Valuentum Exclusive Analysis for the Discerning Investor

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May 17, 2023

Our Reports on the Health Care Bellwethers Industry
Our reports on the Health Care Bellwethers industry can be found in this article. Reports include JNJ, CVS, ABT, ABBV, LLY, AMGN, MRK, PFE, VRTX, UNH, BMY, GILD, ISRG, MDT, WBA, ZTS.

Apr 14, 2023

UnitedHealth Group Raises Guidance for 2023
Image: We view valuation as a range of probable fair value outcomes. The high end of the fair value estimate range for UnitedHealth Group stands north of $600. Shares are currently trading at ~$520 each at the time of this writing. We’re huge fans of entities that generate strong free cash flow and boast a healthy net cash position on the books, and that includes UnitedHealth Group. During the first quarter of 2023, the company returned $3.5 billion to shareholders via dividends and buybacks. UnitedHealth remains one of our top dividend growth ideas, and while the company yields just ~1.3% at this time, we expect its future pace of dividend growth to be robust, especially in light of its strong potential earnings expansion that is backed by robust free cash flow generation and a net-cash-rich balance sheet. It’s simply hard not to like UnitedHealth Group.

Mar 24, 2023

How the Payment of a Dividend Impacts Intrinsic Value Estimation
"Dividends are a transfer of cash to the shareholders that the shareholders already owned."In this purely educational article, using historical data from 3M, let’s walk through the mechanics of how the payment of a dividend impacts the intrinsic value of a company. The takeaways may be somewhat counterintuitive but are nonetheless very important for members to understand.

Jan 13, 2023

UnitedHealth Is A Free Cash Flow Powerhouse; Shares Yield ~1.3%
Image Source: UnitedHealth Group. Very few firms have the type of free cash flow conversion as that of UnitedHealth Group, and the company’s free cash flow coverage of its cash dividends remains phenomenal, all the while its balance sheet remains as strong as ever. We expect the firm to continue to raise its 2023 guidance throughout the year as momentum behind its UnitedHealthcare and Optum divisions accelerate. The executive team remains confident that it will achieve its long-term goal of growing earnings per share in the range of 13%-16% per annum, and while that may seem aggressive, it is achievable, in our view. Healthcare spending remains a large part of U.S. GDP, and we expect overall spending on healthcare to continue to expand at a rapid clip in coming years. We continue to like UnitedHealth Group as a dividend growth idea, and its financials speak to tremendous payout support.

Jan 10, 2023

Dow Laggard Walgreens Boots Alliance Yields North of 5%; Has Raised Dividend for 47 Consecutive Years
Image: Walgreens Boots Alliance’s shares have been pummeled during 2022. Image Source: TradingView. Key metrics, including free cash flow and adjusted earnings per share, aren’t presently moving in the right direction at Walgreens Boots Alliance, but free cash flow generation remains in excess of cash dividends paid. The company, and its predecessor firm, Walgreen Co., have paid 360 straight quarters of dividends over the past 90 years, too, raising the payout in each of the past 47 years. It’s absolutely amazing for a company to have such a storied history and reliable dividend track record, but it’s also worth emphasizing Walgreens Alliance Boots is far from a simple story these days. Still, with a 5%+ forward estimated dividend yield, this component of the Dow Jones Industrial Average is worth a close look.

Dec 27, 2022

Exclusive Call: What To Expect From Valuentum in 2023
Video: 2022 was a successful year by almost every measure from the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio to the simulated High Yield Dividend Newsletter portfolio and Exclusive publication and beyond. There were some disappointments in 2022, of course, but the year showed the value of a Valuentum membership. Join President of Investment Research Brian Nelson on this year's Exclusive conference call to learn what to expect from Valuentum in 2023. Cheers!

