LONG-TERM INVESTING IN HIGH-QUALITY DIVIDEND STOCKS€¦ · 3 Opening Thoughts - On Newell Brands,...

Sure Dividend

LONG-TERM INVESTING IN HIGH-QUALITY DIVIDEND STOCKS

March 2019 Edition

By Ben Reynolds, Nick McCullum, & Bob Ciura

Edited by Brad Beams

Published on March 3rd, 2019

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Table of Contents

Opening Thoughts - On Newell Brands, Value, & Patience - ................................................... 3

Sell Recommendation: Clorox (CLX) ........................................................................................ 4

Sell Recommendation: Nike (NKE) ............................................................................................ 5

The Sure Dividend Top 10 – March 2019 ................................................................................... 6

Analysis of Top 10 Stocks ............................................................................................................. 7

AbbVie Inc. (ABBV) .................................................................................................................. 7

Walgreens Boots Alliance Inc. (WBA) .................................................................................... 12

Caterpillar Inc. (CAT) ............................................................................................................... 17

Eaton Vance Corp. (EV) ........................................................................................................... 22

Bank OZK (OZK) ..................................................................................................................... 27

Ameriprise Financial Inc. (AMP) ............................................................................................. 32

WestRock Co. (WRK) .............................................................................................................. 37

AT&T Inc. (T) .......................................................................................................................... 42

Cardinal Health Inc. (CAH) ...................................................................................................... 47

Western Digital Corp. (WDC) .................................................................................................. 52

Closing Thoughts - On The Dividend Aristocrats - ................................................................. 57

Real Money Portfolio .................................................................................................................. 58

Buying & Ranking Criteria ....................................................................................................... 59

Portfolio Building Guide ............................................................................................................ 60

Examples ................................................................................................................................... 60

Past Recommendations & Sells.................................................................................................. 61

Sell Rules .................................................................................................................................. 61

Current Holds ............................................................................................................................ 61

Pending Sells ............................................................................................................................. 64

Sold Positions............................................................................................................................ 64

List of Stocks by Dividend Risk Score ...................................................................................... 65

List of Stocks by Sector .............................................................................................................. 70

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Opening Thoughts - On Newell Brands, Value, & Patience -

Newell Brands (NWL) traded over $50/share briefly in the summers of 2016 and 2017. The stock is

currently trading for less than $20/share, including a ~20% decline since the company released its 4th

quarter earnings on February 15th. What’s going on at Newell?

First, the company acquired Jarden in 2016 for a total deal value of $16 billion. Newell over-paid and

over-leveraged itself trying to grow rapidly by making a transformative acquisition. The company has

had to divest many brands to streamline its operations (certainly a positive) and pay down debt (due to

its overly aggressive Jarden acquisition). To the company’s credit, the dividend has grown each year

since 2010, even through this difficult restructuring period.

Newell released its 4th quarter and fiscal 2018 earnings results on February 15th. Debt was reduced

from ~$10.5 billion to ~$7.0 billion on the year, a significant improvement. The company also reduced

its share count by more than 7% in fiscal 2018. And, Newell grew adjusted earnings-per-share 4.4% in

the quarter versus the same quarter a year ago. But guidance was troubling…

Specifically, the company is expecting operating cash flow of $400 million at the midpoint of its

guidance in fiscal 2019 versus $680 million in fiscal 2018. On more careful analysis, the underlying

business will be more profitable than the $400 million cash flow number suggests, because it includes

reductions of $200 million for divestiture closing costs and taxes, and $200 million for restructuring

and related costs. It also does not include operating cash flow from expected divestitures. The first

$200 million is obviously a one-time charge. The second $200 million should be, but companies tend

to throw more costs into restructuring than are merited. Conservatively, Newell Brands will generate

$700 million plus in operating cash flow after fiscal 2019 (assuming no recession occurs). This comes

to $1.65/share in operating cash flows at the current share count (versus a dividend of $0.92/share).

But where Newell gets more interesting is how it plans to use the cash from its planned brand

divestitures. Newell expects to generate roughly $4 billion in fiscal 2019 from divestitures. This

money will be used to further pay down debt and repurchase shares. If management follows its

guidance, the share count could fall 30% into fiscal 2020 – and keep in mind these repurchases are at

low valuations, enhancing shareholder value. Also, if any of the company’s cost reduction and

restructuring moves bear fruit (which we believe is likely), operating cash flows will be even higher.

The company could easily have operating cash flows of $3.00/share by the end of fiscal 2020.

Assigning a reasonable valuation multiple, the company’s shares will likely be worth $30 to $45 by the

end of fiscal 2020 making reasonable assumptions about the divestiture plan and share repurchases.

And that’s where value and long-term investing come into play. Newell posted worse guidance than

we expected for fiscal 2019. But the company’s plan remains in place, and it’s likely investors will

benefit from a significantly reduced share count (done at a low share price no less). This is not the type

of opportunity open to someone investing for the next quarter. This story will play out over the next 1

to 2 years. That’s why it’s important to have a long-term outlook while analyzing shorter-term results

closely. Further, understanding the expected value of a security through reasonable analysis can give a

reason to hold for the long run. And with stocks like Newell that pay dividends (which management

has no plan to change), investors get paid to be patient.

Disclosure: I (Ben Reynolds) am long NWL.

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Sell Recommendation: Clorox (CLX)

As a reminder, we are selling up to two securities a month from our past recommendations that have

low expected total returns.

Having low expected total returns does not mean the underlying business is weak in any way. In fact, it

could be an incredibly high-quality business that has weak expected total returns due to being

significantly overvalued.

And that’s the case with Clorox. Clorox is one of the safest businesses around. It does well during

recessions. It has trusted disposable consumer products that are unlikely to be replaced by advances in

technology. In short, Clorox is the type of business you want to own for the long run at the right price.

But other investors have noticed Clorox’s strength and bid the share price up. The stock looks

overvalued at current prices. With great businesses, investors can hold when they are unappreciated or

fairly valued and take advantage of market mispricing when they are overvalued. That’s why we are

recommending selling Clorox today.

We first recommended Clorox in the first-ever edition of The Sure Dividend Newsletter (April 2014),

where it was ranked 7th out of 10. Since that time, Clorox shares have gone on to deliver total returns1

of 102.9% (15.6% annualized) versus 66.1% (10.9% annualized) for the S&P 500.

Our Clorox recommendation has worked out better than expected, trouncing the market and doubling

in value (including dividends).

Clorox’s Growth

Clorox’s earnings-per-share have grown from $4.26 in fiscal 2014 to $6.26 in fiscal 2018, a 46.9%

increase (10.1% on an annualized basis). And, the company has grown its earnings-per-share each year

since 2014. Clorox’s future growth strategy is centered around cost reductions, bolt-on acquisitions,

modest organic growth, and share repurchases. The company does not have excellent growth prospects

ahead; we forecast just 5% growth annually moving forward.

Clorox’s Yield & Valuation

What is a fair price-to-earnings ratio for a secure company with a 5% expected growth rate and a

slightly-above-average dividend yield of 2.5%? We do not think it’s anywhere near 25, around where

Clorox’s current price-to-earnings ratio is. We peg fair value for Clorox at a price-to-earnings ratio of

19. If the company reverts to our estimate of fair value in 5 years, total returns will be reduced by

around 5% annually. When valuation is factored in, Clorox is poised to generate total returns of around

2.5% a year over the next several years. This is about in line with inflation – and does not properly

compensate investors for holding Clorox.

Performance, Recommendation, & Review

Our Clorox recommendation delivered strong total returns due to the dual tailwinds of solid earnings-

per-share growth and a rising valuation multiple. It is time to harvest these gains and reinvest the

proceeds into a security with better expected total returns ahead – like any of those in this month’s Top

10. We recommend selling Clorox now.

1 Return data from morning trading 2/28/19.

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Sell Recommendation: Nike (NKE)

We first recommended Nike in the May 2017 edition of The Sure Dividend Newsletter where it was

ranked 6th out of 10.

Like Clorox, the reason to sell Nike is because it is significantly overvalued, not because of anything to

do with the underlying business. We view Nike as a high-quality brand and industry leader in the

athletic apparel space.

Since we recommended Nike it has generated total returns2 of 62.1% (30.6% annualized) versus 20.5%

(10.9% annualized) for the S&P 500 (SPY). With annual returns nearly 3x those of the S&P 500, our

Nike recommendation has worked out far better than we hoped.

Nike’s Growth

When we first recommended Nike in May of 2017, we expected annual adjusted-earnings-per-share

growth of around 11% annually. Today, we are still targeting the same 11.0% growth annually.

When we first recommended Nike in 2017, it was three quarters into its fiscal 2017. Nike generated

earnings-per-share of $2.51 in fiscal 2017 and then went on to generate earnings-per-share of just

$2.40 in fiscal 2018. But we expect the company to generate earnings-per-share of $2.65 in fiscal

2019, up ~10% from fiscal 2018, and up 5.6% from the fiscal 2017 numbers.

While Nike is a growth company, the strong returns (for the stock) mentioned above did not come

primarily from growth. Valuation multiple expansion was the primary return driver.

Nike’s Yield & Valuation

We recommended Nike with a yield of 1.3% and a price-to-earnings ratio of 23x expected 2017

earnings. Price expansion has reduced Nike’s yield to just 1.0% today (despite rising dividends).

Nike’s historical average price-to-earnings ratio over the last decade is 20.5. With strong growth

prospects and high marks for safety, we believe a price-to-earnings ratio of 21.5 is fair for Nike.

But the stock is trading for a sky-high price-to-earnings ratio of 32.5 using expected fiscal 2019

earnings-per-share of $2.65. If Nike reverts to our estimate of a fair price-to-earnings ratio of 21.5 over

the next 5 years, it will realize a 7.9% annualized drag on returns.

When valuation is factored in, Nike’s expected total returns over the next 5 years are just above 4%

annually – not nearly high enough to justify holding Nike shares. The stock is severely overvalued.

Performance, Recommendation, & Review

Nike was not the typical Sure Dividend recommendation in that it had a below average yield. We

typically look for stocks with higher yields and lower price-to-earnings ratios than Nike. But the stock

offered growth and safety at a fair price. And the investment has worked out well, beating the S&P

500 handily since we recommended it.

Since our initial recommendation, Nike has seen its forward price-to-earnings ratio expand from 23 to

32.5 (a 41% jump). The stock now appears significantly overvalued; now is a good time to harvest

gains and reinvest into better opportunities. We recommend selling Nike now and reinvesting into a

company with better total return potential. Any of this month’s Top 10 would make a fine

replacement.

2 Total return data from mid-morning 2/28/19.

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Return to Top 10 List

The Sure Dividend Top 10 – March 2019

Name & Ticker Div. Risk

Score Price

Fair Value

Exp. Value Ret.

Div. Yield

Payout Ratio

Exp. Growth

ETR

AbbVie (ABBV) A $80 $113 7.4% 5.3% 49% 9.5% 22.2%

Walgreens (WBA) A $68 $98 6.4% 2.5% 28% 8.0% 16.9%

Caterpillar (CAT) A $137 $190 6.5% 2.5% 29% 6.2% 15.2%

Eaton Vance (EV) A $42 $54 5.1% 3.3% 42% 6.0% 14.4%

Bank OZK (OZK) B $33 $50 8.5% 2.7% 27% 11.3% 22.5%

Ameriprise Financial (AMP) B $132 $192 7.8% 2.7% 24% 8.0% 18.5%

WestRock (WRK) B $38 $54 8.8% 4.8% 42% 4.0% 17.6%

AT&T (T) B $31 $48 9.3% 6.6% 57% 6.0% 21.9%

Cardinal Health (CAH) B $54 $71 5.7% 3.6% 38% 5.0% 14.3%

Western Digital (WDC) B $51 $61 4.6% 4.1% 25% 6.5% 15.2%

Notes: Data for the table above is from The Sure Analysis Research Database, 2/27/19 spreadsheet, and

general data over the week ending 3/1/19. ‘Div.’ stands for ‘Dividend.’ ‘Exp. Value Ret.’ means expected

returns from valuation. ‘Exp. Growth’ means expected annualized growth rate over the next 5 years. ‘ETR’

stands for expected total returns and is the sum of the Exp. Value Ret., Div. Yield, and Exp. Growth columns.

Data in the table above might be slightly different than individual company analysis pages due to writing the

company reports throughout the week.

Disclosures: Ben Reynolds is personally long the following from this month’s Top 10: WBA, T, CAH, &

ABBV. Nick McCullum is personally long WBA, T, and CAH. The Real Money Portfolio is long EV, ABBV,

and will buy shares of WBA on Tuesday 3/5/19.

