Kathy Kristof, of Kiplinger's Personal Finance Magazine, takes a look at companies sharing the wealth. Below, she highlights three blue chip firms that are buying back stock and boosting their dividends.
Steve Halpern: We're here today with Kathy Kristof of Kiplinger's Personal Finance Magazine. How are you doing Kathy?
Kathy Kristof: Great! How are you, Steve?
Steve Halpern: Very good. The November issue of Kiplinger's just hit the newsstands, and in the latest issue, you wrote an article entitled Companies That Share the Wealth. Could you explain this trend?
Kathy Kristof: Absolutely. Companies have been building up cash hordes. Honestly, ever since the debacle of 2008-2009, companies got very nervous about having enough capital, and so instead of raising dividends, a lot of them cut dividends and started hording their cash.
Now companies have more cash on their balance sheets than ever before, and the market doesn't look as tenuous, and so they're feeling much more comfortable about giving back some of that cash to shareholders in the form of dividends and share buybacks, and both of those things are obviously very good for shareholders. It just puts a little more cash in your pocket.
Top 5 Consumer Service Companies To Own In Right Now: Chevron Corporation(CVX)
Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The Upstream segment involves in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as holds interest in a gas-to-liquids project. The Downstream segment engages in the refining of crude oil into petroleum products; marketing of crude oil and refined products primarily under the Chevron, Texaco, and Caltex brand names; transportation of crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car; and manufacture and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It a lso produces and markets coal and molybdenum; and holds interests in 13 power assets with a total operating capacity of approximately 3,100 megawatts, as well as involves in cash management and debt financing activities, insurance operations, real estate activities, energy services, and alternative fuels and technology business. Chevron Corporation has a joint venture agreement with China National Petroleum Corporation. The company was formerly known as ChevronTexaco Corp. and changed its name to Chevron Corporation in May 2005. Chevron Corporation was founded in 1879 and is based in San Ramon, California.
Advisors' Opinion:- [By Ben Levisohn]
Last week, shares of Chevron (CVX) got hammered after the company met earnings forecasts but missed on revenue and offered disappointing 2014 production guidance. Now Wall Street is pondering that eternal question: To buy or not to buy?
Associated PressChevron fell 4.1% on Friday, and helped drag down ExxonMobil (XOM) and ConocoPhillips (COP), which released results of its own last week. Exxon dropped 2% on Friday, while ConocoPhillips fell 1.2%.
UBS analyst William Featherston and team say Chevron looks fully valued:
[Chevron] currently trades at a 36% discount to the S&P 500, slightly above its 5-year relative average of 34% and the 10-year average of 33%. While [Chevron] appears fully valued on relative P/E vs. its historical average, it remains >1,000 [basis points] below [Exxon's] relative P/E multiple.
[Chevron's] enterprise value is trading at 5.5x and 5.7x 2014E and 2015E [debt-adjusted cash flow] respectively, over a half turn above its historical average of 4.9x.�[Chevron] is also now trading at a ~0.8 turn discount to Integrated peers on 2014- 2015E EV/DACF, in line with its historical 0.9 turn discount. Given its attractive 2015-17 growth outlook and a more favorable asset mix (e.g., more oil-weighted upstream, less downstream), we believe�[Chevron] has been re-rated upward over the last few years despite missing production growth targets and see limited scope for upside with its EV/DACF now well above its historical average.
Citigroup’s Faisel Khan still rates Chevron a Buy but sound like they’re starting to get worried:
The main deviation from our forecast is a prolonged ramp-up of Angola LNG and Papa-Terra. We have revised our estimates to account for this. In our view, the delay of a number of projects is calling into question [Chevron's] production target of 3.3mmboe/d in 2017. In our view, the target appears feasible given the number of projects under construction and operatin
Top 5 Blue Chip Companies For 2014: Philip Morris International Inc(PM)
Philip Morris International Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. Its international product brand line comprises Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Bond Street, Lark, Muratti, Next, Philip Morris, and Red & White. The company also offers its products under the A Mild, Dji Sam Soe, and A Hijau in Indonesia; Diana in Italy; Optima and Apollo-Soyuz in the Russian Federation; Morven Gold in Pakistan; Boston in Colombia; Belmont, Canadian Classics, and Number 7 in Canada; Best and Classic in Serbia; f6 in Germany; Delicados in Mexico; Assos in Greece; and Petra in the Czech Republic and Slovakia. It operates primarily in the European Union, Eastern Europe, the Middle East, Africa, Asia, Canada, and Latin America. The company is based in New York, New York.
