10-year Treasury inflation-protected securities is about minus 1%.

Mark Haefele, the chief investment officer at UBS Global Wealth Management, wrote Friday that he sees gold heading toward $2,000 an ounce and that the metal offers diversification benefits and protection from market volatility

 

[Mr. Wood]

Starbucks Reports Q3 Fiscal 2020 Results
07/28/20

Q3 Fiscal 2020 Highlights

Global comparable store sales declined 40%, driven by a 51% decrease in comparable transactions, partially offset by a 23% increase in average ticket

The company opened 130 net new stores in Q3, yielding 5% year-over-year unit growth, ending the period with 32,180 stores globally, of which 51% and 49% were company-operated and licensed, respectively

Consolidated net revenues of $4.2 billion declined 38% from the prior year primarily due to lost sales related to the COVID-19 outbreak

GAAP operating margin of -16.7%, down from 16.4% in the prior year primarily due to the COVID-19 outbreak, mainly sales deleverage, material investments in retail partner support and other items; GAAP operating margin was also adversely impacted by restructuring activities primarily associated with the U.S. store portfolio optimization
Non-GAAP operating margin of -12.6%, down from 18.3% in the prior year
GAAP loss per share of $0.58, down from earnings per share of $1.12 in the prior year primarily due to unfavorable impacts related to the COVID-19 outbreak totaling approximately -$1.20 per share

Starbucks® Rewards loyalty program 90-day active members in the U.S. declined to 16.3 million, down 5% year-over-year due to reduced customer frequency primarily attributable to temporary store closures and other impacts related to the COVID-19 outbreak

 

[Mr. Wood]

Visa Inc. Reports Fiscal Third Quarter 2020 Results
July 28, 2020

Fiscal Third Quarter 2020 — Financial Highlights
GAAP net income in the fiscal third quarter was $2.4 billion or $1.07 per share, decreases of 23% and 22%

Net revenues in the fiscal third quarter were $4.8 billion, a decrease of 17%,

Payments volume for the three months ended March 31, 2020, on which fiscal third quarter service revenues are recognized, grew 4% over the prior year on a constant-dollar basis.

Payments volume for the three months ended June 30, 2020, decreased 10% over the prior year on a constant-dollar basis.

Total processed transactions, which represent transactions processed by Visa, for the three months ended June 30, 2020, were 30.7 billion, a 13% decrease over the prior year

 

[Mr. Wood]

The Sherwin-Williams Company Reports 2020 Second Quarter Financial Results
July 28, 2020

Consolidated net sales decreased 5.6% in the quarter to $4.60 billion

Diluted net income per share increased to $6.48 per share in the quarter compared to $5.03 per share in the second quarter 2019

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased 6.2% in the quarter to $979.0 million, or 21.3% of sales

Net operating cash increased 42% year-to-date to $1.07 billion, or 12.3% of sales

Increasing FY20 diluted net income per share guidance to a range of $19.21 to $20.71 per share, including acquisition-related amortization expense of $2.54 per share. Prior FY20 guidance was $16.46 to $18.46 per share, including acquisition-related amortization expense of $2.54 per share

 

[Mr. Wood]

ADM Reports Second Quarter Earnings of $0.84 per Share, $0.85 per Share on an Adjusted Basis
07/29/2020

“From our ambitious new sustainability goals, to the continued expansion of products and services to meet evolving consumer needs, to the critical efforts we are all making to protect our employees and support our communities during challenging times, our team is making a positive impact.

“As we advance our strategy, we are increasingly seeing growing benefits flow to our bottom line. Our team is exceeding the targets we’ve set for those factors under our control, and as we look at the second half of the year, we’ll continue to advance our key focus areas: optimizing business performance, accelerating Readiness – which has been critical to our resilience and agility this year – and harvesting the benefits of strategic growth investments, especially in our Nutrition segment. We are in a strong position, with great momentum, and we are confident in our ability to continue to deliver strong earnings and returns in 2020 and beyond.”

 

[Mr. Wood]

Yum! Brands Reports Second-Quarter Results; Significant Improvement from Early Quarter Lows with Strong Digital and Delivery Momentum; System Sales Decline of (12)% with a Same-Store Sales Decline of (15)% Offset by 3% Net Unit Growth

07/30/2020

Digital sales were a big driver of the dramatic improvement in sales from the initial impact of COVID-19, reaching an all-time high of $3.5 billion for the quarter, an increase of more than $1 billion over the prior year.

 

[Mr. Wood]

A. O. Smith Reports 2020 Second Quarter Financial Results
July 30, 2020

Adjusted earnings of $72.8 million or $0.45 per share were approximately 29 percent lower than the second quarter of 2019 and excluded $5.0 million or $0.03 per share of after-tax severance and restructuring charges in the current quarter related to aligning the business to current market conditions.

"Encouragingly, as U.S. and China restrictions and closures eased and mobility improved as the quarter progressed, we saw our North American water treatment sales thrive and our China business and North America residential water heater markets stabilize and improve," noted Wheeler. "However, much uncertainty remains about the duration and long-term implications of the pandemic, particularly its impact on U.S. commercial construction."

We believe we continue to have ample liquidity and flexibility to meet the needs of our business and return cash to shareholders. We remain focused on keeping our employees safe, while serving our customers and building on our competitive advantages to emerge an even stronger Company in the future."

