Archives for October 2023

Amgen Triumphs in Q3 Earnings and Raises the Bar for 2023

October 31, 2023 by Kevin

With its recent Q3 earnings surpassing expectations, Amgen (NASDAQ:AMGN) is one name that’s been creating ripples in the investment arena.

Earnings That Speak Volumes

Amgen has posted an adjusted third-quarter earnings of $4.96 per share. Now, if we’re comparing notes with Wall Street, their estimate was at $4.78. That’s not all – this number is a marked increase from last year’s $4.70 per share during the same period.

Shares of AMGN dropped during market hours, despite guidance.

A Closer Look at Revenue

When it comes to revenue, Amgen reported a hefty $6.9 billion. While this might seem a tad bit less than the anticipated $6.92 billion, it’s still a substantial figure that cannot be ignored.

Spotlight on Drugs

A couple of drugs from Amgen’s portfolio experienced commendable sales growth. The inflammation drug Amjevita/Amgevita, for example, saw a 30% year-over-year increase. This growth was attributed to a whopping 53% volume growth. However, it’s worth noting that the pricing was a tad bit lower.

Another drug, Prolia, which falls under the company’s general medicine category, enjoyed a 14% growth from the previous year. Factors contributing to this rise include a 7% volume increase and higher pricing.

However, it wasn’t all sunshine and rainbows. Sales of Otezla dipped by 10% compared to the previous year. Amgen’s management is of the opinion that demand for this inflammation drug might face challenges due to free drug programs throughout the year.

Furthermore, Enbrel’s sales saw a decline of 6%. On the bright side, the volume went up, with more new patients beginning their treatment journey owing to improved payer coverage.

What’s Ahead for Amgen in 2023?

Amgen is optimistic about the future. The company has elevated its revenue guidance for 2023 to a range between $28 billion and $28.4 billion. To put things into perspective, the previous projection was between $26.6 billion and $27.4 billion.

In addition, they’ve given a clearer earnings forecast, narrowing down the expected earnings per share to fall between $18.20 and $18.80. Previously, the prediction ranged from $17.80 to $18.80.

The Horizon Acquisition

Earlier this month, Amgen finalized its acquisition of Horizon Therapeutics. This deal was valued at an impressive $27.8 billion. Robert Bradway, Chairman and CEO of Amgen, commented on this strategic move. He highlighted the addition of rare disease medicines to Amgen’s portfolio, which aligns perfectly with the company’s innovative direction.

Stock Performance

Despite the encouraging earnings report, Amgen’s stock took a bit of a tumble. It went down by 3.57%, settling at $255.74 in Tuesday’s trading session.

William Blair analyst Matt Phipps offered some insight. He believes the guidance uplift was primarily due to the closure of the Horizon deal, rather than an indication of organic growth.

AMGN raised their dividend in 2023 to a quarterly payment of $2.13 per share, up 10% YoY.

The 2023 Guidance in a Nutshell

From Amgen’s official press release, here’s a quick snapshot of what to expect for the full year of 2023:

Total revenues will be between $28.0 billion and $28.4 billion.
GAAP-based EPS will range from $11.23 to $12.73 with a tax rate between 14.0% and 15.5%.
Non-GAAP-based EPS is projected to be between $18.20 and $18.80, with a tax rate spanning from 16.5% to 17.0%.

Capital expenditures are set at approximately $950 million.
Share repurchases will not surpass the $500 million mark.

In conclusion, Amgen’s recent earnings report showcases its robust position in the biotech industry and its potential for growth in 2023. It will be interesting to observe how the company maneuvers through challenges and capitalizes on opportunities in the coming months.

Northrop Grumman Q3 2023: A Focus on Backlog and Free Cash Flow Expansion

October 26, 2023 by Kevin

If you’re an investor with an eye on aerospace and defense stocks, then Northrop Grumman’s (NOC) latest quarterly earnings might have caught your attention. The report showcased strong performance across the board, particularly in the company’s backlog and free cash flow. Here, we’ll delve deeper into the highlights from Northrop Grumman’s Q3 2023 earnings report and what it means for investors.

Impressive Sales Growth

Starting with the basics, Northrop Grumman Corp reported a significant 9% increase in sales, reaching $9.8 billion in Q3 2023. This uptick was driven by a rising demand for the company’s products and services, translating to an impressive increase from the $9.0 billion sales recorded in Q3 2022.