There were three changes in this month’s Top 10. T. Rowe (TROW), Invesco (IVZ), and Newell

Brands (NWL) were replaced by Bank OZK (OZK), Ameriprise Financial (AMP), and WestRock

(WRK). The stability of the top 10 list shows the ranking method is consistent, not based on rapid

swings. Securities that fall out of the top 10 are holds, not sells. Selling occurs rarely; only when a

security has expected total returns below the S&P 500’s, or if it reduces its dividend.

An equally weighted portfolio of the top 10 has the following characteristics:

Dividend Yield: 3.8%

Growth Rate: 7.1%

Valuation Expansion: 7.0%

Expected Annual Total Returns: 17.9%

The return estimates above are just that, estimates. Of the three expected total return factors,

dividend yield is the most reliable. Future growth estimates are notoriously unreliable.

Undervalued stocks tend to outperform in aggregate. However, the timing and nature of valuation

is not a science but an art with a high degree of error. Overall, we expect our recommendations to

outperform the S&P 500 by 1 to 3 percentage points over full economic cycles.

Note: Data for the newsletter was obtained between market open 2/27/19 and market close 3/1/19.

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Analysis of Top 10 Stocks AbbVie Inc. (ABBV)

Overview & Current Events

AbbVie is a pharmaceutical company focused on three core therapeutic areas: Immunology, Oncology,

and Virology. AbbVie was spun off by Abbott Laboratories in 2013. AbbVie generates annual sales in

excess of $30 billion and has a market capitalization of approximately $121 billion.

In late January (1/25/19) AbbVie reported its fourth quarter and full year earnings results. Revenue of

$8.3 billion for the fourth quarter increased 7%, due primarily to 42% growth for Imbruvica. Humira

remained the world’s best-selling drug, and AbbVie’s most important drug by far, but its growth rate

slowed down to just 0.5%. AbbVie earned $1.90 per share during the fourth quarter, which was 28%

more than the company’s earnings-per-share during the fourth quarter of the previous year. For 2018,

AbbVie generated earnings-per-share of $7.91, up 41% from 2017. AbbVie management expects

adjusted earnings-per-share in a range of $8.65 to $8.75 for fiscal 2019.

Competitive Advantages & Recession Performance

The most important competitive advantage for AbbVie, and any pharmaceutical company, is its patent

portfolio. To prepare for increasing competition to Humira, AbbVie has accelerated research and

development spending. AbbVie spent $10.4 billion on R&D in 2018, more than double the level from

the previous year. This spending is starting to show positive results, as AbbVie has a robust pipeline.

It is unclear how AbbVie itself performed during the Great Recession, as it was still part of Abbott

Laboratories. However, it is likely the company would hold up fairly well during a recession. People

often cannot choose to go without healthcare, even when the economy is in a downturn.

Growth Prospects, Valuation, & Catalyst

Loss of exclusivity for Humira poses a significant risk for the company going forward. AbbVie

management has stated that discounting in Europe has been “on the higher end” of what the company

had expected, with Humira prices being slashed from 10%-80% depending on the country. AbbVie

will face biosimilar competition to Humira in the U.S. starting in 2023. AbbVie has invested billions

into research and development to build a large portfolio of new products. Its two biggest areas of

growth going forward will be hematologic oncology, and next-generation immunology. AbbVie

expects non-Humira product sales to exceed $16 billion by 2020, and $35 billion by 2025.

Based on expected earnings-per-share of $8.70, AbbVie stock trades for a price-to-earnings ratio of

9.1. Our fair value estimate for AbbVie is a price-to-earnings ratio of 13.0, indicating the stock is

significantly undervalued. An expanding valuation multiple could boost shareholder returns by

approximately 7.4% per year over the next five years. In addition, we expect annual earnings growth

of 9%-10% through 2024. Lastly, the stock has a current dividend yield of 5.3%. In total, we expect

annual returns of 22.2% per year over the next five years.

Key Statistics, Ratios, & Metrics Maximum Drawdown3: 34.8% 10-Year EPS Growth Rate: 20.3% (since 2013)

Dividend Yield: 5.3% 10-Year Dividend Growth Rate: 18.0% (since 2013)

Most Recent Dividend Increase: 11.5% 10-Year Historical Avg. P/E Ratio: 13.8 (since 2013)

Estimated Fair Value: $113 10-Year Annualized Total Return: 18.7% (since 2013) Dividend History: 46 years of increases Next Ex-Dividend Date: 4/12/19 (est.)

3 Maximum drawdown occurred in October 2018.

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Income Statement Metrics Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Revenue N/A N/A N/A 17444 18380 18790 19960 22859 25638 28216

Gross Profit N/A N/A N/A 12805 13872 14209 15534 18359 19805 21176

Gross Margin N/A N/A N/A 73.4% 75.5% 75.6% 77.8% 80.3% 77.2% 75.0%

SG&A Exp. N/A N/A N/A 5894 4989 5352 7724 6387 5855 6275

D&A Exp. N/A N/A N/A 1272 1150 897 786 836 1189 1501

Operating Profit N/A N/A N/A 3620 5817 5664 3411 7537 9384 9592

Op. Margin N/A N/A N/A 20.8% 31.6% 30.1% 17.1% 33.0% 36.6% 34.0%

Net Profit N/A N/A N/A 3433 5275 4128 1774 5144 5953 5309

Net Margin N/A N/A N/A 19.7% 28.7% 22.0% 8.9% 22.5% 23.2% 18.8%

Free Cash Flow N/A N/A N/A 5891 6012 5776 2937 7003 6562 9431

Income Tax N/A N/A N/A 235 450 1204 595 1501 1931 2418

Balance Sheet Metrics Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total Assets N/A N/A N/A 19521 27008 29198 27513 53050 66099 70786

Cash & Equivalents N/A N/A N/A 27 5901 9595 8348 8399 5100 9303

Acc. Receivable N/A N/A N/A 3817 4298 3854 3735 4730 4758 5088

Inventories N/A N/A N/A 872 1091 1150 1124 1719 1444 1605

Goodwill & Int. N/A N/A N/A 9010 8453 8167 7375 32877 44313 43344

Total Liabilities N/A N/A N/A 7589 23645 24706 25771 49105 61463 65689

Accounts Payable N/A N/A N/A 417 556 933 1401 1597 1407 1474

Long-Term Debt N/A N/A N/A 48 15672 14723 14977 31671 36842 37368

Total Equity N/A N/A N/A 11932 3363 4492 1742 3945 4636 5097

D/E Ratio N/A N/A N/A 0.00 4.66 3.28 8.60 8.03 7.95 7.33

Profitability & Per Share Metrics Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Return on Assets N/A N/A N/A 16.9% 22.7% 14.7% 6.3% 12.8% 10.0% 7.8%

Return on Equity N/A N/A N/A 24.8% 69.0% 105% 56.9% 181% 139% 109%

ROIC N/A N/A N/A 24.8% 34.0% 21.6% 9.9% 19.7% 15.4% 12.6%

Shares Out. N/A N/A N/A N/A N/A 1590 1590 1610 1590 1590

Revenue/Share N/A N/A N/A 11.04 11.66 11.71 12.40 13.96 15.72 17.60

FCF/Share N/A N/A N/A 3.73 3.81 3.60 1.82 4.28 4.02 5.88

Note: All figures in millions of U.S. Dollars unless per share or indicated otherwise

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AbbVie Inc. (ABBV) Dividend Yield History

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AbbVie Inc. (ABBV) Fundamentals

Payout Ratio (TTM) - right axis Dividends (TTM) - left axis Earnings (TTM) - left axis

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

AbbVie Inc. (ABBV): Valuation Analysis

Average Annual PE Ratio Current PE 10-Year Average

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Walgreens Boots Alliance Inc. (WBA) Overview & Current Events

Walgreens Boots Alliance is a large pharmacy retail corporation with over 18,500 stores in 11

countries around the world. Through its retail business and other ventures (including equity

investments), Walgreens has a presence in more than 25 countries worldwide. It also operates one of

the largest global pharmaceutical wholesale and distribution networks in the world, with more than 390

centers that deliver to nearly 230,000 pharmacies, doctors, health centers and hospitals each year. With

43 years of consecutive dividend increases, Walgreens is a member of the Dividend Aristocrats Index.

In late December, Walgreens reported (12/20/18) fiscal 2019 first quarter results. Sales increased 10%

to $33.8 billion, led by a 14% increase in the company’s U.S. retail pharmacy segment. Prescription

volume increased thanks in large part to the previous acquisition of Rite Aid stores. Walgreens’

adjusted earnings-per-share increased 15%. Walgreens reiterated its guidance of 7% to 12% earnings-

per-share growth for fiscal 2019.


Walgreens’ competitive advantage is its leading market share as the largest pharmacy retailer in the

U.S. and Europe. Walgreens’ robust retail presence gives the company convenient locations that

encourage consumers to use Walgreens instead of its competitors. This brand strength means

customers keep coming back to Walgreens, providing the company with stable sales and growth.

Walgreens is very recession-resistant. Consumers are unlikely to cut spending on prescriptions and

other healthcare products. Walgreens’ adjusted earnings-per-share declined by just 7% during 2009 –

the worst of the global financial crisis – and the company actually grew its adjusted earnings-per-share

from 2007 through 2010, following this up with over 20% earnings growth in 2011.


Walgreens has a positive long-term growth outlook. Even though the retail industry is struggling,

Walgreens continues to grow sales and earnings. This is because pharmacy retail has so far proven to

be highly resistant to e-commerce competition. In addition, prescriptions and pharmacy retail will

benefit from the aging U.S. population and corresponding need for more healthcare services. Cost cuts

will also help Walgreens grow profitability in the years ahead. The company is launching a cost

management program that targets $1 billion in annual savings by the end of its third year.

Walgreens is expected to generate earnings-per-share of $6.50 in fiscal 2019. Based on this, the stock

currently has a price-to-earnings ratio of 11.0. Our fair value estimate for Walgreens is a price-to-

earnings ratio of 15.0. We view Walgreens as significantly undervalued; expansion of the price-to-

earnings ratio to 15.0 over 5 years could add 6.4% to Walgreens’ annual returns. In addition, we

expect Walgreens to grow earnings by 8% per year, and the stock has a 2.5% dividend yield. Overall,

Walgreens stock has expected returns of around 17% per year over the next five years.

Key Statistics, Ratios, & Metrics Maximum Drawdown4: 57.7% 10-Year EPS Growth Rate: 10.0%

Dividend Yield: 2.5% 10-Year Dividend Growth Rate: 18.0%

Most Recent Dividend Increase: 10% 10-Year Historical Avg. P/E Ratio: 16.7

Estimated Fair Value: $98 10-Year Annualized Total Return: 13.9%

Dividend History: 43 years of increases Next Ex-Dividend Date: 5/8/19 (est.)

4 Using the company’s maximum drawdown in the 2007-2009 financial crisis.

13



Revenue ($B) 63.34 67.42 72.18 71.63 72.22 76.39 103.44 117.35 118.21 131.54

Gross Profit 17613 18976 20492 20342 21119 21569 26753 29874 29162 30792

Gross Margin 27.8% 28.1% 28.4% 28.4% 29.2% 28.2% 25.9% 25.5% 24.7% 23.4%

SG&A Exp. 14366 15518 16561 16878 17543 17992 22400 23910 23740 24569

D&A Exp. 975 1030 1086 1166 1283 1316 1742 1718 1654 1770

Operating Profit 3247 3458 3931 3464 3576 3577 4353 5964 5422 6223

Op. Margin 5.1% 5.1% 5.4% 4.8% 5.0% 4.7% 4.2% 5.1% 4.6% 4.7%

Net Profit 2006 2091 2714 2127 2548 1932 4220 4173 4078 5024

Net Margin 3.2% 3.1% 3.8% 3.0% 3.5% 2.5% 4.1% 3.6% 3.4% 3.8%

Free Cash Flow 2184 2730 2430 2881 3089 2787 4413 6522 5900 6898

Income Tax 1158 1282 1580 1249 1499 1526 1056 997 760 998


Total Assets 25142 26275 27454 33462 35481 37250 68782 72688 66009 68124

Cash & Equivalents 2087 1880 1556 1297 2106 2646 3000 9807 3301 785

Acc. Receivable 2496 2450 2497 2167 2632 3218 6849 6260 6528 6573

Inventories 6789 7378 8044 7036 6852 6076 8678 8956 8899 9565

Goodwill & Int. 2158 3001 3229 3447 3717 3539 28723 25829 25788 28697

Total Liabilities 10766 11875 12607 15226 16027 16633 37482 42407 37735 41435

Accounts Payable 4308 4585 4810 4384 4635 4315 10088 11000 12494 13566

Long-Term Debt 2351 2401 2409 5392 5047 4490 14383 19028 12935 14397

Total Equity 14376 14400 14847 18236 19454 20513 30861 29880 27466 26007

D/E Ratio 0.16 0.17 0.16 0.30 0.26 0.22 0.47 0.64 0.47 0.55


Return on Assets 8.4% 8.1% 10.1% 7.0% 7.4% 5.3% 8.0% 5.9% 5.9% 7.5%

Return on Equity 14.7% 14.5% 18.6% 12.9% 13.5% 9.7% 16.4% 13.7% 14.2% 18.8%

ROIC 12.9% 12.5% 15.9% 10.4% 10.6% 7.8% 11.9% 8.8% 9.0% 12.2%

Shares Out. 989 939 889 944 947 950 1,090 1,083 1,024 952

Revenue/Share 63.89 68.25 78.08 81.39 75.60 79.15 98.15 107.55 109.61 132.20

FCF/Share 2.20 2.76 2.63 3.27 3.23 2.89 4.19 5.98 5.47 6.93

Note: All figures in millions of U.S. Dollars unless per share or indicated otherwise.

