The shortest month of the year is in the books for 2018. Similar to
January, I experienced some significant growth income, percentage wise,
compared to the same period last year. Take a look below for
the details on what contributed to the growth in dividend income.
As noted above, I only had three positions this time last year that paid me a dividend this time last year, compared to the seven positions I have year. Both Abbott and American Express increased their dividend rate in the last 12 months.
Chatam Lodging Trust (CLDT) has not increased their dividend in over the year, in fact, the last time CLDT increased their monthly dividend was back in March of 2016, nearly two years ago. As far as I am aware, the company has not provided any guidance on when the next dividend increase will come. As it stands, the annual dividend of $1.32 annually equates to 6.83% yield. Per the February 2018 Investor Presentation, management has set a FY18 AFFO expectation of $1.80-$1.94 per share. Based on the lower end of this guidance, dividend coverage will be 136% in 2018. I will of course continue to keep on eye on developments at CLDT. Although I prefer to seen annual increase in the dividend rate, a company's failure to do so may raise a red flag so to speak, but it does not trigger an automatic sell for me as perhaps it does for others. With all else remaining constant, I'd prefer to own a company who increased the dividend by 16% every other year rather then one who would only increased the dividend 4% consistently each year.
Omega Health Investors (OHI) is new holding within the last year. Recently, management announced that they would not be increasing the dividend on a quarterly basis for the time being. And, just yesterday, OHI announced that their largest operator, Orianna, file Chapter 11 bankruptcy. Along with this announcement, OHI's CEO, Mr. Pickett, reaffirmed the 2018 AFFO guidance of $2.96-$3.06. Based on the lower end of this guidance, OHI dividend coverage, based on an annual rate of $2.64, would be 112%. Is this a short term storm that OHI will weather just fine or is this just the tip of the iceberg? Stay tuned, this position may end up as a candidate for sale.
General Mills (GIS) has recently fallen back below my cost basis and thus has popped back up on my radar. However, this is just one of a dozen or so companies that I have been considering for purchase. What I believe has contributed pullback in valuation is the company's recent announcement that it has agreed to acquire Blue Buffalo Pet Products for $8 billion. Per the GIS press release, "founded in 2002, Blue Buffalo is the fastest growing major pet food company making natural foods and treats for dogs and cats under the BLUE brand, which includes BLUE Life Protection Formula, BLUE Wilderness, BLUE Basics, BLUE Freedom and BLUE Natural Veterinary Diet. BLUE is the #1 Wholesome Natural pet food brand in the U.S. with $1.275 billion in net sales and $319 million in Adjusted EBITDA for fiscal year 2017, representing an Adjusted EBITDA margin of 25%. Over the past three years, Blue Buffalo has delivered compound annual net sales growth of 12% and Adjusted EBITDA growth of 18%." It appears that Wall Street isn't sold on the idea of entering the Pet Food space (similar to JM Smucker decided to do not too long ago) and/or the premium valuation GIS offered.
Looking forward to the next month, March is shaping up to be another big winner with 5 holding having recently announced dividend increase. Stay tuned!
As noted above, I only had three positions this time last year that paid me a dividend this time last year, compared to the seven positions I have year. Both Abbott and American Express increased their dividend rate in the last 12 months.
Chatam Lodging Trust (CLDT) has not increased their dividend in over the year, in fact, the last time CLDT increased their monthly dividend was back in March of 2016, nearly two years ago. As far as I am aware, the company has not provided any guidance on when the next dividend increase will come. As it stands, the annual dividend of $1.32 annually equates to 6.83% yield. Per the February 2018 Investor Presentation, management has set a FY18 AFFO expectation of $1.80-$1.94 per share. Based on the lower end of this guidance, dividend coverage will be 136% in 2018. I will of course continue to keep on eye on developments at CLDT. Although I prefer to seen annual increase in the dividend rate, a company's failure to do so may raise a red flag so to speak, but it does not trigger an automatic sell for me as perhaps it does for others. With all else remaining constant, I'd prefer to own a company who increased the dividend by 16% every other year rather then one who would only increased the dividend 4% consistently each year.
Omega Health Investors (OHI) is new holding within the last year. Recently, management announced that they would not be increasing the dividend on a quarterly basis for the time being. And, just yesterday, OHI announced that their largest operator, Orianna, file Chapter 11 bankruptcy. Along with this announcement, OHI's CEO, Mr. Pickett, reaffirmed the 2018 AFFO guidance of $2.96-$3.06. Based on the lower end of this guidance, OHI dividend coverage, based on an annual rate of $2.64, would be 112%. Is this a short term storm that OHI will weather just fine or is this just the tip of the iceberg? Stay tuned, this position may end up as a candidate for sale.
General Mills (GIS) has recently fallen back below my cost basis and thus has popped back up on my radar. However, this is just one of a dozen or so companies that I have been considering for purchase. What I believe has contributed pullback in valuation is the company's recent announcement that it has agreed to acquire Blue Buffalo Pet Products for $8 billion. Per the GIS press release, "founded in 2002, Blue Buffalo is the fastest growing major pet food company making natural foods and treats for dogs and cats under the BLUE brand, which includes BLUE Life Protection Formula, BLUE Wilderness, BLUE Basics, BLUE Freedom and BLUE Natural Veterinary Diet. BLUE is the #1 Wholesome Natural pet food brand in the U.S. with $1.275 billion in net sales and $319 million in Adjusted EBITDA for fiscal year 2017, representing an Adjusted EBITDA margin of 25%. Over the past three years, Blue Buffalo has delivered compound annual net sales growth of 12% and Adjusted EBITDA growth of 18%." It appears that Wall Street isn't sold on the idea of entering the Pet Food space (similar to JM Smucker decided to do not too long ago) and/or the premium valuation GIS offered.
Looking forward to the next month, March is shaping up to be another big winner with 5 holding having recently announced dividend increase. Stay tuned!
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