Earnings Outshine Expectations

Apart from a rise in sales, the company enjoyed a 20% hike in operating income. The diluted earnings per share (EPS) settled at $6.18, supported by an operating cash flow of $1.2 billion. When we pit these figures against the previous year, Q3 2023’s net earnings totaled $937 million, outdoing Q3 2022’s $915 million. This translates to an increase from $5.89 to $6.18 per diluted share year over year.

*Northrop Grumman Third Quarter 2023 Conference Call*

Backlog Hits Record High

One of the standout figures from the earnings report was Northrop Grumman’s backlog, which reached a historic high of $84 billion. Net awards for the company stood at $15 billion, indicating a robust book to bill ratio of 1.53. For investors, a strong backlog can be a positive sign as it represents future potential revenues.

Sector-wise Sales Jump

Drilling down further, the increased sales weren’t just from one segment but were broad-based across all sectors of the company. Aeronautics Systems reported a 9% jump, Defense Systems showed a 6% rise, Mission Systems noted a 7% growth, and finally, the Space Systems sector led the pack with an 11% surge in sales.

What’s Behind the EPS Boost?

The 5% growth in diluted EPS was not just a product of increased net earnings (which grew by 2%). A significant factor was also the $97 million gain Northrop Grumman recognized from selling its minority investment in an Australian business. Additionally, the 2% reduction in weighted-average diluted shares outstanding played a role in enhancing the EPS.

A Positive Outlook for the Future

In light of the encouraging figures, Northrop Grumman has revised its expectations for the future. The company upped its 2023 sales guidance by $400 million, now forecasting approximately $39 billion. Furthermore, Northrop Grumman’s glimpse into 2024 is also optimistic, anticipating steady growth in revenue, operating income, and free cash flow.

Additionally, NOC expects to deploy ~$1.5B in share repurchases this year.

Concluding Thoughts

For followers of Northrop Grumman, the Q3 2023 earnings report brings a lot of good news. With a record backlog, increasing sales across all sectors, and a positive outlook for the coming year, the company is clearly on a trajectory of growth. While past performance is no guarantee of future results, the company’s current trajectory, focus on free cash flow, and ability to surpass expectations make it a compelling story in the aerospace and defense sector.

For more insights and dividend-related information on companies like Northrop Grumman and others, make sure to visit DividendCalculator.net regularly.

Visa’s Q4 Financial Report: Surpassing Forecasts, Amplifying Dividends, and a Colossal $25B Buyback

October 25, 2023 by Kevin

In the stock market, every earnings report can dramatically sway investors’ sentiments. For financial juggernauts like Visa, their fiscal reports often create ripples across the broader financial landscape. And their latest Q4 results? They did not disappoint.

Beating the Analysts

When Visa revealed its fiscal Q4 results, the numbers surpassed many analysts’ projections. According to data from FactSet, industry experts anticipated a 16.6% growth in earnings, translating to $2.25 per share adjusted. They also projected a 9.9% revenue surge, amounting to $8.56 billion. However, Visa’s results painted an even rosier picture.

The company showcased a commendable 21% adjusted earnings growth, reaching $2.33 per share. Their revenue also shone, marking a 10.6% rise, which culminated in a total of $8.6 billion.

Visa Q4 2023 presentation — *Screenshot from Visa’s Q4 2023 presentation. View here.*

A Deep Dive into Visa’s Performance Metrics

Behind the overarching figures lie details that give us a clearer view of where Visa’s growth is stemming from:

Payments Volume: This metric is central to a company that revolves around facilitating transactions. For Visa, this number was up by 9% over the quarter.
Cross-border Volumes: An essential aspect in our globalized world, Visa reported a significant 16% upswing in these transactions when analyzed on a constant basis.

Processed Transactions: Overall, the number of transactions processed by Visa witnessed a 10% growth.
Service Revenue: This revenue stream, which reached $3.88 billion, saw an uptick of 12%.
Data Processing Revenues: Amounting to $4.26 billion, this segment experienced a 13% growth.

International Transaction Revenues: Another crucial metric for Visa, these revenues climbed 10% to settle at $3.17 billion.

