Hello, my dears. Welcome to a new overview of upcoming ex-dividend dates and dividend ideas here on the TEV Blog. Like every week, I want to show you some stocks that will go ex-dividend in the next days. I’ll also review a few companies currently in investors’ focus or that have an attractive fundamental valuation. Additionally, I’ll give you some insights into my retirement portfolio and/or share my thoughts and experiences about individual companies with you. This week, Church & Dwight, J.M. Smucker, Hanesbrands, Visa are going ex-dividend.
Why yields are a simple way to screen companies
Dividends are a great thing. Even in bad stock market times, they provide a juicy cash flow per month. If you want to benefit from dividend payments as quickly as possible, you must pay attention to the ex-dividend dates. This date is the day on which shares are traded without their subsequent dividend value. Only if you owned the stocks on this day are you entitled to receive the dividend.
Usually, there are always exciting dividend companies that are worth a second look. And the dividend yield is an excellent way to get an initial overview of companies that may be worth further due diligence. To help you get started, at the end of each week, I will publish the ex-dividend dates for the coming week of individual companies here in the TEV blog.
Why I handpick and double-check the upcoming ex-dividend dates next week
I have recently noticed that many databases do not indicate the respective numbers and dates correctly. Spontaneous dividend cuts, in particular, are only partially taken into account, or in some cases, not at all. As a result, the value of such overviews dwindles enormously.
Therefore, I’ve decided to select individual companies by hand and check the dates and dividend yields on the companies’ websites, which means more work for me but increases this section’s value enormously, so it is worth it 🙂
Because I’ve been asked about it by some of the readers: I don’t decide my investments based on whether a company goes ex-dividend or not. This overview is simply a way to screen companies regularly. By double-checking the current dividend yields, I scan companies’ business development more or less once a quarter and see if anything significant has changed. In the end, however, comprehensive due diligence always decides whether I invest or not.
As always, you’ll find some handpicked exciting ex-dividend dates below.
|Company||Payout Date||Yield||In my retirement portfolio|
|Monday, November 09, 2020|
|American Electric Power Company (AEP)||December 10, 2020||3.26%||NO|
|Cedar Realty Trust Inc. (CDR)||November 20, 2020||3.96%||NO|
|Hanesbrands (HBI)||December 01, 2020||4.50%||NO|
|IBM (IBM)||December 10, 2020||5.68%||YES|
|Papa John's International (PZZA)||November 11, 2020||1.09%||NO|
|Welltower (WELL)||November 19, 2020||4.29%||NO|
|Xilinx Inc.(XLNX)||December 02, 2020||1.17%||NO|
|Tuesday, November 10, 2020|
|Exxon Mobil Corp. (XOM)||December 10, 2020||10.49%||NO|
|ResMed (RMD)||December 17, 2020||0.73%||NO|
|Starbucks Corp. (SBUX)||November 27, 2020||1.99%||NO|
|Invesco (IVZ)||December 02, 2020||4.30%||NO|
|KB Home (KBH)||November 26, 2020||1.70%||NO|
|Pool (POOL)||November 25, 2020||0.60%||NO|
|Wednesday, November 11, 2020|
|Thursday, November 12, 2020|
|Alliance Data Systems Corp. (ADS)||December 18, 2020||1.43%||NO|
|Charles Schwab (SCHW)||November 27, 2020||1.74%||NO|
|Duke Energy Corp. (DUK)||December 16, 2020||4.10%||NO|
|Equinor ASA (EQNR)||February 26, 2021||3.27%||NO|
|Eli Lilly & Co. (LLY)||December 10, 2020||2.03%||NO|
|Enbridge (ENB)||December 01, 2020||8.49%||NO|
|Emerson Electric Company (EMR)||December 10, 2020||2.87%||NO|
|GlaxoSmithKline Plc (GSK)||January 01, 2021||5.52%||YES|
|Honeywell International Inc. (HON)||December 04, 2020||2.03%||NO|
|Helmerich & Payne Inc. (HP)||December 01, 2020||6.41%||NO|
|J. M. Smucker Co. (SJM)||December 01, 2020||3.11%||NO|
|MSCI (MSCI)||November 30, 2020||0.75%||NO|
|Raytheon Technologies (RTX)||December 17, 2020||3.26%||NO|
|Royal Dutch Shell Plc (RDS.A)||December 16, 2020||4.96%||YES|
|The Kroger Co. (KR)||December 01, 2020||2.20%||NO|
|The Sherwin-Williams Co. (SHW)||December 04, 2020||0.73%||NO|
|Visa Inc. (V)||December 01, 2020||0.65%||NO|
|Friday, November 13, 2020|
|Amgen Inc. (AMGN)||December 02, 2020||2.76%||NO|
|American States Water Co. (AWR)||December 01, 2020||1.84%||NO|
|Church & Dwight Co. Inc. (CHD)||December 01, 2020||1.07%||NO|
|Lifetime Brands Inc. (LCUT)||December 16, 2020||1.55%||NO|
|Lindsay Corp. (LNN)||November 30, 2020||1.14%||NO|
|Standard Motor Products Inc. (SMP)||December 01, 2020||1.51%||NO|
|Southern Company (SO)||December 07, 2020||4.25%||NO|
As always, here are some current thoughts. This week there are some exciting stocks and excellent companies. We have everything included. Conservative consumer goods (Church & Dwight, J. M. Smucker), rapid growth stocks (Visa), turn-around candidates (IBM), problem companies (Hanesbrands), and so on. I will take a closer look at a few of these companies below.
