There are many companies in business and you need to be very selective in trying to pick the right ones for you. Many financial newspapers including the Globe will offer advice on what the managers of actively traded mutual funds are picking for their portfolios. Mind you when they pick them, the stock may or may not be the biggest holding in their portfolio but their advice helps you to select. On January 20, the Globe had a special feature called the Top US dividend stocks for your portfolio.
The companies are the why:
Starbucks – 70% of sales in North America; where the economy is beginning to do well. The new menu should boost sales per store; the new app adds to loyalty program which helps increase revenues. The company can add $3-$5 billion in new debt before impacting their credit rating.
Apple – iPhone7 is coming in the fall which could be a reason for more sales. (iPhone is 65% of sales of Apple). Apple users tend to love the brand or be brand loyal which should be able to sell other products. The company has billions in dollars in offshore accounts which means they can be very aggressive on research and development costs which means somewhere they will be more innovative products.
CVS Health – two companies dominate US pharmacy sales CVS and Walgreen. CVS recently bought a company which provides drugs to nursing homes. Over the past decade we know seniors use more drugs (or buy more drugs). CVS is nice stable business with a clean balance sheet. The retail accounts for 46% of sales but 72% of earnings.
MetLife Inc – the largest life insurance company with more than 100 million customers in 50 countries. Its long term debt is manageable for it has $10 billion in cash. As the economy gets better, MetLife benefits.
Wal-Mart Stores – the shares have been hit by a strong dollar however on line sales have increased as well as same-store sales have increased. As the economy does better, Wal-Mart will continue to do good.
Quest Diagnostics Inc – the largest US provider of laboratory testing. It should do better on the better economy, the aging population and Obama care (expanding insurance coverage – the government pays the bills). While Quest does many routine tests they also do higher revenue, higher margin specialized testing which is growing rapidly.
Linking to dividend paying companies, notice the dominate market share these companies have, the economy will go up and down but these companies will tend to make profits which can pay dividends. The better the economy, the greater the capital gain for you. Be selective and you will do better with less market risk.
There are more questions than answers, till the next time – to raising questions.