 

[Mr. Wood]

P&G Announces Fourth Quarter and Fiscal Year 2020 Results
7/30/2020

Q4 ’20: Net Sales +4%; Organic Sales +6%; Diluted Net EPS $1.07, +$3.19; Core EPS $1.16, +5%

FY ’20: Net Sales +5%; Organic Sales +6%; Diluted Net EPS $4.96, +247%; Core EPS $5.12, +13%

The Company generated $17.4 billion of operating cash flow in fiscal 2020 with adjusted free cash flow productivity of 114%. The Company returned $15.2 billion of value to shareholders in fiscal 2020 through $7.8 billion in dividend payments and $7.4 billion of share repurchases.

 

[Mr. Wood]

Templeton & Phillips Capital Management LLC July 2020 Commentary
The Instagram Economy
July 24, 2020

With the S&P 500 trading at 23.9x estimated earnings compared with a long-term average of approximately 16x earnings, our concern is that the market’s view of the economy has been subjected to certain manipulations and embellishments. The market’s view today reminds us of young people taking selfie photos through Instagram or Snapchat filters, thereby presenting themselves in ways that range from unrealistic to completely distorted. So, while we do not believe the market has lost its mind—and it is still trying to do its job—we can also recognize that the economic and financial pictures it sees are being heavily filtered and in some cases distorted through fiscal and monetary policies.

To both the casual observer and policymaker alike, they may have breathed a sigh of relief that the Fed could intervene and change the likely outcome of rising corporate bankruptcies. We disagree. In economics there are no free lunches, and we believe this bailout traded off for a period of slower economic growth going forward. That has been the experience of Japan since its debt bubble imploded in the early 1990s, whereas a large number of firms simply stayed alive, rather than resuming growth. Moreover, we believe that the Fed’s rescue probably just postponed the day of reckoning for the most indebted firms.

To summarize our discussion from an investment perspective, we can appreciate the likelihood that the U.S. market has been led astray in some cases pertaining to credit quality and consumer spending levels. At the same time, we have been careful to resist any of these potential holdings in light of our view that the market has bifurcated more than usual into sets of winners and losers in terms of market-share driven earnings growth over the next few years. Moreover, we believe we are beginning to see evidence of this effect in share price return patterns. In the figure below, we can see that an increasingly smaller group of stocks are outperforming the markets by greater than 10%.

To be sure, we would not go so far as to say that we have no concerns or worries. However, our concerns are more focused on the potential for detrimental (rich) valuations. The good news here though, is that we do not believe we have reached that point, and that as we look at the international markets we believe we see many attractive long-term bargains still available. We look forward to discussing those views further in a future commentary

 

[Mr. Wood]

Colgate Announces 2nd Quarter 2020 Results
Jul 31, 2020

"The gross margin expansion in the quarter allowed us to invest behind our brands. Over the second half of the year, we will continue to fund strong consumer programs to drive our business.

“Looking ahead, we continue to expect a mid-single digit negative impact on net sales for the year from foreign exchange, based on current spot rates. Given the continued uncertainty related to the impact of the virus and government actions to stem the virus, including macroeconomic impacts, we have decided not to reinstate our financial guidance for 2020 at this time. As we proceed through this pandemic we plan to reinstate our guidance when we have the visibility to forecast our results with more confidence.”

 

[Mr. Wood]

Waste Management Announces Second Quarter Earnings
July 30, 2020

Revenues for the second quarter of 2020 were $3.56 billion compared with $3.95 billion for the same 2019 period. Net income for the quarter was $307 million, or $0.72 per diluted share, compared with $381 million, or $0.89 per diluted share, for the second quarter of 2019. On an adjusted basis, net income was $372 million, or $0.88 per diluted share, in the second quarter of 2020, compared with $470 million, or $1.11 per diluted share, in the second quarter of 2019.

Free Cash Flow & Capital Allocation

In the second quarter of 2020, net cash provided by operating activities was $856 million compared to $1.01 billion in the second quarter of 2019.
In the second quarter of 2020, capital expenditures were $436 million compared to $578 million in the second quarter of 2019.
In the second quarter of 2020, free cash flow was $423 million compared to $440 million in the second quarter of 2019.
The Company paid $230 million of dividends to shareholders.
As a prudent step to preserve cash in this uncertain environment, the Company has temporarily suspended share repurchases through the end of the year.

 

[Mr. Wood]

Gilead Sciences Announces Second Quarter and First Half 2020 Financial Results
July 30, 2020

Gilead’s first half performance demonstrates the strength and durability of our core HIV business, even as we navigated the expected impact of the COVID-19 pandemic.

We are also making important progress with our pipeline. In addition to the critical work of advancing remdesivir, we have continued to strengthen our presence in immuno-oncology

Financial Results

Total revenues for the second quarter and first half 2020 were $5.1 billion and $10.7 billion, respectively, compared to $5.7 billion and $11.0 billion, respectively, for the same periods in 2019.
GAAP net loss and diluted loss per share for the second quarter 2020 were $(3.3) billion and $(2.66), respectively, compared to net income and diluted EPS of $1.9 billion and $1.47, respectively, for the same period in 2019.
GAAP net loss for the second quarter 2020 included an acquired in-process research and development (“IPR&D”) charge of $4.5 billion related to Gilead’s acquisition of Forty Seven, Inc (“Forty Seven”).
Non-GAAP net income and diluted EPS for the second quarter 2020 were $1.4 billion and $1.11, respectively, compared to $2.2 billion and $1.72, respectively, for the same period in 2019.
Gilead’s core business delivered a solid performance, despite the global impacts of COVID-19.