The CEO’s Perspective

When CEOs comment on results, they offer an invaluable lens through which we can interpret the numbers. Visa’s CEO, Ryan McInerney, highlighted two core themes:

The resilience of consumer spending: Even amidst economic uncertainties, consumers are continuing to spend, which bodes well for companies in the financial sector.

Recovery in cross-border travel: Compared to the figures from 2019, there’s an evident rejuvenation in cross-border travel, which aligns with the growth in Visa’s cross-border volumes.

Looking Ahead: Visa’s 2024 Forecast

As with any robust company, Visa’s eyes are fixed on the future. For the upcoming 2024 fiscal year, the firm anticipates high single-digit to low double-digit net revenue growth. However, they’ve also signaled a potential 5.5% dip in adjusted earnings, attributing it to costs related to acquisitions. But on the brighter side, their GAAP earnings growth is expected to soar into the high teens.

The Dividend and Buyback News

Here’s where things get particularly interesting for investors and stock market enthusiasts. Visa announced a nearly 16% hike in its quarterly dividend, adjusting it to 52 cents a share. This increase is a direct reflection of the company’s financial health and its commitment to returning value to shareholders.

But that wasn’t the only headline-stealer. Visa unveiled a staggering $25 billion buyback program. Stock buybacks are a strategic move, often signaling a company’s belief that its shares are undervalued. They can also boost earnings per share figures, making the stock more attractive to potential investors.

Stock Market Reaction

Visa’s announcements undeniably made waves in the stock market. On the Wednesday following their earnings release, Visa’s stock witnessed an approximately 1% ascent, surpassing its 10-day and 21-day moving averages. This uptrend was a continuation from Tuesday’s regular session where shares rose by 1.35%, trading between crucial 50-day and 200-day lines.

For those tracking Visa’s stock (V), it’s currently moving within a flat base, with analysts pinpointing a 250.06 buy point. With the stock up nearly 13% for the year and inching close to its all-time high from July 2021, it’s a space investors are keenly watching.

In Conclusion

Visa’s Q4 results can be summed up in three words: impressive, promising, and strategic. By outpacing analyst projections, reinforcing dividends, and announcing a significant buyback, Visa has solidified its stance as a financial powerhouse in the eyes of investors and market analysts alike.

RTX Triumphs with Stellar Earnings and a Massive Buyback Initiative

October 24, 2023 by Kevin

For many companies, obstacles can either make or break them. For RTX (previously known as Raytheon Company), the journey amidst challenges has been nothing short of remarkable, as recent reports have shown. Let’s dive into the details.

An Earnings Surprise

Despite facing some significant challenges, RTX recently reported a quarterly earnings that surpassed expectations. A substantial factor behind this surprise was the sterling performance of its Collins Aerospace unit. This business success managed to offset some of the financial drawbacks from the major quality crisis faced by its engine-making unit, Pratt and Whitney.

The Engine Hiccup

A few months back, RTX unveiled a concerning discovery. Their investigations revealed the presence of microscopic contaminants in powdered metal. This metal is crucial for manufacturing high-pressure turbine discs, which form an essential component of the engine’s core. Such contamination can eventually lead to cracks, which in turn impacts the efficiency and safety of the engines.

Initially, RTX estimated that around 200 of its Geared Turbofan (GTF) engines would require inspection, setting aside 60 days for fixing each problematic engine. But the plot thickened. Two months later, they had to broaden the scope of inspections, suggesting a whopping 700 engines might need to be pulled from aircraft for intensive quality checks.

Because of this issue with the powdered metal, RTX found itself compelled to reduce the expected lifespan of specific parts of the PW1500 and PW1900 engines. This decision is projected to result in the grounding of certain Airbus A220s and Embraer E2 aircraft come the first half of 2024. Additionally, over the next four years, the company plans to speed up the removal and inspection process for 100 V2500 engines that power the A320ceo aircraft.

A Bold Buyback Announcement

Amidst this backdrop, RTX unveiled a move that speaks volumes about their confidence in their future. The company greenlit a massive $10 billion share repurchase program. Funding for this bold initiative is slated to come from both short and long-term debt. This announcement was a resounding note of optimism, and the market responded favorably. Following the news, shares of the aerospace titan surged by 6.3% in early trading.