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Walgreens Boots Alliance (WBA) Dividend Yield History

15


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8Walgreens Boots Alliance (WBA) Fundamentals


16


13.9

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Walgreens Boots Alliance (WBA): Valuation Analysis


17


Caterpillar Inc. (CAT)


Caterpillar was founded in 1925. Today, it is an industrial giant, manufacturing heavy machinery used

in the construction and mining industries. The company also manufactures ancillary industrial

products such as diesel engines and gas turbines. Caterpillar generates annual revenue of $58 billion

and the stock has a market capitalization of $80 billion.

Caterpillar experienced strong growth in the years after the 2007-2009 Great Recession. However,

operating conditions became more challenging in 2015 and 2016, due to falling prices of certain

industrial commodities like precious metals and oil. Caterpillar’s customers disproportionately come

from the construction, mining, and energy industries, where falling commodity prices cause demand

for new machinery to sink.

After a difficult period, Caterpillar enjoyed a resurgence in 2018. For the fourth quarter, revenue

increased 11% to $14.3 billion. Construction product sales rose 8%, while resource segment revenue

increased 21%. For 2018, revenue increased 20% while adjusted earnings-per-share soared 63%.

Earnings-per-share of $11.22 set an annual record in 2018.


Caterpillar’s competitive advantage is its global presence, which affords it economic scale. For

example, Caterpillar has the ability to leverage down variable costs per unit, which boosts profit

margins. However, Caterpillar is certainly not immune to recessions as slowdowns in the global

economy are generally accompanied by lower commodity prices and slowing construction spending.

Earnings-per-share declined 75% in 2009. Fortunately, it was only a brief decline. Earnings nearly

tripled in 2010, with further growth after. It is likely Caterpillar would see a significant hit to earnings

if another recession occurs in the years ahead.


Caterpillar appears to be firing on all cylinders. The global economic growth has fueled positive

growth for the company. Mining companies are expanding operations as commodity prices remain

favorable, and construction continues to expand in the U.S., China and other key markets around the

globe. Further, Caterpillar’s own cost-cutting measures have expanded operating margins.

We expect Caterpillar to earn $12.25 per share in 2019. Based on this, the stock has a price-to-earnings

ratio of 11.3. This is significantly below average. In the past 10 years, the stock held an average price-

to-earnings ratio of 16.7. Our fair value estimate is a price-to-earnings ratio of 15.5. Expansion to this

level would boost annual returns by 6.5% per year over the next five years. In addition, shareholder

returns will be driven by earnings growth and dividends. The company is expected to generate 6.2%

earnings growth through 2024, while the stock has a current dividend yield of 2.5%. Overall, we

expect total annual returns of 15.2% per year over the next five years.



Most Recent Dividend Increase: 10.3% 10-Year Historical Avg. P/E Ratio: 16.7



5 Maximum drawdown occurred in March 2009.

18



Revenue 51324 32396 42588 60138 65875 55656 55184 47011 38537 45462

Gross Profit 12909 8510 11307 15734 18023 14202 13842 12878 9632 13767

Gross Margin 25.2% 26.3% 26.5% 26.2% 27.4% 25.5% 25.1% 27.4% 25.0% 30.3%

SG&A Exp. 4399 3645 4248 5203 5919 5547 6529 4951 4686 5177

D&A Exp. 1980 2336 2296 2527 2813 3087 3163 3046 3034 2877


Op. Margin 13.2% 10.6% 9.3% 11.9% 13.9% 10.1% 6.0% 8.1% 2.8% 9.7%

Net Profit 3557 895 2700 4928 5681 3789 2452 2512 -67 754

Net Margin 6.9% 2.8% 6.3% 8.2% 8.6% 6.8% 4.4% 5.3% -0.2% 1.7%

Free Cash Flow 786 4027 2423 3033 108 5745 4678 3438 2708 3366

Income Tax 953 -270 968 1720 2528 1319 692 916 192 3339


Total Assets 67782 60038 64020 81218 88970 84896 84681 78342 74704 76962

Cash & Equivalents 2736 4867 N/A N/A N/A N/A N/A N/A N/A N/A

Acc. Receivable N/A N/A 8494 10057 9706 8413 7737 6695 5981 7436

Inventories 8781 6360 9587 14544 15547 12625 12205 9700 8614 10018

Goodwill & Int. 2772 2734 3419 11448 10958 10552 9770 9436 8369 8311



Long-Term Debt 35535 31631 28337 34546 40070 37653 39200 37936 36715 34441

Total Equity 6087 8740 10824 12883 17532 20811 16746 14809 13137 13697

D/E Ratio 5.84 3.62 2.62 2.68 2.29 1.81 2.34 2.56 2.79 2.51


Return on Assets 5.7% 1.4% 4.4% 6.8% 6.7% 4.4% 2.9% 3.1% -0.1% 1.0%

Return on Equity 47.5% 12.1% 27.6% 41.6% 37.4% 19.8% 13.1% 15.9% -0.5% 5.6%

ROIC 8.9% 2.2% 6.7% 11.4% 10.8% 6.5% 4.3% 4.6% -0.1% 1.5%

Shares Out. 602 625 639 648 655 638 606 582 586 598

Revenue/Share 81.74 51.75 65.48 90.28 98.38 84.51 87.75 78.18 65.95 75.86

FCF/Share 1.25 6.43 3.73 4.55 0.16 8.72 7.44 5.72 4.63 5.62


19


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Caterpillar (CAT) Dividend Yield History

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8Caterpillar (CAT) Fundamentals


21


29.4

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Caterpillar (CAT): Valuation Analysis


22


Eaton Vance Corp. (EV) Overview & Current Events

Eaton Vance is an asset management firm based in Boston, Massachusetts and founded in 1924 with a

$4.9 billion market cap. With offices in North America, Europe, Asia, and Australia, the company

serves its clients by providing closed-end funds, mutual funds, term trusts, and exchange-traded funds

(those ETFs trade under the NextShares name).

In late February, Eaton Vance reported (2/26/19) financial results for the first quarter of fiscal 2019. In

the quarter, the company generated revenues of $406 million, which represents a decline of 3.3% over

the same period a year ago. This revenue decline was partially due to declining assets, as consolidated

assets under management (AUM) of $444.7 billion declined by 1% from the $449.2 billion of AUM

reported in the same period a year ago. The AUM decline reflected net inflows (notably rare among

non-passive asset managers) of $11.7 billion and market price declines of $16.3 billion. The remainder

of Eaton Vance’s decline in revenue is attributable to lower average management fees.

On the bottom line, Eaton Vance’s performance was similarly weak. Adjusted earnings-per-share of

$0.73 declined by 6% from the $0.78 reported in the same period a year ago, and also decreased by

14% from the fourth quarter of fiscal 2018. Revenue declines impacted earnings, and the company’s

earnings also suffered from seasonal increases in compensation and benefit costs. With that said, Eaton

Vance’s earnings release was in-line with analyst expectations as earnings-per-share came in just a

penny under consensus estimates.


Eaton Vance’s competitive advantage lies in its appealing product offerings and low fees, which are

allowing it to compete in an asset management industry experiencing significant fee compression.

While most asset managers are experiencing net outflows due to the trend towards low-cost ETFs,

Eaton Vance actually saw net inflows of $11.7 billion through the last four quarters.

The asset management industry is not known for its recession resiliency. Stocks in this sector tend to

perform poorly during bear markets as (1) equity markets fall, reducing asset managers’ revenue and

(2) customers withdraw money, further lowering AUM. Still, Eaton Vance performed reasonably well

during the last recession, as earnings-per-share declined by 31% and hit a new high within two years.


Eaton Vance is likely to generate earnings-per-share of ~$3.36 in fiscal 2019. Using this estimate, the

company is trading at a price-to-earnings ratio of 12.5. Eaton Vance traded at an average price-to-

earnings ratio of 16 over the last decade. If the company’s valuation can revert to a price-to-earnings

ratio of 16 in 5 years, this will boost its returns by about 5.1% annually. Eaton Vance is likely to

generate 6% annualized earnings growth and pays a dividend that yields 3.3%. Overall, we believe that

Eaton Vance could potentially deliver total returns of about 14.4% per year from current prices.







23



Revenue 890 1116 1249 1209 1358 1450 1404 1343 1529 1702

Gross Profit 700 873 718 690 776 855 798 738 846 966

Gross Margin 78.6% 78.2% 57.5% 57.0% 57.1% 58.9% 56.9% 54.9% 55.3% 56.7%

SG&A Exp. 315 369 161 161 172 175 234 153 171 141

D&A Exp. 21 25 25 25 25 21 22 20 19 N/A


Operating Margin 26.2% 31.1% 34.1% 32.5% 33.4% 35.8% 28.5% 30.8% 31.6% 32.6%

Net Profit 130 174 215 203 194 304 230 241 282 382

Net Margin 14.6% 15.6% 17.2% 16.8% 14.3% 21.0% 16.4% 18.0% 18.5% 22.4%

Free Cash Flow 118 84 160 174 110 91 208 330 52 N/A

Income Tax 71 126 157 142 144 187 143 154 174 157


Total Assets 1075 1259 1831 1979 2407 1860 2116 1730 2331 3599


Accounts Receivable N/A N/A N/A 134 170 186 188 186 200 237

Goodwill & Int. Ass. 217 209 210 214 303 294 293 295 349 341



Long-Term Debt 514 500 978 947 1100 726 971 572 631 1493

Shareholder’s Equity 307 410 460 612 670 655 620 704 1011 1107

D/E Ratio 1.67 1.22 2.12 1.55 1.64 1.11 1.57 0.81 0.62 1.35


Return on Assets 12.7% 14.9% 13.9% 10.7% 8.8% 14.3% 11.6% 12.5% 13.9% 12.9%

Return on Equity 47.6% 48.6% 49.4% 37.9% 30.2% 45.9% 36.1% 36.5% 32.9% 36.1%

ROIC 16.1% 18.9% 17.1% 13.1% 11.6% 19.3% 15.5% 16.8% 19.3% 18.0%

Shares Out. 117 118 115 116 121 118 116 114 119 121

Revenue/Share 7.38 9.10 10.41 10.50 11.09 11.93 11.88 11.78 13.13 13.85

FCF/Share 0.98 0.68 1.33 1.52 0.90 0.75 1.76 2.89 0.45 N/A


24


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Eaton Vance (EV) Dividend Yield History

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Eaton Vance (EV) Fundamentals


26


22.1

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Eaton Vance (EV): Valuation Analysis


27


Bank OZK (OZK) Overview & Current Events

Bank OZK is a regional bank that serves its customers in Arkansas, Florida, North Carolina, Texas,

Alabama, South Carolina, New York, and California. The company was founded in 1903, is based in

Little Rock, Arkansas, and has a market capitalization of $4.2 billion which makes it a mid-cap stock.

Bank OZK has increased its dividend for 22 consecutive years.

In mid-January, Bank OZK reported (1/17/19) its fourth quarter and fiscal 2018 earnings results. The

company had gross revenues of $256 million during the fourth quarter, which represents a growth of

4.4% compared to the prior year’s quarter. Analysts had forecasted flat revenues, so Bank OZK’s top

line performed substantially better than expected. Bank OZK’s revenue growth was primarily based on

growth in the company’s loan portfolio. Total loans, including purchased loans, totaled $17.1 billion at

the end of the fourth quarter, which represents a 6.7% increase versus the previous year’s quarter. The

strong growth in Bank OZK’s loan balance was the driver for a 6.3% net interest income, which, in

turn, was the most important factor for Bank OZK’s revenue performance. The bank earned $0.89 per

share during the fourth quarter, which was the highest quarterly profit in fiscal 2018. The weak

performance during its third quarter (due to one-time expenses for credit charge-offs) did not repeat,

and Bank OZK’s profitability was substantially better than what analysts and the market had expected.

Bank OZK’s share price rose by 16% on the day following the earnings release.


