Category Archives: dividends

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Conagra Brands: A “defensive” consumer stock with an aggressive balance sheet

One or the other time, I have published a weekly about consumer stocks. My general view has been for years that these names should be avoided, being it food, beverage, or alcohol stocks, partly also household and cleaning producers (except one name I published a research report about, it’s up +22% over the last five months). Investors who bought blindly solely based on past performance have suffered big losses. While hopes for a turnaround to finally arrive continue to be high, there’s little reason to be overly optimistic. These stocks have lost their status as “defensive” core positions not for one, but for several reasons. The case study of Conagra Brands.

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Nine lost years — Bottom in sight for Nestlé?

Since its peak at around 130 CHF per share and a market cap of almost 400 billion CHF, consumer staples heavyweight Nestlé has highly disappointed its fan base of predominantly defensively oriented investors. Who’d have thought that THE core investment in the consumer staples sector (besides Coca-Cola) could see its stock price get almost cut in half? Although I have not written a weekly about Nestlé so far, my readers know that Nestlé has not been interesting all the time. Is it now worth a look?

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My next Target for a Dividend Cut is a King

I stick to my view which many investors don’t share: this decade will be remembered as the one where dividends have been cut, not sparing big names. With this, I do not mean the obvious candidates like cyclical commodity producers or European car makers, but the ones where it really hurts (for dividend and income investors). In the past, I have written several weeklies, digging out names with proud series that have come to an end or with a high likelihood will end in the not-too-distant future. My next target is another dividend king.

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Has Big Pharma destroyed Shareholder Value (as expected)?

In March 2023, I published a controversial weekly, warning about investments in Big Pharma stocks. This group, often popular among retail investors for their dividends and pretend safety (size, diversification, proven, etc.), was already back then clearly facing a huge wall of painful patent expirations. As I had expected, many of the biggest — and most popular — names have seen their stocks painfully breaking apart while broader markets rose. Time for an update.

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Don’t skip this: Why I‘ve been (+ remain) negative on consumer stocks

I must admit I am surprised how angry people can become when their widows and orphans stocks, mainly consumer staples with reliable dividends, are attacked. It is no secret that I‘ve been writing and commenting negatively about them for some time. And I was right in most cases, as these “safe bets“, which according to the fan base belong in every defensive portfolio, have performed very poorly. I stick to my view that the dividends won’t be safe over time. Once and for all, I am now unveiling why my pessimism likely is warranted.

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Is now the time to rotate into defensive stocks?

This question pops up frequently. Some people ask it more often, others less so. The ongoing bull market started in 2009 and was only briefly interrupted a few times. Every dip gets bought, and on we go. We haven’t seen a recession with an enduring and nasty bear market. Many investors nowadays do not even know what that is – the last one is simply too far away. This Weekly is not about market timing, but about bringing some thoughts in order, cleaning up with a few misbeliefs, and challenging the composition of one’s stock portfolio.

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Nomad Foods: Tasty Deal?

In the spotlight today is the Western European market leader in the frozen food industry. With a portfolio of multiple brands, the company’s roots span over a century. The current setup was formed in 2015, when the brands Iglo and Findus were acquired. Since the IPO, a decade has passed, yet the stock is trading (again) where it had started. Are a near 5% dividend yield and a PE ratio of 7 enough to spark appetite, or is something fishy?

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Diageo – Does Johnnie keep on stumblin’?

Though initially not planned as a trilogy in that sense, today I am taking a closer look at Diageo, the world’s biggest spirits company. Like its competitors Pernod Ricard and Brown-Foreman, Diageo stock has nosedived, and caused strong headaches for its investors. After the stock got cut in half, while the broader market ran from high to high, the question arises, whether this could be a good contrarian pick right now. Especially with the dividend now being on a historically high level.

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Not Safe: My next picks for a dividend cut

Summer holidays have begun. This is a good time to have a look into the stock portfolio, challenging the personal picks and always asking “why” they have a place in the portfolio. Occasionally, a summer clean-up may be appropriate. Especially, if the core strategy consists of banking on dividend payers that generate a supposedly low-maintenance passive income stream. Be on guard, here come my next four names where I think the dividends will have a tough time to be sustained.

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When do buybacks create shareholder value?

Buying back own stock on the open market is a frequently used tool to let shareholders participate in the success of a company. At least in theory. Ideally, free cash flow is used to repurchase equities to lower share count, thus making every single piece a bit more valuable. There are examples where buybacks indeed created shareholder value. On the other hand, plenty of money has been wasted with the goal to appease shareholders, but without a positive outcome. Are buybacks good or bad, respectively when so?

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