Silver Linings Amidst the Clouds

While the engine problem is undeniable, the company’s CFO, Neil Mitchill, offered some solace. In a recent conversation with Reuters, he noted that they don’t anticipate a significantly negative financial or operational fallout from these issues.

In response to the engine challenges, RTX has strategically upped its game. They’re pushing the envelope to bolster maintenance shop output, which remains the most considerable risk in executing their GTF inspection plan. On the brighter side, they aim to have 16 repair facilities active by the end of 2023. Moreover, the company is accelerating the production of the essential high-pressure turbine and compressor discs, targeting to manufacture at full capacity by the second quarter of 2024.

Looking at the Bigger Picture

Pratt and Whitney didn’t escape the ripple effect of the engine recalls. The RTX subsidiary reported a significant $2.48 billion operating loss for the quarter, with this figure inclusive of compensations to airlines. But it’s not all grim. The Collins Aerospace unit, a key player under the RTX umbrella, saw its profit soar by 22%, touching $903 million.

RTX’s overall third-quarter adjusted profit stood at an impressive $1.25 per share. This figure comfortably beat Wall Street’s expectations, which were pegged at $1.21 per share. Moreover, adjusted revenue showed a 12% spike, reaching $18.95 billion, outperforming analysts’ forecasts.

Despite the setbacks related to the GTF, RTX has confidently raised its outlook for 2023. They’re now anticipating a free cash flow of $4.8 billion, a jump from the initial estimate of $4.3 billion. Sales projections have been adjusted too, with the company now expecting reported sales to touch $68.5 billion and adjusted sales to reach $74 billion.

Other Noteworthy Moves

Adding to the series of significant announcements, RTX disclosed its decision to sell its Cybersecurity, Intelligence, and Services business. This move, encompassing a segment of its Raytheon unit, will bring in a neat sum of around $1.3 billion.

Conclusion

In the world of business, challenges are inevitable. What matters is how companies respond. For RTX, their recent quarterly report is a testament to their resilience and strategic foresight. As they navigate through challenges, their performance shines a light on the robust nature of their operations and their commitment to growth.

These Companies Just Raised Their Dividends

October 24, 2023 by Kevin

Dividends are a major attraction for investors. They represent a company’s willingness to share its profits with shareholders. Recently, a few companies made the news by announcing increases in their dividend payouts. Let’s dive into which companies these are and what it means for their shareholders.

1. Brown & Brown, Inc. (BRO)

Brown & Brown is not just any company when it comes to dividends; it has a stellar track record. With its recent announcement of a dividend increase to $0.13 per share, it has marked its 30th consecutive annual dividend hike! This new dividend is a 13% increase from its previous $0.1150 per share. For shareholders, it means not only getting a piece of the company’s profits but also enjoying an increment in that piece year after year.

Historical Perspective: Brown & Brown’s commitment to steadily increasing its dividends positions it as a reliable choice for dividend investors. A three-decade growth streak is no small feat, especially in volatile markets.

2. Stepan Company (SCL)

Stepan Company, another heavyweight in the dividend world, has also announced a rise in its dividends. Though the increment of $0.010 per share (or 2.7%) might seem modest, it’s the consistency that stands out. This marks the 56th consecutive year that the company has increased its quarterly dividend rate.

Historical Perspective: Stepan’s unwavering approach to dividends, even during challenging economic times, underlines its robust financial health and dedication to shareholders.

3. Minerals Technologies Inc (MTX)

Minerals Technologies took a bold step by doubling its regular quarterly dividend from $0.05 to $0.10 per share. On top of that, the company has authorized a massive $75 million share repurchase program. This move not only benefits shareholders directly through dividends but also indicates potential stock price appreciation with the buyback.

CEO’s Note: Douglas T. Dietrich, the Chairman and CEO, emphasized that these financial decisions mirror the Board’s confidence in the company’s growth and overall financial performance.

4. Accenture (ACN)

Accenture has been making waves in the financial news, not just for its dividends but also for its ambitious share repurchase program. The company plans to buy back a whopping $4.00 billion in shares, signaling its belief that the shares are undervalued.

But dividends are our main focus, right? Accenture announced a significant dividend increase. Shareholders will now receive a quarterly dividend of $1.29 per share, up from the previous $1.12. Annually, this represents a dividend of $5.16 with a yield of 1.69%. When we look at the dividend payout ratio (DPR) of 47.91%, it suggests the company retains over half of its earnings, which can be used for future growth.