Church & Dwight Co. Inc. vs. J. M. Smucker Co.
Church & Dwight and J. M. Smucker are popular dividend stocks. Although their portfolios are not congruent, you can often find these consumer goods companies in the portfolios of, particularly risk-averse investors. In the coming week, both companies will go ex-dividend. So let’s look more closely at which of these defensive companies currently represents the better investment.
Church & Dwight Co. Inc.
Church & Dwight is a US-American manufacturer of household goods and operates in three segments:
- Consumer Domestic (76 percent of net sales),
- Consumer International (17 percent of net sales), and
- SPD (Specialty chemical products, accountable for 7 percent of net sales).
The company manufactures and markets a wide range of products in the care, household, and specialty product segments. The product range contains shavers, eye creams, toothpaste, and products for the care of pets and furniture. The most known products are marketed under the brand’s Arm & Hammer, Nair, Spinbrush, Batista, Waterpik, Replens, Troyan, Xtra, Orajel, and First Response, among others.
Church & Dwight faces healthy competition, for instance, Procter & Gamble, Clorox, Colgate-Palmolive, S.C. Johnson & Son, Henkel, Reckitt Benckiser Group plc, Johnson & Johnson, Ansell Limited, Pfizer, Bayer AG, Unilever PLC.
J. M. Smucker Co.
Among other products, J. M. Smucker manufactures and sells coffee, dog food, cat food, pet snacks, peanut butter, jam, jelly, fruit syrups, beverages, ice cream toppings, and oils products in North America. The company operates through four segments:
- U.S. Retail Pet Foods (Rachael Ray, Nutrish, Meow Mix, Milk-Bone, Kibbles ‘n Bits, 9Lives, Natural Balance, Pup-Peroni, and Nature’s Recipe),
- U.S. Retail Coffee (Folgers, Dunkin’ Donuts, and Café Bustelo),
- U.S. Retail Consumer Foods (Jif, Smucker’s, Uncrustables, and Crisco)(overall retail is accountable for 87 percent of net sales), and
- International and Away From Home.
Growth & Profitability
So let’s compare growth and profitability in the next step. Both companies are characterized by a high degree of revenue stability. We can measure revenue stability by examining how revenue has developed over the last ten years. Low stability means -1 (thus, the company had every year less revenues). High stability means +1 (therefore, the company had more revenues every year). Against this background, both companies shine with top values.
- Church & Dwight: 0.99, with CAGR of the last ten years of 6.4 percent
- J. M. Smucker: 0.98, with CAGR of the last ten years of 5.52 percent.
However, Church & Dwight is somewhat more stable in terms of earnings development:
- Church & Dwight: 0.95, with CAGR of the last ten years of 13.04 percent
- J. M. Smucker: 0.81, with CAGR of the last ten years of 6 percent.
So here, Church & Dwight takes the lead.
Both companies have quite stable balance sheets. But in direct comparison, Church & Dwight is the better company here too. You can see this on several points:
Firstly, J. M. Smucker has more debt in absolute terms (including all liabilities). Furthermore, Church & Dwight’s amortization power is also much stronger. Additionally, Church & Dwight has more cash and a giant pile of treasury stocks. The company also has a free cash flow of USD 723 million after dividends. So this round also has a winner: Church & Dwight.
Fair value Church & Dwight
At the next step, we take a look at the fundamental valuation of the two companies. First, you see the fair calculation of Church & Dwight below.
I must honestly say that I love it when all the operating figures, the share price, and the fair value go from bottom left to the top right as if on a string. There is nothing better for investors.
So the graph above shows the definition of a SWAN (sleep well at night) stock. Besides, we see the following: Overvaluation should not always mean that you are not investing in a particular company. Church & Dwight has been consistently overvalued since 2013. If you had not bought the company in 2013 because of the overvaluation, you would have missed an annual return of 15 percent to date.