Advisors' Opinion:- [By Maxx Chatsko]
However, you would be hard-pressed to find any connection between falling smoking prevalence and share performance at Reynolds American (NYSE: RAI ) , Lorriland (NYSE: LO ) , Phillip Morris (NYSE: PM ) , and Altria (NYSE: MO ) . These companies are some of the best performers in the past decade. In fact, Altria is the best-performing stock of the last half-century!
- [By Dan Dzombak]
However, the tobacco industry has been a great hunting ground for investors. While no tobacco companies pay as high a dividend as Vector Group, long-term investors would do well to look at Altria in the U.S. or Phillip Morris International (NYSE: PM ) . Both were part of the original Phillip Morris conglomerate that split up around 2008 by spinning off Kraft and Phillip Morris International.� Both businesses are leaders in their respective markets -- Altria in the U.S. and Phillip Morris the world, excluding China and the U.S -- and have exceptionally high-returning businesses. This is in part due to both having one of the top brands in the world with Marlboro. For dividend investors, the key part is that both have long-term histories of steadily increasing their dividends. If I had to choose just one, while Altria has a higher yield than Phillip Morris (4.9% vs. 3.9%), I would go with Phillip Morris. The company has better growth prospects and a lower payout ratio, and the business is far more diversified in terms of legal risk, whereas Altria could be hurt by any laws or rulings that go against tobacco companies in the U.S.
Top 5 Blue Chip Companies For 2014: Colgate-Palmolive Company(CL)
Colgate-Palmolive Company, together with its subsidiaries, manufactures and markets consumer products worldwide. It offers oral care products, including toothpaste, toothbrushes, and mouth rinses, as well as dental floss and pharmaceutical products for dentists and other oral health professionals; personal care products, such as liquid hand soap, shower gels, bar soaps, deodorants, antiperspirants, shampoos, and conditioners; and home care products comprising laundry and dishwashing detergents, fabric conditioners, household cleaners, bleaches, dishwashing liquids, and oil soaps. The company offers its oral, personal, and home care products under the Colgate Total, Colgate Max Fresh, Colgate 360 Advisors' Opinion:
- [By Dan Caplinger]
One concern, though, is how the company handled news of Venezuela's currency devaluation. Clorox (NYSE: CLX ) and Colgate-Palmolive (NYSE: CL ) also felt the pinch, with Clorox taking about a $0.05 to $0.10 per-share earnings hit and Colgate losing about $0.50 per share. But they also addressed the potential devaluation more proactively than P&G did. Clorox actually�anticipated�the devaluation in its February earnings report, projecting the potential hit if a devaluation took place. Colgate didn't provide specific guidance in advance but clearly saw it as an issue, delivering on a promise to give prompt guidance revisions after the devaluation occurred.
Top 5 Blue Chip Companies For 2014: Apple Inc.(AAPL)
Apple Inc., together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells third-party Mac, iPhone, iPad, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals through its online and retail stores; and digital content and applications through the iTunes Store. The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative markets. As of September 25, 2010, it had 317 retail stores, including 233 stores in the United States and 84 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California.
Advisors' Opinion:- [By Chris Neiger]
Samsung and�Apple� (NASDAQ: AAPL ) �may steal all of the spotlight when their new phones debut, or even when rumors of their phones surface, but some think there's room in the mobile OS space for more competition -- and Mozilla wants in.
- [By Jon C. Ogg]
Apple Inc. (NASDAQ: AAPL) has made the company a true hit with all of the iPhone variations. Still, there is one thing that some of us 40-somethings and older often miss in using the phone even if we are iPhone�users. No keyboard. That is about to change.
- [By Justin Loiseau]
Despite the Dow's daytime gains, yesterday's major mover was stock market giant Apple (NASDAQ: AAPL ) , up 3.9% in after-hours trading following its second-quarter earnings report. Not only did the company beat on sales, but its adjusted EPS clocked in at $7.47, beating analyst estimates by 2% above analyst estimates. More telling than the financial numbers, Apple's iPhone proved to be far from dead, with 20% year-over-year sales growth -- Fortune had estimated about 4% growth.
- [By Chris Neiger]
This may all sound a little morbid, but it's more practical than anything. If a will is an important thing to set up so that others know what to do with your stuff when you're done, then a digital will should be almost as important. No one may want all the pictures of your dog you posted to Facebook (NASDAQ: FB ) , but they will want some of your digital life. Some of your online information is important and should be protected. Which leads us to the question of why other companies don't have a similar settings like Google. Surely Facebook, as the world's largest social network, should have one. Any other company that stores online documents, such as Apple's (NASDAQ: AAPL ) iCloud and Microsoft's (NASDAQ: MSFT ) Office 365, should do the same. Heck, if the Bitcoin craze plays out the way some are hoping, then there may be some digital monies that need to be designated as well.
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