Wrap Up:

These companies, with their recent announcements, have shown a strong commitment to their shareholders. For investors, a consistent and growing dividend can be a sign of a company’s financial health and its confidence in the future.

The History of the JP Morgan Dividend

October 17, 2023 by Kevin

When it comes to reputable names in the banking world, J.P. Morgan is at the forefront. Founded in 1824 as The Manhattan Company, J.P. Morgan has undergone several transformations, mergers, and acquisitions, but one thing has remained consistent – their commitment to returning value to shareholders through dividends.

Decades of Dividend Payments

For decades, JP Morgan has maintained a tradition of paying dividends to its shareholders. While the exact amount and frequency have varied over the years, the bank’s commitment to rewarding its shareholders has never wavered. For instance, in the early 2000s, their dividends grew steadily, reflecting the bank’s growth and profitability.

However, the financial crisis of 2007-2008 posed challenges. Like many banks, JP Morgan had to make tough decisions to stay afloat. One such decision was to cut their dividends. In 2009, the bank reduced its quarterly dividend from $0.38 to $0.05. This was a strategic move to preserve capital and ensure the bank’s longevity during uncertain times.

A Strong Recovery

The financial crisis didn’t hold JP Morgan down for long. As the economy began to recover, so did the bank’s dividend payments. By 2011, just two years after the significant cut, the bank increased its dividend to $0.25 per quarter. This was a testament to JP Morgan’s resilience and ability to bounce back after economic downturns.

In the years that followed, the dividends continued to grow. By 2019, the quarterly dividend had more than doubled from the post-crisis era, standing at $0.90. This impressive growth demonstrates not just the bank’s commitment to its shareholders but also its robust financial health and growth strategy.

The Role of Acquisitions

JP Morgan’s dividend history can’t be discussed without mentioning the role of acquisitions. Over the years, the bank has acquired numerous companies, each bringing with it assets, opportunities, and sometimes even a dividend-paying history of its own. One of the most significant acquisitions was that of Chase Manhattan Bank in 2000, which contributed to JP Morgan’s growth and, by extension, its ability to offer higher dividends.

Tax Considerations

It’s essential to understand the tax implications when you receive dividends. JP Morgan’s dividends, like those from most U.S. corporations, are typically taxed at a rate lower than regular income. This is known as “qualified dividends,” which can be a great advantage for shareholders. If you’re an investor, it might be wise to consult a tax professional to understand fully the tax implications of your dividend income.

Where To Hold JP Morgan Shares?

Given the tax advantage of qualified dividends, many investors choose to hold their JP Morgan shares in taxable accounts. However, for those who want to avoid taxes now and are planning for long-term growth, holding these shares in a tax-advantaged account like an IRA might make more sense. This way, you allow your dividends and potential capital appreciation to compound over time, without the immediate tax bite.

Conclusion

The story of JP Morgan’s dividend is one of resilience, growth, and unwavering commitment to shareholders. From its early days as The Manhattan Company to its current status as a global banking giant, JP Morgan has consistently showcased the importance of returning value to those who believe in and invest in the company.

Whether you’re an existing shareholder or considering an investment, understanding JP Morgan’s dividend history offers insights into the bank’s stability, growth strategy, and promise for future returns.

Ally Financial Declares Q4 2023 Dividend

October 12, 2023 by Kevin

Ally Financial Inc. (NYSE: ALLY) has recently made an announcement that will undoubtedly please its shareholders. In a press release distributed today, the company’s board of directors has declared a quarterly cash dividend for its stockholders.

For every share of the company’s common stock, shareholders will receive $0.30. This dividend will be payable on November 15, 2023, to all stockholders who are on record as of November 1, 2023.

But that’s not all. The announcement also contained information about dividend payments related to the company’s Series B and Series C preferred stock securities. These dividends will also be payable on November 15, 2023.

Specifically, shareholders of Ally’s 4.700% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series B, are set to receive approximately $15.9 million in total, which breaks down to $11.75 per share. The eligibility cut-off for this dividend is set for October 31, 2023.

Similarly, those holding shares of Ally’s 4.700% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C, can expect a dividend amounting to roughly $11.8 million in total. This also translates to $11.75 per share, with the same record date of October 31, 2023.