Nov 30, 2022

Great Year for (Our) High Yield Dividend Ideas! Inquire about the High Yield Dividend Newsletter!
Image: The year-to-date simulated estimated performance of the High Yield Dividend Newsletter portfolio, which continues to hold up well during 2022, while offering an attractive forward estimated dividend yield. Simulated estimated performance is calculated by Valuentum and has not been externally audited. Inquire about the High Yield Dividend Newsletter. The next edition will be released December 1, 2022. Based on our estimates, the simulated High Yield Dividend Newsletter portfolio is down ~4.4% on a price-only basis so far in 2022 on an interim basis, using data from the trading session November 29 (retrieved from Seeking Alpha). By comparison, according to data from Morningstar, the Vanguard 60/40 stock/bond portfolio (VBIAX) is down more than 15% so far this year (on a price-only basis), the Vanguard Real Estate ETF (VNQ) is down 26% year-to-date (on a price-only basis), while the iShares Mortgage Real Estate Capped ETF (REM) is down ~30% on a year-to-date basis. Each simulated newsletter portfolio at Valuentum targets a different strategy, whether long-term capital appreciation, dividend growth, income/high yield, and the like. Generally, for the simulated Best Ideas Newsletter portfolio, it targets long-term capital appreciation potential (not in one year or a couple years, but in the long run). During the past five years...an ETF that tracks the area of large cap growth is up more than 70%, while an ETF that tracks the area of dividend growth has advanced ~40%, an ETF that tracks small cap value is up ~17% during the past five years, while an ETF that tracks the area of the highest-yielding S&P 500 companies is up just 12% -- according to data from Morningstar. REITs, as measured by the VNQ, are up just 3% over the past five years. We nailed the call on the drawdown in the 60/40 stock/bond portfolio this year, and readers should continue to question the merits of modern portfolio theory, not merely state that now the 60/40 stock/bond is cheap (after the huge decline)! It's extremely important to continue to test whether something makes sense or not. If interest rates continue to rise, we think bond prices will continue to face pressure. Sometimes, a few of our best ideas don't work out (as in any year), but that's why we use the simulated (and diversified) Best Ideas Newsletter portfolio to measure the success of the VBI. We're not a quant shop. We believe in the qualitative overlay. For example, there are highly-rated ideas that don't make the cut for the simulated Best Ideas Newsletter portfolio and there are low-rated ideas that find their way into the newsletter portfolio because they add a diversification benefit. Given the massive up years in the broader markets in 2019, 2020 and 2021, with the simulated Best Ideas Newsletter portfolio estimated to be down in the low-double-digits so far this year (approximately ~10%-12%, by our latest tally) -- and this estimate includes the missteps in Meta Platforms (META), PayPal (PYPL), and Disney (DIS) -- this is actually pretty awesome, in our view -- especially considering all that went wrong in other areas such as crypto, REITs, mortgage REITs, disruptive innovation stocks, Chinese equities, and the list goes on and on. A low double-digit estimated percentage decline, as that "experienced" in the simulated Best Ideas Newsletter portfolio so far in 2022 after huge up years, can be viewed as just part of a long-term journey that targets capital appreciation. For context, Berkshire Hathaway's stock price was nearly halved in 1974. It's okay to time the markets a bit as we did last August, but staying engaged with investing over the long haul is a key part of the recipe for success, as it was for Berkshire investors. For readers seeking income and high yield dividend ideas, please consider subscribing to our High Yield Dividend Newsletter. 2022 hasn't been an up year for a lot of investors, but it shouldn't have been a disaster either, and we've done a really great job avoiding the worst areas. We're interested in hearing how you are using our service, so that we can continue to get better. All told, we're excited about 2023, and we hope you are too!

Nov 28, 2022

2022 Showcased the Value of a Valuentum Membership
In bull markets, almost everyone is a winner. But 2022 was different. This year was a big test for Valuentum, and we passed with flying colors. We delivered across the board during the year from ideas in the Exclusive publication and the efficacy of the dividend growth methodology to the resilience of high yield ideas and simulated Best Ideas Newsletter portfolio relative performance--despite setbacks from Meta Platforms, PayPal, and beyond. Tune in to the latest video installment from Valuentum. Thanks for listening!

Nov 10, 2022

Market Whipsaw: Crypto Collapse and a Lower-than-Expected Inflation Print
Image: Uncertainty in the cryptocurrency markets has surged with concerns over the liquidity of a key exchange. Investors are weighing the spillover effects of crypto with the view that the pace of inflation may have peaked. The U.S. equity market continues to be highly volatile as it whipsaws between concerns over the health and sustainability of cryptocurrency and optimism over lower-than-feared inflation readings. We maintain our bearish/defensive stance on equities, but at the same time, we continue to be “fully-invested” across the simulated newsletter portfolios in part because we don’t want to miss out on days like today, November 10, when the markets are soaring ~2.5%-5.5% depending on which index you are monitoring. We’re also not ruling out a Santa Claus rally through the end of the year. Merry Dow Jones, as they say!

Nov 3, 2022

Lumen’s Dividend Cut Highlights Effectiveness of Valuentum’s Dividend Methodology and Uniqueness of Dividend Cushion Ratio
A lot of times investors only focus on the dividend payout ratio – dividends paid per share divided by earnings per share – or free cash flow coverage of the dividend, but the balance sheet is so very important to the sustainability of the dividend, too – something that the Dividend Cushion ratio embraces but other dividend health metrics do not. For example, Lumen’s dividend payout ratio was 50% ($0.75 in dividends dividend by $1.50 in earnings per share during the first three quarters of the year), and its free cash flow was enough to cover its cash dividends paid during the first nine months of 2022, too. However, the company held a massive ~$25 billion net debt position at the end of the quarter, which pushed its Dividend Cushion ratio deep into negative territory, raising a huge red flag with respect to the sustainability of the payout. Ignoring the balance sheet both with respect to intrinsic value and dividend analysis could be a recipe for disaster.