The fair value of J. M. Smucker
The fundamental analysis of J. M. Smucker confirms the above overall picture regarding growth and profitability. In the long term, the jam producer’s operating figures, share price, and fair valuation have also increased. But things are going a little rougher than at Church & Dwight. In return, J. M. Smucker is valued somewhat more fairly. Also, the adjusted P/E ratio of about 17 strongly suggests J. M. Smucker. For comparison: Church & Dwight has an adj. P/E ratio of well over 20.
The market is already predicting that J. M. Smucker will grow slightly less than Church & Dwight in the coming years. Besides, many investors are afraid that consumers will reduce their demand for J. M. Smucker’s not so healthy products. However, it is questionable whether this justifies such a difference in valuation.
Finally, we look at which stock is more interesting for dividend investors. Below you will find the dividend scoreboards of both companies.
Church & Dwight:
- Dividend yield: 1.07 percent.
- Years of dividend growth: 16 Years.
- Payout ratio: 34.07 percent.
- 5 Year growth rate: 7.98 percent.
- 1 Year growth rate: 5.49 percent.
J. M. Smucker:
- Dividend yield: 3.11 percent.
- Years of dividend growth: 18 Years.
- Payout ratio: 41.74 percent.
- 5 Year growth rate: 7.24 percent.
- 1 Year growth rate: 2.89 percent.
Overall, I think both scoreboards are quite respectable, but I find some differences quite noticeable. The most significant difference is, of course, the dividend yield. At J. M. Smucker, the yield is almost three times higher than at Church & Dwight.
The annual dividend increases at Church & Dwight have also been falling recently, so it will probably take several years before Church & Dwight achieves a similar yield on cost.
And just as a side note: In 2016, J. M. Smucker also had a dividend yield of less than 2 percent during the period of apparent overvaluation (see above), which is an excellent illustration of the fact that companies and their shares go through business cycles. For investors, such phases of undervaluation or fair valuation are good buying opportunities in the long term.
So do we have a winner? Well, I think the better question is: Why can’t there be two winners? I think that both companies are suitable for a defensive investment approach. Church & Dwight has an impressive track record. Operationally, the company runs like a machine, but investors have to pay a somewhat higher price for this quality. If I had to split USD/EUR 10,000 among these two honorable companies right now, I would most likely invest USD/EUR 6,000 in J.M. Smucker and USD/EUR 4,000 in Church & Dwight. Then I would leave the stocks in my portfolio. Forever.
Visa goes ex-dividend – I am always too late
Oh, Visa… How often was I close to putting shares of the company into my portfolio? With excellent prospects, massive dividend growth, and a great track record, the reasons for investment are well known. And yet I missed the opportunity several times. Even from a value-based strategy, there have been good opportunities to invest in Visa in recent years. Most recently, this was the case at the peak of the Corona crash.
As with Church & Dwight, one could buy shares now that are likely to reach their fair value in a few years. Visa is an excellent example of how wrong it can be when investors do not invest because of supposedly low dividend yields. If you bought the shares in early 2009, you could now look forward to an annual yield on cost of over 10 percent. The payout amount at that time was USD 0.05, and the yield was 0.4 percent. The current yield is 0.6 percent and thus quite similar.
As you can see in the fair value calculation above, the analysts assume that the company will continue to massively increase revenues, profits, and cash flow in the future. Thus, further high dividend increases are very likely. The current payout ratio of under 25 percent also speaks for itself.
In the end, such an overvaluation is nothing more than a somewhat larger short-term risk margin. This is countered by the particularly promising future prospects, which brings us back to the wonderful risk/reward harmony. Risks and rewards correlate. This has always been the case and will remain so.
Hanesbrands – Doesn’t look good
I would also like to mention Hanesbrands, a company that was on my extended watch list for a long time and which also goes ex-dividend. Even if historical multiples currently point to a significant undervaluation, don’t let this mislead you. The same applies to the attractive dividend yield of 4.5 percent. These are warning signs that directly point to the massive challenges Hanesbrands is facing. In the medium and long term, cash flow and profits will not really increase. In fact, estimates suggest that they will continue to decline in 2023.
Even though the payout ratio is below 50 percent, the business prospects bother me. The company does not have a moat. It is also too indebted (debt ratio of almost 90 percent). Hanesbrands is, in my eyes, a classic value trap. I would invest in all companies reviewed here, even if they are overvalued, like Church & Dwight or Visa. But at Hanesbrands, I gratefully decline.
Time to do your due diligence
Has a company caught your interest? Attractive dividend yields should not be the only reason to buy shares of a company. Instead, you must carry out careful due diligence before every purchase. The Internet offers you excellent opportunities in this respect.
Otherwise, I use tools like those from Dividendstocks.cash and Seeking Alpha to do further research. You can also find me and my analyses on these platforms. We also have a small but lovely group on Facebook that you can join. We share there only fundamental analyses of companies from various sources. So there is no spamming or anything like that.
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