Ally Financial has been consistently showing its commitment to return value to its shareholders, and these recent dividend declarations are a testament to that dedication.

$0.30 for the 8th Consecutive Quarter

ALLY is on track to pay a $0.30 dividend for 8 consecutive quarters now. This dividend grower has stalled out due to the Federal Reserve’s commitment to crushing inflation. The Fed has relentlessly raised rates since 2022. Meanwhile, ALLY has shored up cash in case of rough seas ahead in the form of defaults from borrowers.

The 5 year dividend growth rate was at 24.6% before the recent dividend announcement.

Are Covered Call ETFs Tax Efficient?

October 12, 2023 by Kevin

Whether you’re on forums, Reddit, Twitter (X), or even Threads, you will see chatter about covered call ETFs. They’re incredibly popular with dividend and fixed income investors, especially within the FIRE (financially independent, retire early) movement.

Some of the most popular covered call ETFs include:

JEPI: JPMorgan Equity Premium Income ETF

JEPQ: JPMorgan Equity Premium Plus ETF
QYLD: Global X NASDAQ-100 Covered Call ETF
RYLD: Global X Russell 2000 Covered Call ETF

XYLD: Global X S&P 500 Covered Call ETF

What Are Covered Calls?

A covered call is a financial market transaction in which the seller of call options owns the corresponding amount of the underlying instrument, such as shares of a stock or other securities. The strategy is typically used to generate additional income from a portfolio by selling options against securities already owned.

A covered call ETF (Exchange Traded Fund) uses this strategy to generate income from the underlying assets of the ETF. The ETF will own a basket of stocks and then sell call options on those stocks. The premium received from selling these options can be distributed to the ETF shareholders, often resulting in a higher yield than the underlying assets would produce on their own.

The trade off here is that investors can miss out on potential upside during a bull market. There are pros and cons to owning covered call ETFs, but we’re going to dive into tax implications.

The Tax Side of Covered Call ETFs

While covered call ETFs can provide attractive income, understanding their tax implications is vital. Why? Because the taxes you pay can eat into your returns. So, let’s dive into the tax side of things!

How Covered Call Income is Taxed

When you receive income from a covered call ETF, it’s typically considered ordinary income, not qualified dividend income (see SCHD for a dividend ETF with qualified dividend income). This means you’re taxed at your regular income tax rate, not the lower qualified dividend rate. For investors in higher tax brackets, this can make a difference!

Short-term vs. Long-term Capital Gains

Another tax aspect to consider is capital gains. When a covered call is exercised and the underlying stock is sold, it could generate capital gains. If the ETF held the stock for over a year, it’s a long-term gain (taxed at a lower rate). But if held for less, it’s short-term (taxed at your regular income rate).

Tax Advantage of Holding in Tax-Deferred Accounts

Considering the tax implications, it might make sense to hold covered call ETFs in tax-advantaged accounts like IRAs or 401(k)s. Here’s why:

No Immediate Tax on Distributions: In traditional IRAs or 401(k)s, you won’t pay taxes on the income or capital gains from your covered call ETFs until you start taking distributions.

Roth Advantage: If held in a Roth IRA, the distributions could be entirely tax-free if taken after age 59½ and the account is at least five years old.
Avoiding Tax Complications: Managing taxes with covered call ETFs can get complicated. Holding them in a tax-advantaged account simplifies things.

When It Might NOT Make Sense to Use Tax-Advantaged Accounts

While tax-advantaged accounts sound perfect, there are scenarios where it might not be ideal:

Liquidity Needs: If you might need access to the funds before retirement age, pulling them out of a 401(k) or IRA might lead to penalties.
Mandatory Distributions: Traditional IRAs have required minimum distributions (RMDs) once you hit a certain age. If you don’t need the money, these mandatory withdrawals might be inconvenient.

Conclusion: Weighing the Tax Trade-offs

Covered call ETFs offer a unique blend of income and potential for capital appreciation. But like all investments, they come with tax considerations. By understanding these tax implications and strategically deciding where to hold these ETFs, you can potentially optimize your after-tax returns. Always remember, when it comes to taxes, consulting with a tax professional can provide tailored advice to your situation.