Despite being a regional bank, Bank OZK benefits from modest scale advantages in the specialized

geographies that it serves. The company is the largest bank in its home state of Arkansas. In addition,

the company operates with slightly less leverage than is common in the financial services industry, and

still reports strong returns on assets and returns on equity. Bank OZK has often operated with a return

on assets above 2% in the last decade (which is good), almost unheard of even among large-cap banks.

Bank OZK performed surprisingly well during the last recession. During a period when many of its

competitors were going out of business, Bank OZK’s earnings actually rose each year. Because of this,

we believe that the company is likely to perform reasonably well during future economic contractions

despite its recent poor credit quality controls.


We believe that Bank OZK is likely to generate earnings-per-share of $3.56 in fiscal 2018. Based on

this estimate, the company is trading at a price-to-earnings ratio of 9.3. Bank OZK traded at an average

valuation of about 14 times earnings over the last decade. If the company’s price-to-earnings ratio

were to expand to its 10-year average in the next 5 years, this would boost its total returns by than 8.5%

per year during this time period. After adding in the company’s 2.7% dividend yield and the possibility

for earnings growth (which we estimate at 11.3% per year), Bank OZK could deliver returns of about

22.5% per year from its current irrationally cheap price.





Dividend History: 22 years of increases Next Ex-Dividend Date: 4/14/19


28



Revenue 118 169 154 211 228 258 346 479 694 929

SG&A Exp. 30 59 55 75 78 84 100 111 163 212

D&A Exp. 4 4 5 7 9 10 13 17 25 34

Net Profit 34 43 64 101 77 91 119 182 270 422

Net Margin 29.0% 25.4% 41.5% 48.0% 33.8% 35.3% 34.3% 38.0% 38.9% 45.4%

Free Cash Flow 18 39 24 -1 -62 49 79 184 197 346

Income Tax 10 13 27 50 34 40 54 94 154 159


Total Assets 3233 2771 3274 3842 4040 4791 6766 9879 18890 21276


Accounts Receivable 19 15 14 13 13 14 20 25 52 65

Goodwill & Int. Ass. 6 6 8 12 12 19 106 152 721 709


Accounts Payable N/A N/A N/A 46 28 17 37 52 73 186

Long-Term Debt 490 408 347 367 346 346 256 322 383 364


D/E Ratio 1.51 1.51 1.08 0.86 0.68 0.55 0.28 0.22 0.14 0.11


Return on Assets 1.2% 1.4% 2.1% 2.8% 2.0% 2.1% 2.1% 2.2% 1.9% 2.1%

Return on Equity 15.5% 16.5% 21.7% 27.2% 16.5% 16.1% 15.4% 15.4% 12.7% 13.5%

ROIC 4.8% 5.8% 9.5% 13.8% 9.3% 9.9% 11.1% 12.3% 10.9% 12.0%

Shares Out. 67.50 67.60 68.18 68.96 69.78 72.40 78.06 87.35 104.7 125.8 Revenue/Share 1.75 2.51 2.26 3.06 3.26 3.57 4.43 5.49 6.63 7.39

FCF/Share 0.27 0.57 0.35 -0.01 -0.89 0.68 1.01 2.11 1.88 2.75 Note: All figures in millions of U.S. Dollars unless per share or indicated otherwise.

29


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Bank OZK (OZK) Fundamentals


31


11

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Bank OZK (OZK): Valuation Analysis


32


Ameriprise Financial Inc. (AMP)


Ameriprise Financial operates in the financial sector. It is an asset manager, with a market

capitalization of $18 billion, approximately 14,000 employees, and more than $800 billion in assets

under management (AUM). Ameriprise Financial’s operating segments include Advice & Wealth

Management, Asset Management, Annuities, and Protection (insurance products).

In late January (1/30/19) Ameriprise Financial released financial results for the fourth quarter and full

year. Revenue was flat for the fourth quarter, but adjusted earnings-per-share (EPS) more than tripled

year-over-year to $3.80. Ameriprise Financial’s Advice & Wealth Management segment increased

revenue by 5% while expenses dropped 2% in the fourth quarter. Higher net inflows helped lead to this

growth. Revenue fell 13% for the Asset management division and fell 4% in the Annuities segment.

The Protection segment revenue increased 3% for the quarter. A tax rate of 16.9% (versus 35% in the

fourth quarter of 2017) aided results. For the year, revenue grew 5.7% to $12.7 billion. Adjusted

earnings-per-share grew 27% to $14.94, due in large part to a lower tax rate. Assets under

management totaled $823 billion at the end of 2018.


Ameriprise Financial’s biggest competitive advantage is its brand strength within the asset

management industry. Strong financial performance is critical to retaining and growing its assets under

management.

That said, Ameriprise Financial is not immune to recessions. An economic downturn and resulting

decline in the stock market would both be negative headwinds for AUM. This would naturally lead to

declining earnings as well. Ameriprise’s earnings-per-share declined 13% from 2007-2009 during the

Great Recession. Fortunately, the company snapped back in 2010 with 42% earnings growth.

Ameriprise would likely see its earnings decline during a recession but should remain profitable.

Ameriprise’s dividend appears to be highly secure. Using expected EPS of $12.00 for 2018,

Ameriprise is likely to have a dividend payout ratio of 30% for the year. This is a fairly low payout

ratio that leaves plenty of room for Ameriprise’s high rate of dividend increases to continue.


Based on 2019 expected earnings-per-share of $15.30, Ameriprise stock currently trades for a price-to-

earnings ratio of 8.6. This is below our fair value estimate, which is a price-to-earnings ratio of 12.5,

equal to the average valuation multiple since 2009. If Ameriprise stock experiences expansion of the

price-to-earnings ratio to 12.5 over 5 years, shareholders would see a boost to the tune of 7.8%

annually. In addition, shareholder returns will be supplemented by earnings growth and dividends.

The combination of valuation changes, 8% expected EPS growth, and the 2.7% dividend yield fuels

expected annual returns of 18.5% over the next five years.





Dividend History: Increasing since 2010 Next Ex-Dividend Date: 5/4/19 (est.)

8 Maximum drawdown occurred in November 2008.

33



Revenue 7946 9582 10239 10259 11230 12296 12200 11735 12075 12924

SG&A Exp. 4296 4802 5569 5687 5981 6331 6358 6179 6450 6808

D&A Exp. 120 110 110 225 239 254 248 248 234 N/A

Net Profit 722 1097 1116 1029 1334 1619 1562 1314 1480 2098

Net Margin 9.1% 11.4% 10.9% 10.0% 11.9% 13.2% 12.8% 11.2% 12.3% 16.2%

Free Cash Flow 1401 1716 1928 1368 1259 2286 2558 2261 1539 N/A

Income Tax 183 350 377 335 492 545 455 278 734 386


Total Assets ($B) 113.8 131.2 132.3 134.7 144.6 148.8 145.3 139.8 147.5 137.2


Acc. Receivable N/A N/A 4440 4315 4610 5027 5274 5310 5785 6185

Total Liab. ($B) 103.9 119.9 122.6 125.0 135.3 139.5 137.0 133.5 141.5 131.6

Long-Term Debt 2249 8249 8075 7885 8956 10129 10363 5387 5261 4786

Total Equity 9269 10725 8988 9092 8192 8124 7191 6292 5998 5588

D/E Ratio 0.24 0.77 0.90 0.87 1.09 1.25 1.44 0.86 0.88 0.86


Return on Assets 0.7% 0.9% 0.8% 0.8% 1.0% 1.1% 1.1% 0.9% 1.0% 1.5%

Return on Equity 9.3% 11.0% 11.3% 11.4% 15.4% 19.8% 20.4% 19.5% 24.1% 36.2%

ROIC 7.1% 6.9% 6.0% 5.8% 7.5% 8.6% 8.2% 8.6% 12.9% 19.4%

Shares Out. 255 257 241 219 203 192 171 155 147 137 Revenue/Share 32.51 36.53 41.57 46.05 54.23 63.06 66.23 69.77 77.06 87.50

FCF/Share -5.73 6.54 7.83 6.14 6.08 11.72 13.89 13.44 9.82 N/A


34


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8Ameriprise Financial (AMP) Fundamentals


36


9.4

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Ameriprise Financial (AMP): Valuation Analysis


37


WestRock Co. (WRK)


WestRock Company was formed in July 2015 by the merger of Rock-Tenn and MeadWestvaco.

Today, it is a leading provider of paper and packaging solutions. It operates two major segments:

Corrugated Packaging (55% of revenue) and Consumer Packaging (45% of revenue). WestRock has a

market capitalization of approximately $9.6 billion.

WestRock has reported impressive financial results in recent periods. In early November, WestRock

reported (11/5/18) its financial results for fiscal 2018. WestRock grew revenue by 10% and adjusted

earnings-per-share by 56% for fiscal 2018, driven by especially strong growth in the corrugated

packaging segment, which benefited from increased volumes and price increases.

In late January (1/31/19) WestRock reported fiscal 2019 first quarter results. Net sales increased

14.5% for the quarter, mainly due to a recent acquisition as well as a favorable product mix. However,

adjusted earnings-per-share declined 4.6% for the quarter, as revenue growth was more than offset by

cost inflation and a negative impact on production from hurricanes.


WestRock’s main competitive advantage is its industry-leading position. That said, the industry is

highly competitive. In addition, WestRock is not a recession-resistant business. Packaging is an

economically-sensitive industry. If the economy enters a downturn, consumers and businesses would

spend less and send fewer packages. However, we would expect WestRock to remain profitable during

a recession, as the company has the flexibility to cut costs.


WestRock will pursue future growth both organically, and with acquisitions. For example, last

November (11/3/18) WestRock completed the acquisition of KapStone Paper for $4.9 billion including

KapStone’s debt. The acquisition of KapStone enhanced WestRock’s product offerings and

geographical reach. WestRock is also working to pay down debt, which will help grow earnings by

reducing interest expenses. The KapStone deal increased WestRock’s net-debt-to-EBITDA ratio to

3.9x. The company has set a goal to reduce the leverage ratio to a range of 2.25x to 2.50x this year.

WestRock also expects to produce annual integration synergies of $200 million by 2021.

WestRock is expected to generate earnings-per-share of $4.60 for 2019. Based on this, the stock trades

for a price-to-earnings ratio of 8.2. Since the 2015 merger, WestRock shares have held an average

price-to-earnings ratio of 16.8. The stock appears to be deeply undervalued. Our fair value estimate is

a price-to-earnings ratio of 12.5, meaning an expanding price-to-earnings ratio could boost future

returns by 8.8% per year over the next five years. In addition, we expect the company to report 4.0%

annual earnings growth through 2024. Lastly, the stock has a current dividend yield of 4.8%. In total,

we expect annual returns of 17.6% per year for WestRock over the next five years.

Key Statistics, Ratios, & Metrics Maximum Drawdown9: 52.6% 10-Year EPS Growth Rate: 2.8% (since 2015)

Dividend Yield: 4.8% 10-Year Dividend Growth Rate: 5.7% (since 2015)

Most Recent Dividend Increase: 5.8% 10-Year Historical Avg. P/E Ratio: 16.8 (since 2015)

Estimated Fair Value: $54 10-Year Annualized Total Return: -7.5%

Dividend History: Increasing since 2016 Next Ex-Dividend Date: 5/3/19 (est.)

