Regardless of the overall stock market, there is always exceptional news for dividend investors! Today, I am excited to share exceptional news from four stocks that I own in my personal dividend stock portfolio. It's time to spread passive income and cash flow happiness.
First, I want to discuss Cedar Fair (FUN), a master limited partnership (MLP) that I have been accumulating in 2018. Today, I bought more FUN and I'm honestly shocked it's trading so low after their exceptional earnings report.
Some fun facts about Cedar Fair:
* They tanked due to attendance being down (due to inclement weather). They went down further due to the overall market correction.
* Their recent earnings report was really good (in my opinion), however the stock has not really rallied (another piece of good news for someone accumulating FUN, like myself).
* Attendance is down 0.5% year over year
* Revenue is up 2%
* Adjusted EBITDA is up 1%
* Net income is up 11% due to tax reform
* Out of park revenue is up 8%, my favorite stat from their report
* Also, they raised the distribution by 4%, and current yield is 7.09% (on a starting yield basis)
* Projecting out 4% annual increases for 10 years, one's dividend yield on cost (without reinvestment) would be 10% (sweet)
* Formula: 7.09%*1.04^10
Next up is a controversial stock, IBM! I spend time chatting about the recent Red Hat acquisition. IBM just keeps falling in share price, becoming more and more of a deep value. I love IBM here and I love the Red Had acquisition. That said, I am being cautious on my asset allocation since this is one of my riskiest stock holdings. As such, I feel good with IBM coming in at ~1.6% of my portfolio right now. I may add more shares in 2018, but I also have other holdings that deserve some love too. Right now, I want to buy more Cedar Fair, although I certainly continue to be bullish on IBM here.
A few thoughts on this stock pick:
* I love the Red Hat acquisition
* Stock is down due to lackluster earnings, a weak stock market, and the acquisition (when a company makes an acquisition, it typically goes down).
* I like IBM even more knowing about this acquisition. I think it will bring life to the company and offer them the opportunity to become #2 or maybe even #1 in cloud. Right now, Amazon is #1 and Microsoft is #2, with IBM coming in at #3.
* Gotta love the IBM dividend yield of 5.83%
* With a market cap of $106 billion, the $34 billion Red Hat acquisition, the largest software acquisition of all time, is a huge bet. It has to work!
* Of course they are overpaying. That said, I see long-term synergies for the decade (or longer) holder.
* According to management, the acquisition will boost revenue, gross margin, and free cash flow within 12 months
* And, it's going to support the growing dividend! (Yay!)
* That said, the acquisition will take IBM's already high debt to a whole new level
Last up is Kimberly-Clark (KMB). If you are a long-time subscriber, you may recall that this is a very strategic stock for me in 2018. (PG too, although that ship has sailed.) I'm looking at my 2018 goals and realizing that I am coming up a bit short on my strategic KMB and PG focus. I did ok, but also got distracted with other stocks too. I have absolutely no regrets, but now is the time to focus coming into the end of the year.
I certainly like buying at a 15.5-16 forward 2018 PE (based on company guidance). And, I love the 3.77% starting dividend yield.
Do you have 2018 goals? There is still time! Also, start thinking about your 2019 goals.
Want to learn more about dividend investing? Don't forget to connect on Instagram (I'm @ianlopuch): https://www.instagram.com/ianlopuch/
Want to learn about more great dividend investing news? Check out this video:
Here’s my Cedar Fair (FUN) analysis:
Here's why I think IBM is really undervalued:
Here are my 2 goals for 2018 (buying PG and KMB):
Here's my #4 stock pick of all time, United Technologies (UTX):
Disclosure: I am long Cedar Fair (FUN), IBM (IBM), Kimberly-Clark (KMB), Procter & Gamble (PG), General Mills (GIS), PepsiCo (PEP), and United Technologies (UTX). I own these stocks in my stock portfolio.
Disclaimer: I'm not a licensed investment advisor, and PPC Ian videos, Excel files, and content are just for entertainment and fun. PPC Ian videos, Excel files, and content are NOT investment advice. Also, I'm not a tax advisor and PPC Ian videos, Excel files, and content are NOT tax advice. Please talk to your licensed investment advisor before making any financial decisions. Please talk to your licensed tax advisor before making any tax decisions.
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