The History of Energy Transfer L P (ET) Dividends

October 9, 2023 by Kevin

In the world of big companies and stock markets, there are many names, but some stand out more than others. One such name in the energy sector is Energy Transfer L.P. (ET). Beyond its operations, ET is also known for something that many investors love: dividends. Let’s dive into its dividend history and see what makes it tick.

The Dividend Story of ET

Dividends are essentially a part of a company’s profits that they decide to share with their shareholders. Think of it as a “thank you” for believing in them. Since its early days, Energy Transfer L.P. has been consistent in paying dividends to its investors. Over the years, they’ve seen increases and decreases, reflecting the company’s performance and the broader economic environment.

Historically, ET has shown growth in its dividend distribution. For instance, in the mid-2010s, the dividend was around 30 cents per share. Fast forward to recent times, and it has fluctuated, reaching higher peaks and seeing some drops, but it’s evident that dividends have been a core part of ET’s financial strategy.

The MLP Twist: A Different Kind of Dividend

Energy Transfer L.P. isn’t just any regular company; it’s an MLP, which stands for Master Limited Partnership. This is where things get interesting. MLPs are unique because they combine features of corporations and partnerships. They’re traded on public exchanges, just like regular stocks, but they have different tax structures.

Unlike regular companies that pay a portion of their profits as dividends, MLPs give out “distributions.” Now, you might wonder about the difference. The primary distinction comes down to taxes. Regular dividends get taxed twice: once at the corporate level and then at the individual level when shareholders receive them. Distributions from MLPs, however, are only taxed at the individual level, and even then, a large part of it might be considered a “return of capital,” which can have tax deferral benefits.

Why This Matters for Investors

If you’re an investor, the way MLPs handle dividends can be beneficial. Not only might you get regular income through distributions, but the unique tax treatment can also be advantageous. However, it’s always essential to consult with a tax professional, as MLPs can complicate tax returns.

Energy Transfer L.P. and the Future

With a history of commitment to returning value to shareholders and a unique MLP structure, Energy Transfer L.P. has been a point of interest for many dividend investors. The energy sector has its ups and downs, influenced by global events, technological advancements, and shifts in energy sources. However, ET’s consistent focus on dividends signals its dedication to its investor base.

As with all investments, it’s crucial to stay informed and understand the nuances, especially with companies like ET that have different structures. The past might give insights, but the future of dividends, especially in sectors as dynamic as energy, remains to be written.

Conclusion: A Journey of Energy and Dividends

Energy Transfer L.P.’s dividend history offers a tale of consistent financial rewards, intertwined with the complexities of being an MLP. For investors, it’s a story of potential gains, unique tax benefits, and the ever-evolving world of energy. As the energy landscape changes, companies like ET will continue to be at the forefront, powering our homes and potentially our investment portfolios.

Lockheed Martin Raises Dividend and Nearly Doubles Buyback

October 9, 2023 by Kevin

Lockheed Martin Corporation (NYSE:LMT) published a press release on October 6, 2023, that they would be increasing the dividend from $3 per share in Q4 to $3.15. The increase adds up to a 5% increase YoY. Some dividend investors might find that somewhat boring. However, the most exciting piece of the press release came in the second half.

The company’s board has also authorized the purchase of up to an additional $6 billion of Lockheed Martin common stock under its share repurchase program, nearly doubling total authorization of the current program to $13 billion for future purchases.”
Lockheed Martin Corporation

LMT is known as one of the better capital allocators, decreasing share count at an impressive rate. While the 5% raise in dividends might not be exciting, the $6 billion in additional buybacks should get any Lockheed Martin’s shareholder’s blood pumping.

This Is a Significant Move in Share Repurchases

Share repurchases, or buybacks, often indicate that a company believes its shares are undervalued. When a company buys back its shares, it reduces the total shares available in the market. This can lead to an increase in earnings per share, often making the stock more attractive to investors.

Furthermore, this aggressive approach to share repurchases shows a confident stance in the company’s financial health and future outlook. For long-term investors, such moves by LMT should be reassuring. Not only is the company committed to returning value to shareholders through dividends, but it’s also actively working to enhance shareholder value through buybacks. This dual approach demonstrates Lockheed Martin’s commitment to its investors and its belief in its long-term growth potential. So, while the dividend increase might seem modest, the broader strategy paints a picture of a company that is both forward-thinking and investor-friendly.