9 Maximum drawdown occurred in February 2016.

38



Revenue 2812.3 3001 5340 9208 9545 9895 11125 14172 14860 16285

Gross Profit 762.7 720.1 991.9 1532 1846 1934 2138 2759 2740 3394

Gross Margin 27.1% 24.0% 18.4% 16.6% 19.3% 19.5% 19.2% 19.5% 18.4% 20.8%

SG&A Exp. 330.8 339.9 541.2 927.5 954.3 1024 1145 1962 1662 1974

D&A Exp. 150 147.4 N/A N/A N/A N/A N/A N/A N/A N/A

Operating Profit 431.9 380.2 450.7 605.2 892.2 910 993.3 797 1078 1420

Op. Margin 15.4% 12.7% 8.3% 6.6% 9.3% 9.2% 8.9% 5.6% 7.3% 8.7%

Net Profit 222.3 225.6 141.1 249.1 727.3 479.7 507.1 396.3 708.2 1906

Net Margin 7.9% 7.5% 2.6% 2.7% 7.6% 4.8% 4.6% -2.8% 4.8% 11.7%

Free Cash Flow 305.7 271.1 262.3 187.3 592.1 617.6 618.1 891.7 1122 1421

Income Tax 91.6 64.7 69.5 136.9 -21.8 286.5 233 89.8 159 874.5


Total Assets 2884 2915 10566 10687 10733 11040 25372 23038 25089 25361

Cash & Equivalents 11.8 15.9 41.7 37.2 36.4 32.6 207.8 340.9 298.1 636.8

Accounts Receivable 305.5 333.5 1110 1076 1135 1119 1575 1592 1887 2011

Inventories 275.1 269.5 849.8 861.9 937.9 1029 1761 1638 1797 1830

Goodwill & Int. Ass. 887.7 900.3 2639 2660 2561 2617 7442 7377 8858 8700


Accounts Payable 233.9 252.3 780.7 708.9 802.1 812.8 1231 1054 1492 1717

Long-Term Debt 1349 1129 3446 3412 2848 2985 5622 5789 6555 6415

Shareholder’s Equity 776.8 1011 3372 3406 4312 4307 11652 9729 10343 11469

D/E Ratio 1.74 1.12 1.02 1.00 0.66 0.69 0.48 0.60 0.63 0.56


Return on Assets 7.5% 7.8% 2.1% 2.3% 6.8% 4.4% 2.8% -1.6% 2.9% 7.6%

Return on Equity 31.4% 25.2% 6.4% 7.4% 18.8% 11.1% 6.4% -3.7% 7.1% 17.5%

ROIC 9.9% 10.5% 3.1% 3.7% 10.4% 6.6% 4.1% -2.4% 4.4% 10.9%

Shares Out. ---- ---- ---- ---- ---- ---- 257.0 251.0 254.5 259.2 Revenue/Share 36.52 38.38 53.46 63.90 65.33 67.77 64.19 54.95 58.11 62.68

FCF/Share 3.97 3.47 2.60 1.30 4.05 4.23 3.57 3.46 4.39 5.47


39


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Westrock Co. (WRK) Dividend Yield History

40


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8Westrock Co. (WRK) Fundamentals


41


15.2

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Westrock Co. (WRK): Valuation Analysis


42


AT&T Inc. (T) Overview & Current Events

AT&T is a large telecommunications company with over 100 million customers in the U.S. and a

significant presence in Latin America. The company provides a wide range of telecom services,

including wireless, broadband, and television through its cable operations and its DirectTV satellite

brand. AT&T generates more than $170 billion in annual revenue and the company has increased its

dividend for 35 consecutive years, qualifying it for inclusion in the Dividend Aristocrats Index.

In late January, AT&T reported (1/30/19) fourth quarter financial results. For the fourth quarter, the

company generated $48.0 billion in revenue, up 15.2% from the year ago period. Revenue growth was

primarily driven by the Time Warner acquisition that closed in June 2018. Adjusted earnings-per-share

totaled $0.86 against $0.78 in the same period a year ago, for growth of 10%. For the year, AT&T

reported revenue of $170.8 billion, up 6.4% as compared to 2017. Adjusted earnings-per-share came in

at $3.52 versus $3.05 in 2017, once again driven by the Time Warner acquisition as well as lower tax

rates associated with tax reform. AT&T also provided an outlook for 2019. The company anticipates

free cash flow to be in the $26 billion range, with low single-digit adjusted EPS growth. The dividend

payout ratio is anticipated to be below 60% and end-of-year net debt to adjusted EBITDA in the 2.5x

range. Shares opened 5% lower on the news.

Competitive Advantage & Recession Performance

AT&T’s primary competitive advantage is its scale. The U.S. telecom industry is dominated by two

major players, AT&T and rival Verizon. It is all-but-impossible for a new telecom company to build a

network with the necessary scale to compete with the established industry giants. This gives AT&T a

wide economic moat and a durable competitive advantage. AT&T’s strong business model served it

well during the Great Recession. The company remained highly profitable each year of the recession

and experienced only a minor dip in earnings-per-share in 2009.


AT&T’s major growth catalyst going forward is media content driven by the $81 billion acquisition of

Time Warner Inc., which owns multiple media brands, including: TNT, TBS, CNN, and HBO. Time

Warner also owns a movie studio and sports rights across the NFL, NBA, MLB, and NCAA. AT&T

has made additional bolt-on acquisitions to boost its growing content businesses as well and is working

to maximize the advertising capacity of its content.

AT&T expects to generate earnings-per-share of $3.60 in fiscal 2019. Based on this, the stock has a

price-to-earnings ratio of just 8.6. AT&T traded at an average price-to-earnings ratio of 13.4 over the

last decade. If AT&T’s price-to-earnings ratio expands to its historical valuation level, this will boost

its returns by around 9.3% per year over the next five years. In addition to the 6.6% dividend and 6%

expected earnings growth, expected returns could approach 22% over the next five years.







43



Revenue ($B) 124.03 122.51 124.28 126.72 127.43 128.75 132.45 146.80 163.79 160.55

Gross Profit 74472 71942 74023 71819 72206 77561 72302 79755 86902 83167

Gross Margin 60.0% 58.7% 59.6% 56.7% 56.7% 60.2% 54.6% 54.3% 53.1% 51.8%

SG&A Exp. 31526 31427 34986 41314 41066 28414 39697 32919 36347 34917

D&A Exp. 19883 19379 18377 18143 18395 18273 22016 25847 24387


Op. Margin 18.6% 17.1% 15.8% 9.6% 10.2% 23.9% 10.8% 16.9% 15.1% 14.9%

Net Profit 12867 12138 19864 3944 7264 18418 6442 13345 12976 29450

Net Margin 10.4% 9.9% 16.0% 3.1% 5.7% 14.3% 4.9% 9.1% 7.9% 18.3%

Free Cash Flow 13321 17111 15692 14633 19711 13852 10139 16662 17828 18504

Income Tax 7036 6091 -1162 2532 2900 9328 3619 7005 6479 N/A


Total Assets ($B) 265.25 268.31 269.39 270.44 272.32 277.79 296.83 402.67 403.82 444.10


Acc. Receivable 16047 14845 13610 13231 12657 12918 14527 16532 16794 16522

Goodwill ($B) 135.54 134.41 134.12 130.19 128.55 131.49 136.66 225.28 222.07 219.73

Total Liab. ($B) 168.50 166.32 157.44 164.65 179.62 186.31 206.56 279.03 279.71 302.09


LT Debt ($B) 78.84 76.25 66.17 64.75 69.84 74.79 81.83 126.15 123.51 164.35

Total Equity ($B) 96.35 101.56 111.65 105.53 92.36 90.99 89.72 122.67 123.14 140.86

D/E Ratio 0.82 0.75 0.59 0.61 0.76 0.82 0.91 1.03 1.00 1.17


Return on Assets 4.8% 4.5% 7.4% 1.5% 2.7% 6.7% 2.2% 3.8% 3.2% 6.9%

Return on Equity 12.2% 12.3% 18.6% 3.6% 7.3% 20.1% 7.1% 12.6% 10.6% 22.3%

ROIC 7.2% 6.9% 11.1% 2.3% 4.4% 11.2% 3.8% 6.3% 5.2% 10.6%

Shares Out. 5,893 5,902 5,911 5,927 5,581 5,226 5,187 6,145 6,139 6,139

Revenue/Share 20.82 20.68 20.93 21.30 21.89 23.91 25.37 26.00 26.46 25.97

FCF/Share 2.24 2.89 2.64 2.46 3.39 2.57 1.94 2.95 2.88 2.99


44


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AT&T Inc. (T) Dividend Yield History

45


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8AT&T Inc. (T) Fundamentals


46


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AT&T Inc. (T): Valuation Analysis


47


Cardinal Health Inc. (CAH) Overview & Current Events

Cardinal Health is one of the largest healthcare product distributors in the U.S., along with McKesson

(MCK) and AmerisourceBergen (ABC). Cardinal Health’s core business is pharmaceutical

distribution. It also has a medical products distribution segment. The company has operations in 46

countries with approximately 50,000 employees. With 32 years of consecutive dividend increases,

Cardinal Health is a member of the Dividend Aristocrats Index.

In early February (2/7/19) Cardinal Health released financial results for the fiscal 2019 second quarter.

Cardinal Health reported quarterly revenue of $37.7 billion, a 7% increase compared to the same

quarter last year. Adjusted earnings-per-share totaled $1.29, down 15% from the same quarter a year

ago. Both operating segments posted 14% declines in operating profit for the quarter. However,

Cardinal Health raised its adjusted earnings-per-share guidance for fiscal 2019, to $4.97-$5.17 (from

$4.90-$5.15 previously).


Cardinal Health serves over 26,000 pharmacies and nearly 85% of hospitals in the U.S. The company

generated $137 billion of revenue in the most recent fiscal year. This kind of scale is very hard to

replicate. While demand for pharmaceuticals is likely to rise as the average age in the United States

rises, gains are likely to be (and have been in recent years) offset by political and competitive pressure

to lower pharmaceutical prices. Cardinal Health has a competitive advantage in an industry that is

currently struggling to maintain its margins. With that said, Cardinal Health does have favorable

characteristics – including recession resistance. Adjusting for the Care Fusion spin-off, Cardinal

Health managed to grow revenue, operating profits, and dividends during the Great Recession. People

need to take their medications, even when the economy enters a downturn.


Cardinal Health’s primary growth catalyst is the aging U.S. population. Rising life expectancies and a

very large population of seniors mean demand for healthcare products should only grow in the U.S.

going forward. Acquisitions have helped Cardinal Health pursue these growth opportunities. For

example, in 2017 Cardinal Health acquired the Patient Recovery business from Medtronic (MDT) for

$6.1 billion, which is expected to add $0.55 to Cardinal Health’s earnings-per-share in fiscal 2019.

Cardinal Health stock trades for a price-to-earnings ratio of 10.6, based on expected earnings-per-share

of $5.07 for fiscal 2019. Our fair value estimate for the stock is a price-to-earnings ratio of 14.0,

meaning the stock is significantly undervalued. Valuation changes could add 5.7% per year to

shareholder returns. In addition, we expect Cardinal Health to grow earnings-per-share by 5.0% per

year. Adding in the 3.6% dividend yield, total expected returns could reach 14.3% per year for

Cardinal Health stock over the next five years.

Key Statistics, Ratios, & Metrics Maximum Drawdown11: 63.3% 10-Year EPS Growth Rate: N/A (CareFusion spin-off)




Dividend History: 32 years of increases Next Ex-Dividend Date: 3/29/19

11 Maximum drawdown occurred in October 2008.

48



Revenue ($B) 95.99 98.50 102.64 107.55 101.09 91.08 102.53 121.55 129.98 136.81

Gross Profit 3748 3781 4162 4541 4921 5161 5712 6543 6544 7181

Gross Margin 3.9% 3.8% 4.1% 4.2% 4.9% 5.7% 5.6% 5.4% 5.0% 5.2%

SG&A Exp. 2334 2397 2528 2677 2875 3028 3240 3648 3775 4596

D&A Exp. 226 254 313 325 397 459 451 641 717 1032



Net Profit 1152 642 959 1069 334 1166 1215 1427 1288 256

Net Margin 1.2% 0.7% 0.9% 1.0% 0.3% 1.3% 1.2% 1.2% 1.0% 0.2%

Free Cash Flow 1016 1874 1104 916 1532 2275 2240 2506 797 2384

Income Tax 402 625 552 628 553 635 755 845 630 -487


Total Assets 25119 19990 22846 24260 25819 26033 30142 34122 40112 39951


Acc. Receivable 5215 5171 6156 6355 6304 5380 6523 7405 8048 7800

Inventories 6833 6356 7334 7864 8373 8266 9211 10615 11301 12308

Goodwill & Int. 2267 2253 4259 4392 5574 5870 6018 9426 9207 12229



Long-Term Debt 366 2129 2502 2894 3854 3972 5492 5539 10395 9013

Total Equity 8725 5276 5849 6244 5975 6401 6256 6554 6808 6059

D/E Ratio 0.04 0.40 0.43 0.46 0.65 0.62 0.88 0.85 1.53 1.49


Return on Assets 4.7% 2.8% 4.5% 4.5% 1.3% 4.5% 4.3% 4.4% 3.5% 0.6%

Return on Equity 14.0% 9.2% 17.2% 17.7% 5.5% 18.8% 19.2% 22.3% 19.3% 4.0%

ROIC 11.1% 7.8% 12.2% 12.2% 3.5% 11.5% 11.0% 12.0% 8.8% 1.6%

Shares Out. 360 356 351 343 340 337 328 322 316 309

Revenue/Share 265.54 272.86 290.78 308.17 293.88 264.01 306.06 368.32 406.18 434.31

FCF/Share 2.81 5.19 3.13 2.62 4.45 6.59 6.69 7.59 2.49 7.57


49


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Cardinal Health Inc. (CAH) Dividend Yield History

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Cardinal Health Inc. (CAH) Fundamentals


51


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Cardinal Health Inc. (CAH): Valuation Analysis


52


Western Digital Corp. (WDC) Overview & Current Events

Western Digital is a technology hardware manufacturer. It produces data storage products such as hard

disk drives (HDDs) and solid-state drives (SDDs). Western Digital is also engaged in the flash

memory business. The stock trades with a market capitalization of approximately $14.2 billion.

In late January, Western Digital reported (1/24/19) its second quarter earnings results. The company

reported revenues of $4.23 billion for the second quarter, which represents a decline of 20.8%

compared to the prior year’s quarter. This revenue decline was anticipated. Western Digital’s top line

met analyst consensus estimates. Western Digital’s earnings-per-share totaled $1.45 during the second

quarter, which was slightly less than what the analyst community had forecasted. Earnings-per-share

declined by more than half from the prior year’s level of $3.95, which was not surprising. Western

Digital’s broader industry is experiencing a down cycle in data storage demand.

Western Digital had previously forecasted that second quarter results would be relatively weak.

Looking ahead, the company forecasts that this weakness will persist into the third quarter. Western

Digital guides for revenues of $3.6 billion to $3.8 billion during the third quarter, while earnings-per-

share are forecasted to fall into a range of $0.40 to $0.60. Management also points out that its long-

term outlook remains very positive, as capacity enterprise storage growth is seen at 40% annually in the

long run while NAND (flash memory) demand bit growth is forecasted in a 36% to 38% range.


It is difficult for technology companies to establish competitive advantages, particularly when it comes

to hardware manufacturing which tends to become commoditized. Trends change rapidly, and the

storage industry is highly volatile. Fortunately, Western Digital holds a top position in the HDD

industry, with Seagate Technologies as its only major competitor. It also has a strong position in SDDs

thanks to its flash memory exposure. Western Digital invested over $2.4 billion in research and

development in fiscal 2018 to maintain its competitive advantages.

Investors should not expect Western Digital to fare well during a recession. Its fundamental cyclicality

means it is leveraged to economic cycles. For example, Western Digital’s earnings-per-share declined

46% in fiscal 2009. This indicates the sensitivity Western Digital has to recessions.


Based on expected earnings-per-share of $8.10 for fiscal 2019, Western Digital shares trade for a price-

to-earnings ratio of just 6.0. In the past 10 years, Western Digital held an average price-to-earnings

ratio of 8.1. Our fair value estimate is a price-to-earnings ratio of 7.5, slightly below the 10-year

average. Expansion of the price-to-earnings ratio to fair value would add approximately 4.6% to

Western Digital’s annual returns if it occurred over the next 5 years. In addition, we expect annual

earnings growth of 6.5% through 2024. Lastly, Western Digital’s high dividend yield of 4.1% will also

contribute to shareholder returns. In all, we expect annual returns of 15.2% over the next five years.


Dividend Yield: 4.1% 10-Year Dividend Growth Rate: 12% (since 2012)

Most Recent Dividend Increase: 67% 10-Year Historical Avg. P/E Ratio: 8.1

Estimated Fair Value: $61 10-Year Annualized Total Return: 15.4% Dividend History: Steady/increasing since 2012 Next Ex-Dividend Date: 3/28/19

12 Using the company's maximum drawdown during the 2007-2009 financial crisis.

53



Revenue 7453 9850 9526 12478 15351 15130 14572 12994 19093 20647

Gross Profit 1337 2401 1791 3638 4363 4360 4221 3435 6072 7705

Gross Margin 17.9% 24.4% 18.8% 29.2% 28.4% 28.8% 29.0% 26.4% 31.8% 37.3%

SG&A Exp. 201 265 282 518 706 813 788 997 1445 1473

D&A Exp. 479 510 602 825 1233 1244 1114 1154 2128 2056



Net Profit 470 1382 726 1612 980 1617 1465 242 397 675

Net Margin 6.3% 14.0% 7.6% 12.9% 6.4% 10.7% 10.1% 1.9% 2.1% 3.3%

Free Cash Flow 786 1205 877 2350 2167 2188 1630 1399 2859 3370

Income Tax 31 138 54 145 242 135 112 -89 372 1410


Total Assets 5291 7328 8118 14206 14036 15499 15170 32862 29860 29235


Accounts Receivable 926 1256 1206 2364 1793 1989 1532 1461 1948 2197

Inventories 376 560 577 1210 1188 1226 1368 2129 2341 2944

Goodwill & Int. Ass. 228 234 222 2774 2559 3013 3098 14985 13837 12755



Long-Term Debt 482 400 294 2185 1955 2438 2556 16994 13151 11172


D/E Ratio 0.15 0.08 0.05 0.28 0.25 0.28 0.28 1.52 1.15 0.97


Return on Assets 9.2% 21.9% 9.4% 14.4% 6.9% 10.9% 9.6% 1.0% 1.3% 2.3%

Return on Equity 16.0% 35.0% 14.2% 24.5% 12.6% 19.3% 16.2% 2.4% 3.5% 5.9%

ROIC 13.7% 31.5% 13.3% 20.6% 9.9% 15.3% 12.7% 1.2% 1.5% 2.9%

Shares Out. 225 231 233 246 237 234 230 284 294 296

Revenue/Share 32.98 42.27 40.54 50.93 62.40 62.52 61.49 53.69 64.50 67.25

FCF/Share 3.48 5.17 3.73 9.59 8.81 9.04 6.88 5.78 9.66 10.98


54


0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

201

3

201

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201

8

Western Digital Corp. (WDC) Dividend Yield History

55


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$(8.00)

$(6.00)

$(4.00)

$(2.00)

$-

$2.00

$4.00

$6.00

$8.00

$10.00

198

4

198

5

198

6

198

7

198

8

198

9

199

0

199

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199

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0

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8Western Digital Corp. (WDC) Fundamentals


56


7.9

6.3

10.4

3.9

5.3

9.7

12.8

11.7

7.4

5.9

0

2

4

6

8

10

12

14

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Western Digital Corp. (WDC): Valuation Analysis


57

Disclaimer

Nothing presented herein is, or is intended to constitute, specific investment advice. Nothing in this newsletter should be construed as a recommendation to follow any investment strategy or allocation. Any forward-looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements

or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. While Sure Dividend has used reasonable efforts to

obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability or completeness of third-party information presented herein. No guarantee of investment performance is being provided and no inference to the contrary should be made. There is a risk of loss from an investment in securities.

Past performance is not a guarantee of future performance.

Closing Thoughts - On The Dividend Aristocrats -

Five of this month’s newsletter’s Top 10 are Dividend Aristocrats. To be a Dividend Aristocrat, a

stock must have 25+ years of consecutive dividend increases, be a member of the S&P 500, and meet

certain minimum size and liquidity requirements.

Note: AbbVie (ABBV), AT&T (T), Cardinal Health (CAH), Caterpillar (CAT), and Walgreens Boots

Alliance (WBA) are the five Dividend Aristocrats.

The Dividend Aristocrats Index has average annualized returns of 16.6% versus 15.0% for the S&P

500 over the last decade. And, it has an annualized stock price standard deviation of 12.8% versus

13.4% for the S&P 500 over the same time period. Said another way, The Dividend Aristocrats Index

has produced better returns with lower risk (as measured by volatility). And, the index outperformed in

2018, generating total returns of -2.7% versus -4.4% for the S&P 500.

The ‘secret’ behind the Dividend Aristocrats’ success has to do with their dividend history. Having a

25+ year streak of rising dividends shows three important points that help produce superior returns:

1. A shareholder friendly management

2. Ability to pay dividends during recessions

3. A strong and durable competitive advantage

The third point is arguably the most important. A business simply cannot pay rising dividends for 25+

years without a strong and durable competitive advantage. Moreover, these are businesses that

(typically) remain profitable during recessions – profitable enough that they can pay rising dividends.

The Sure Dividend Newsletter does not exclusively select Dividend Aristocrats, but we do look for

companies that generally have similar characteristics. Namely, a safe dividend and solid growth

prospects. In addition, we look for companies that offer high expected total returns – and that typically

means companies trading below their fair value.

The combination of a great business, paying reliable dividends, purchased at a great price is the core of

what dividend growth investing is about. The Dividend Aristocrats tend to be great businesses with

reliable dividends (there are great dividend stocks that aren’t Dividend Aristocrats as well), but they

often do not trade at reasonable prices. The Dividend Aristocrats in this month’s newsletter are the

exception – all appear undervalued, some exceptionally so.

Thanks for reading,

Ben Reynolds

The next newsletter publishes on Sunday, April 7th, 2019

58

Real Money Portfolio

The Sure Dividend Real Money Portfolio tracks our actual investment decisions in real time,

with real money.

Each month we will save and invest $1,000 to show the actual progress of building and

maintaining a dividend growth portfolio.

Our buy decisions will be the highest ranked stock in the Top 10 that we either do not own or

own the least in our portfolio. We will not place buys that push the portfolio over 30% in any

one sector (after the portfolio reaches a reasonable number of positions) to prevent over-

concentration in any sector. The portfolio will hold up to 30 stocks. Once 30 stocks are

reached, it will buy the highest ranked stock already in the portfolio up to 10% of the portfolio’s

value. Sell decisions are based on the same sell criteria used in The Sure Dividend Newsletter.

We are using Interactive Brokers as our brokerage for this portfolio. Limit buy orders for our

trades will be placed the second trading day after The Sure Dividend Newsletter is published.

This gives our readers who are following the real money portfolio, a full trading day to make

the same trade we would in advance of us.

Our next buy will be Walgreens Boots Alliance (WBA). Walgreens has an “A” Dividend Risk

Score combined with solid total return prospects. And, Walgreens CEO Stefano Pessina has a

track record of delivering excellent results. See our section on Walgreens for more on the

company.

Future editions of The Sure Dividend Newsletter will include brokerage screenshots showing

holdings and performance. As we have only two stocks in the portfolio so far – Eaton Vance

(EV) and AbbVie (ABBV) – there is not much data to show. Performance will become

meaningful as both the number of holdings in our portfolio grows, and the amount of time each

security has been held increases.

59

Buying & Ranking Criteria

The method we use to come up with the Top 10 buys for The Sure Dividend Newsletter is as

follows:

Note: Ranking data is from Wednesday’s Sure Analysis data update.

1. Filter our Sure Analysis Research Database universe of securities for:

- 10%+ Expected total returns

- A & B Dividend Risk scores

- U.S. stocks only (no international securities, REITs, MLPs, or BDCs, etc.)

- All companies must have dividend covered by cash flows

2. Sort by expected total return (highest first)

3. No more than 3 companies per sector

4. Veto any securities from Top 10 as necessary after qualitative analysis

5. The Top 10 is the 10 highest expected total return securities from steps 1 through 4

6. “A” Dividend Risk score securities rank ahead of “B” Dividend Risk score securities

within the Top 10

To receive an “A” Dividend Risk score, a stock must be in the top 20% for dividend safety. To

receive a “B” Dividend Risk score, a stock must be in the top 40% for dividend safety. The

formula for the Dividend Risk score is below:

Dividend Risk Score (Raw) = Payout Ratio x 100 – # Years of Steady or Rising Dividends + 50 if

deemed risky during a recession

We view stocks with A and B Dividend Risk scores as generally having secure dividends that are very

unlikely to be reduced in the near future.

Our formula for expected total return is calculated as the sum of 5 year expected returns from growth

on a per share basis, 5 year expected returns from valuation multiple changes, and the current dividend

yield.

The combination of expected total returns and low dividend risk creates a screen to find high quality

dividend growth stocks with strong return potential.

Note that our expected total returns are based on the idea that the economy will continue forward ‘as is’

for the foreseeable future, and not hit a recession. Recessions happen, of course, and we seek to

recommend securities likely to pay steady or rising dividends during recessions. Recession safety

factors into our Dividend Risk scores, and in turn our rankings for The Sure Dividend Newsletter.

https://www.suredividend.com/sure-analysis-subscribe/

60

Portfolio Building Guide

The process of building a high-quality dividend growth portfolio is not complex: Each month invest in the

top-ranked security in which you own the smallest dollar amount out of the Top 10. Over time, you will

build a well-diversified portfolio of great businesses purchased at attractive prices. Alternatively, the Top 10

list is also useful as an idea generation tool for those with a different portfolio allocation plan. If you are

looking to add additional yield to your portfolio, The Sure Retirement Newsletter offers a Top 10 list with 4%+

dividend yields. The Sure Dividend International Newsletter provides additional geographic diversification.

Examples Portfolio 1 Portfolio 2

Ticker Name Amount Ticker Name Amount

ABBV AbbVie Inc. $ 1,002 ABBV AbbVie Inc. $ 4,374

WBA Walgreens Boots Alliance $ - WBA Walgreens Boots Alliance $ 4,878

CAT Caterpillar Inc. $ - CAT Caterpillar Inc. $ 4,353

EV Eaton Vance $ - EV Eaton Vance $ 7,428

OZK Bank OZK $ - OZK Bank OZK $ 3,309

AMP Ameriprise Financial $ - AMP Ameriprise Financial $ 8,099

WRK WestRock $ - WRK WestRock $ 5,629

T AT&T Inc. $ - T AT&T Inc. $ 2,176

CAH Cardinal Health Inc $ - CAH Cardinal Health Inc $ 1,079

WDC Western Digital Corp. $ - WDC Western Digital Corp. $ 4,864

- If you had portfolio 1, you would buy WBA, the top-ranked security you own least.

- If you had portfolio 2, you would buy CAH, the top-ranked security you own least.

If you have an existing portfolio or a large lump sum to invest, you may wish to switch over to the Sure

Dividend Strategy over a 20-month period. Each month take 1/20 of your initial portfolio value and buy the

top-ranked security you own the least out of the Top 10. When you sell a security, use the proceeds to purchase

the top-ranked security you own the least. Reinvest dividends in the same manner.

This simple investing process will build a diversified portfolio of high-quality dividend securities over a period

of less than 2 years. Further, higher ranked securities will receive proportionately more investment dollars as

they will stay in the Top 10 rankings longer. You will build up large positions in the highest-quality securities

over your investing career.

If your portfolio grows too large to manage comfortably (for example, you are not comfortable holding 40+

securities – which would happen after around 4 years of using the Sure Dividend System), you will need to sell

holdings. I recommend eliminating positions that have the lowest yields if you are in or near retirement. If you

are not near retirement, eliminate positions that rank the lowest in the newsletter until you are comfortable with

the number of positions in your portfolio. Reinvest the proceeds into the highest-ranked securities you currently

own, until your highest-ranked holding makes up 10% of your portfolio’s total value. Then add to the next

highest-ranked holding, and so on.

https://www.suredividend.com/retirement-subscribe/

https://www.suredividend.com/international-subscribe/

61

Past Recommendations & Sells

Every past Sure Dividend Newsletter recommendation from the Top 10 is shown in this section13. The sell rules

that govern this newsletter are below.

Sell Rules Sell Rule #1, Dividend-Based Sell Rules: Any past recommendation that reduces or eliminates its dividend is

automatically a pending sell. We review and analyze these stocks to determine when to initiate the final sale.

Secondly, any past recommendation that has an “F” Dividend Risk Score is reviewed as a potential sell.

Sell Rule #2, Valuation-Based Sell Rules: Sell past recommendations with expected total returns below the

expected total returns of the S&P 500 over the next several years. This sell rule replaces our previous

valuation-based sell rule of selling stocks with an adjusted P/E ratio of 40 or higher. We calculate our estimate

of the long-term returns of the S&P 500 as the S&P 500’s dividend yield plus nominal (not inflation adjusted)

GDP growth, less valuation multiple mean reversion over 10 years. We currently estimate long-term U.S.

nominal GDP growth at 5.5%, the S&P 500’s dividend yield at 1.9%, and valuation multiple mean reversion at

-3.1% (S&P 500 fair value P/E of 15.7 versus current P/E of 21.5) for an expected total return sell threshold of

4.3%. Past recommendations at or below this sell threshold are bolded and in green in the table below.

We will only recommend up to two valuation-based sells a month so that the reinvestment of sale proceeds is

not concentrated in a short time frame.

Current Holds Name Ticker 1st Rec. Date DR Score

Performance (Total Return)14

5 Year Forward Expected Tot. Ret.

McDonald's MCD 4/7/2014 A 120% 7.1%

AFLAC AFL 4/7/2014 A 80% 5.5%

PepsiCo PEP 4/7/2014 B 59% 6.6%

Target TGT 4/7/2014 A 42% 11.8%

Coca-Cola KO 4/7/2014 B 36% 5.9%

Kimberly-Clark KMB 4/7/2014 B 27% 7.5%

ExxonMobil XOM 4/7/2014 B -2% 9.4%

3M MMM 5/5/2014 A 67% 6.6%

Genuine Parts Company GPC 5/5/2014 A 46% 6.9%

Becton, Dickinson BDX 6/2/2014 A 131% 9.0%

Philip Morris PM 6/2/2014 C 23% 11.5%

AT&T T 6/2/2014 B 12% 15.2%

General Mills GIS 6/2/2014 C 1% 9.2%

J.M. Smucker SJM 8/4/2014 C 18% 7.9%

Kellogg K 12/8/2014 C -4% 12.6%

13 This does not include our past “special recommendations” or international recommendations from years ago because they are

outside the scope of the regular Sure Dividend Newsletter strategy and Top 10. We are not tracking when to sell or performance of

those recommendations. 14 All performance data for holds and pending sells is through midday 3/1/19.

62

Deere & Company DE 1/5/2015 B 108% 7.1%

Altria MO 4/6/2015 C 19% 14.2%

W.W. Grainger GWW 7/6/2015 A 40% 10.3%

Caterpillar CAT 8/3/2015 A 99% 15.3%

United Technology UTX 8/3/2015 B 38% 4.2%

BCE, Inc. BCE 8/3/2015 D 27% 7.0%

Eaton ETN 9/8/2015 C 57% 7.1%

Computer Services CSVI 11/2/2015 A 64% 7.1%

Cummins CMI 11/2/2015 B 61% 11.7%

Johnson & Johnson JNJ 11/2/2015 A 48% 8.6%

Verizon VZ 12/7/2015 C 42% 11.4%

Procter & Gamble PG 12/7/2015 A 39% 5.6%

Johnson Controls JCI 12/7/2015 F 22% 14.5%

Archer-Daniels-Midland ADM 2/8/2016 A 40% 9.0%

General Dynamics GD 3/7/2016 A 36% 9.2%

Flowers Foods FLO 3/7/2016 D 28% 8.0%

Cardinal Health CAH 5/2/2016 B -28% 14.3%

Disney DIS 6/6/2016 C 21% 10.6%

Phillips 66 PSX 7/5/2016 B 36% 8.9%

Walgreens Boots Alliance WBA 9/6/2016 A -14% 17.0%

Boeing BA 10/3/2016 C 253% 10.6%

AbbVie ABBV 10/3/2016 A 39% 21.8%

VF Corp. VFC 11/7/2016 A 69% 5.5%

Medtronic MDT 12/5/2016 A 34% 4.8%

Mondelez MDLZ 4/3/2017 C 14% 7.3%

Lowe's LOW 5/8/2017 A 25% 5.6%

IBM IBM 5/8/2017 B -2% 12.5%

Macy's M 5/8/2017 D -6% 20.5%

Occidental Petroleum OXY 6/5/2017 D 21% 9.5%

Ameriprise Financial AMP 6/5/2017 B 13% 18.7%

Qualcomm QCOM 6/5/2017 C -3% 7.9%

CVS Health CVS 6/5/2017 B -22% 12.6%

Royal Dutch Shell RDS.B 7/3/2017 D 28% 14.6%

Kohl's KSS 9/5/2017 C 78% 8.2%

HNI Corporation HNI 12/4/2017 C 16% 13.2%

ONEOK OKE 1/8/2018 F 22% 13.0%

63

Axis Capital AXS 1/8/2018 B 20% 4.5%

Leggett & Platt LEG 1/8/2018 A -2% 9.4%

Universal Corporation UVV 2/5/2018 B 35% 5.7%

Southwest Airlines LUV 2/5/2018 A -4% 13.7%

Invesco IVZ 3/5/2018 C -37% 17.8%

Church & Dwight CHD 4/2/2018 A 35% 5.5%

Franklin Resources BEN 4/2/2018 A 1% 5.9%

Illinois Tool Works ITW 11/5/2018 A 11% 9.7%

United Parcel Service UPS 11/5/2018 C 7% 15.0%

Northrop Grumman NOC 11/5/2018 B 3% 12.6%

S&P Global SPGI 12/3/2018 B 10% 9.0%

Hanesbrands HBI 1/7/2019 B 41% 10.4%

Bank OZK OZK 1/7/2019 B 32% 20.9%

Whirlpool WHR 1/7/2019 B 24% 12.3%

Eaton Vance EV 1/7/2019 A 16% 15.3%

Newell Brands NWL 1/7/2019 C -16% 15.7%

Western Digital WDC 2/4/2019 B 7% 13.7%

T. Rowe Price Group TROW 2/4/2019 A 6% 12.0%

WestRock WRK 3/4/2019 B N/A 15.2%

64

Pending Sells Owens & Minor (OMI): We first recommended Owens & Minor to be purchased on January 8th, 2018. The

company announced a dividend reduction on October 31st, 2018 (and has since cut its dividend yet again),

triggering an automatic pending sell recommendation. Upon review, we believe Owens & Minor should be sold

when it reaches our estimate of a fair valuation; a price-to-earnings ratio of 10 ($6.80/share at current EPS). It

has generated total returns of -67.7% at current prices and will go down as our worst recommendation in

Sure Dividend’s history.

Clorox (CLX): See this month’s sell recommendation analysis on Clorox.

Nike (NKE): See this month’s sell recommendation on Nike.

Sold Positions Chubb (pre-merger CB, not current CB): We first recommended Chubb on April 7th, 2014. We

recommended selling Chubb on July 6th, 2015, due to its merger with ACE which was announced on July 1st,

2015. It generated total returns of 32.1%, versus 14.9% for the S&P 500 (SPY).

Baxalta (BXLT, no longer publicly traded): We first recommended Baxalta on July 6th, 2015. We

recommended selling Baxalta on February 8th, 2016, due to its proposed merger with Shire plc which was

announced on January 11th, 2016. It generated total returns of 15.4%, versus -9.3% for the S&P 500 (SPY).

ConocoPhillips (COP): We first recommended ConocoPhillips on December 8th, 2014. We issued a pending

sell recommendation for the company on February 8th, 2016, due to its dividend reduction announcement on

February 4th, 2016. We issued our final sell recommendation on October 8th, 2018, when the price of oil was

around its 10-year historical average price. It generated total returns of 34.4%, versus 50.8% for the S&P

500 (SPY).

Vector Group (VGR): We first recommended Vector Group on August 7th, 2017. We recommended selling

Vector Group on December 3rd, 2018 due to an “F” Dividend Risk Score. It generated total returns of

-28.7%, versus 15.3% for the S&P 500 (SPY).

Helmerich & Payne (HP): We first recommended Helmerich & Payne on February 2nd, 2015. We

recommended selling Helmerich & Payne on December 3rd, 2018 due to an “F” Dividend Risk Score. It

generated total returns of 17.5%, versus 48.9% for the S&P 500 (SPY).

Hormel Foods (HRL): We first recommended Hormel Foods to be purchased on December 5th, 2016. Due to

low expected total returns, we recommend selling Hormel Foods on January 7th, 2019. Hormel generated total

returns of 30.2% versus returns of 20.3% for the S&P 500 (SPY).

Abbott Labs (ABT): We first recommended Abbott Labs to be purchased on July 7th, 2014. Due to low

expected total returns, we recommend selling Abbott Labs on January 7th, 2019. Abbott generated total

returns of 83.6% versus 40.9% for the S&P 500 (SPY).

Wal-Mart (WMT): We first recommended Wal-Mart to be purchased on April 7th, 2014. Due to low expected

total returns, we recommended selling Wal-Mart on February 4th, 2019. Wal-Mart generated total returns of

43.4% versus 66.8% for the S&P 500 (SPY).

EcoLab (ECL): We first recommended EcoLab to be purchased on October 6th, 2014. Due to low expected

total returns, we recommended selling EcoLab on February 4th, 2019. Ecolab generated total returns of

70.4% versus 66.8% for the S&P 500.

65

List of Stocks by Dividend Risk Score

Each of the securities in The Sure Analysis Research Database are grouped according to Dividend

Risk Score and sorted (from highest to lowest) by Expected Total Returns. Dividend or distribution

yield is included next to each security’s ticker symbol. The Dividend Risk Score uses payout ratio,

dividend history, and recession resiliency to measure a company’s dividend safety. You can learn

more about how the score is calculated at The Sure Analysis Glossary.

A-Rated Dividend Risk Stocks 1. AbbVie Inc. (ABBV): 5.3%

2. Walgreens Boots Alliance Inc. (WBA): 2.5%

3. Caterpillar Inc. (CAT): 2.5%

4. Eaton Vance Corp. (EV): 3.3%

5. The Goldman Sachs Grp. Inc. (GS): 1.6%

6. Imperial Oil Ltd (IMO): 2.1%

7. Southwest Airlines Co. (LUV): 1.2%

8. FedEx Corp. (FDX): 1.4%

9. AmerisourceBergen Corp. (ABC): 1.9%

10. Perrigo Co. plc (PRGO): 1.6%

11. Farmers & Merchants Bancorp (FMCB): 1.9%

12. American Express Co. (AXP): 1.5%

13. T. Rowe Price Grp. Inc. (TROW): 3.1%

14. Target Corp. (TGT): 3.5%

15. Textron Inc. (TXT): 0.2%

16. Canadian Pacific Railway Ltd (CP): 0.9%

17. 1st Source Corp. (SRCE): 2.3%

18. NVIDIA Corp. (NVDA): 0.4%

19. Donaldson Co. Inc. (DCI): 1.5%

20. PPG Industries Inc. (PPG): 1.7%

21. A. O. Smith Corp. (AOS): 1.7%

22. W.W. Grainger Inc. (GWW): 1.8%

23. Parker-Hannifin Corp. (PH): 1.7%

24. Carlisle Companies Inc. (CSL): 1.3%

25. Mastercard Inc. (MA): 0.6%

26. Commerce Bancshares Inc. (CBSH): 1.7%

27. Visa Inc. (V): 0.7%

28. Community Trust Bancorp Inc. (CTBI): 3.4%

29. Tompkins Financial Corp. (TMP): 2.5%

30. Illinois Tool Works Inc. (ITW): 2.8%

31. Stanley Black & Decker Inc. (SWK): 1.9%

32. Pentair plc (PNR): 1.7%

33. Federal Realty Inv. Trust (FRT): 3.1%

34. Leggett & Platt Inc. (LEG): 3.3%

35. The Sherwin-Williams Co. (SHW): 1%

36. General Dynamics Corp. (GD): 2.2%

37. Sysco Corp. (SYY): 2.3%

38. Aon plc (AON): 0.9%

39. Archer-Daniels-Midland Co. (ADM): 3.3%

40. Becton, Dickinson & Co. (BDX): 1.2%

41. Johnson & Johnson (JNJ): 2.6%

42. United Bankshares Inc. (UBSI): 3.6%

43. Infosys Ltd (INFY): 3.1%

44. Dover Corp. (DOV): 2.1%

45. CSX Corp. (CSX): 1.3%

46. ABM Industries Inc. (ABM): 2%

47. Emerson Electric Co. (EMR): 2.9%

48. McDonald's Corp. (MCD): 2.5%

49. Computer Services Inc. (CSVI): 2.5%

50. Genuine Parts Co. (GPC): 2.8%

51. 3M Co. (MMM): 2.8%

52. Sonoco Products Co. (SON): 2.8%

53. The Travelers Companies Inc. (TRV): 2.3%

54. Brookfield Asset Mgmt. Inc. (BAM): 1.4%

55. UMB Financial Corp. (UMBF): 1.8%

56. McCormick & Co. Inc. (MKC): 1.7%

57. Franklin Resources Inc. (BEN): 3.2%

58. RPM Intl. Inc. (RPM): 2.4%

59. The Procter & Gamble Co. (PG): 2.9%

60. Lowe's Companies Inc. (LOW): 1.8%

61. H.B. Fuller Co. (FUL): 1.2%

62. Aflac Inc. (AFL): 2.2%

63. Church & Dwight Co. Inc. (CHD): 1.4%

64. V. F. Corp. (VFC): 2.3%

65. The Gorman-Rupp Co. (GRC): 1.6%

66. Medtronic plc (MDT): 2.2%

67. Black Hills Corp. (BKH): 2.9%

68. Brady Corp. (BRC): 1.8%

69. Ross Stores Inc. (ROST): 1%

70. The TJX Companies Inc. (TJX): 1.6%

71. Nordson Corp. (NDSN): 1%

72. Bemis Co. Inc. (BMS): 2.4%

73. Dillard's Inc. (DDS): 0.5%

74. SJW Grp. (SJW): 2%

75. Abbott Laboratories (ABT): 1.7%

76. Brown-Forman Corp. (BF.B): 1.4%

77. MSA Safety Inc. (MSA): 1.5%

78. UGI Corp. (UGI): 1.9%

79. Ecolab Inc. (ECL): 1.1%

80. Tennant Co. (TNC): 1.4%

81. Walmart Inc. (WMT): 2.2%

82. Roper Technologies Inc. (ROP): 0.6%

83. Hormel Foods Corp. (HRL): 2%

84. Advance Auto Parts Inc. (AAP): 0.2%

85. Stepan Co. (SCL): 1.1%

86. Colgate-Palmolive Co. (CL): 2.5%

87. Atmos Energy Corp. (ATO): 2.1%

88. Cintas Corp. (CTAS): 1%

89. Connecticut Water Service Inc. (CTWS): 1.9%

90. Tootsie Roll Industries Inc. (TR): 1%

91. Cincinnati Financial Corp. (CINF): 2.6%

92. MGE Energy Inc. (MGEE): 2.1%

93. Lancaster Colony Corp. (LANC): 1.7%

https://www.suredividend.com/sure-analysis-research-database/

https://www.suredividend.com/procedures-glossary-definitions/

66

94. Middlesex Water Co. (MSEX): 1.6%

95. California Water Service Grp. (CWT): 1.5%

96. American States Water Co. (AWR): 1.6%

97. West Pharmaceutical Srvcs. Inc. (WST): 0.6%

98. RLI Corp. (RLI): 1.2%

B-Rated Dividend Risk Stocks 1. Bank OZK (OZK): 2.5%

2. Ameriprise Financial Inc. (AMP): 2.8%

3. WestRock Co. (WRK): 4.6%

4. AT&T Inc. (T): 6.5%

5. Canadian Natural Resources Ltd (CNQ.TO): 3.6%

6. Cardinal Health Inc. (CAH): 3.6%

7. M&T Bank Corp. (MTB): 2.4%

8. Western Digital Corp. (WDC): 3.9%

9. Snap-on Inc. (SNA): 2.4%

10. Vermilion Energy Inc. (VET): 8.2%

11. MSC Industrial Direct Co. Inc. (MSM): 3%

12. Kansas City Southern (KSU): 1.3%

13. CVS Health Corp. (CVS): 3.3%

14. Northrop Grumman Corp. (NOC): 1.7%

15. Omnicom Grp. Inc. (OMC): 3.4%

16. International Business Machines Corp. (IBM): 4.5%

17. Whirlpool Corp. (WHR): 3.2%

18. Constellation Brands Inc. (STZ): 1.8%

19. National Bank of Canada (NA.TO): 4.2%

20. Intel Corp. (INTC): 2.4%

21. Fresenius Medical Care AG & Co. KGaA (FMS): 1.6%

22. Cummins Inc. (CMI): 2.9%

23. Molson Coors Brewing Co. (TAP): 2.7%

24. U.S. Bancorp (USB): 2.9%

25. SAP SE (SAP): 1.6%

26. Fortis Inc. (FTS.TO): 3.8%

27. Foot Locker Inc. (FL): 2.6%

28. Chevron Corp. (CVX): 4%

29. Enterprise Products Partners LP (EPD): 6.2%

30. Comcast Corp. (CMCSA): 2.2%

31. Stryker Corp. (SYK): 1.1%

32. Tractor Supply Co. (TSCO): 1.3%

33. Domtar Corp. (UFS): 3.4%

34. People's United Financial Inc. (PBCT): 4%

35. Hanesbrands Inc. (HBI): 3.2%

36. The Toro Co. (TTC): 1.3%

37. Apple Inc. (AAPL): 1.7%

38. Eagle Financial Srvcs. Inc. (EFSI): 3%

39. Cognizant Technology Solutions Corp. (CTSH): 1.1%

40. MetLife Inc. (MET): 3.8%

41. UnitedHealth Grp. Inc. (UNH): 1.4%

42. Domino's Pizza Inc. (DPZ): 1%

43. Exxon Mobil Corp. (XOM): 4.2%

44. Lockheed Martin Corp. (LMT): 2.9%

45. S&P Global Inc. (SPGI): 1.1%

46. Phillips 66 (PSX): 3.3%

47. Jack in the Box Inc. (JACK): 2%

48. Microsoft Corp. (MSFT): 1.6%

49. Dollar General Corp. (DG): 1%

50. International Paper Co. (IP): 4.2%

51. HP Inc. (HPQ): 2.7%

52. HollyFrontier Corp. (HFC): 2.5%

53. The Hershey Co. (HSY): 2.6%

54. Chubb Ltd (CB): 2.2%

55. NACCO Industries Inc. (NC): 1.8%

56. Ingersoll-Rand plc (IR): 2%

57. Bed Bath & Beyond Inc. (BBBY): 3.9%

58. Everest Re Grp. Ltd (RE): 2.5%

59. Kimberly-Clark Corp. (KMB): 3.5%

60. América Móvil SAB de CV (AMX): 2.1%

61. MDU Resources Grp. Inc. (MDU): 3.1%

62. Xylem Inc. (XYL): 1.3%

63. Deere & Co. (DE): 1.9%

64. The Kroger Co. (KR): 1.9%

65. Oracle Corp. (ORCL): 1.4%

66. WEYCO Grp. Inc. (WEYS): 3.1%

67. PepsiCo Inc. (PEP): 3.2%

68. Costco Wholesale Corp. (COST): 1.1%

69. Raytheon Co. (RTN): 1.9%

70. Community Bank System Inc. (CBU): 2.4%

71. Morningstar Inc. (MORN): 0.9%

72. Norfolk Southern Corp. (NSC): 1.9%

73. The Coca-Cola Co. (KO): 3.6%

74. First Financial Corp. (THFF): 2.4%

75. Universal Corp. (UVV): 5.1%

76. Chesapeake Financial Shares Inc. (CPKF): 2.2%

77. Honeywell Intl. Inc. (HON): 2.1%

78. Corning Inc. (GLW): 2.3%

79. Moody's Corp. (MCO): 1.2%

80. Air Products & Chemicals Inc. (APD): 2.6%

81. Canadian National Railway Co. (CNI): 1.9%

82. AXIS Capital Holdings Ltd (AXS): 2.8%

83. Nike Inc. (NKE): 1%

84. United Technologies Corp. (UTX): 2.3%

85. Franklin Electric Co. Inc. (FELE): 1.1%

86. Jack Henry & Associates Inc. (JKHY): 1.2%

87. Waste Mgmt. Inc. (WM): 2.1%

88. McGrath RentCorp (MGRC): 2.6%

89. L3 Technologies Inc. (LLL): 1.6%

90. Consolidated Edison Inc. (ED): 3.6%

91. Assurant Inc. (AIZ): 2.4%

92. Aqua America Inc. (WTR): 2.4%

93. The Clorox Co. (CLX): 2.4%

94. Nucor Corp. (NUE): 2.6%

95. Automatic Data Processing Inc. (ADP): 2.1%

96. Union Pacific Corp. (UNP): 2.1%

97. CAE Inc. (CAE.TO): 1.4%

98. Twenty-First Century Fox Inc. (FOXA): 0.7%

99. Northwest Natural Holding Co. (NWN): 3%

100. Badger Meter Inc. (BMI): 1%

C-Rated Dividend Risk Stocks 1. The Kraft Heinz Co. (KHC): 4.8%

2. ArcelorMittal (MT): 0.4%

3. Micro Focus Intl. plc (MFGP): 4.7%

4. Invesco Ltd (IVZ): 6.3%

5. The Bank of Nova Scotia (BNS.TO): 4.8%

67

6. Newell Brands Inc. (NWL): 5.4%

7. Energy Transfer LP (ET): 8.2%

8. United Parcel Service Inc. (UPS): 3.5%

9. Mckesson Corp. (MCK): 1.2%

10. Altria Grp. Inc. (MO): 6.1%

11. Canadian Imperial Bank of Commerce (CM): 4.8%

12. Total SA (TOT): 5.1%

13. Royal Bank of Canada (RY.TO): 3.8%

14. Old Republic Intl. Corp. (ORI): 3.8%

15. Sanofi (SNY): 4.5%

16. HNI Corp. (HNI): 3.2%

17. Nordstrom Inc. (JWN): 3.3%

18. Texas Instruments Inc. (TXN): 2.9%

19. Siemens AG (SIEGY): 3.9%

20. ABB Ltd (ABB): 4%

21. Kellogg Co. (K): 4%

22. Gilead Sciences Inc. (GILD): 3.9%

23. H&R Block Inc. (HRB): 4.1%

24. Halliburton Co. (HAL): 2.3%

25. Enbridge Inc. (ENB): 6%

26. The Home Depot Inc. (HD): 2.9%

27. The Toronto-Dominion Bank (TD.TO): 3.5%

28. American Airlines Grp. Inc. (AAL): 1.1%

29. Philip Morris Intl. Inc. (PM): 5.3%

30. Verizon Communications Inc. (VZ): 4.3%

31. Arthur J. Gallagher & Co. (AJG): 2.2%

32. The Western Union Co. (WU): 4.5%

33. Hospitality Properties Trust (HPT): 7.8%

34. BlackRock Inc. (BLK): 3%

35. Amgen Inc. (AMGN): 3.1%

36. NetApp Inc. (NTAP): 2.4%

37. The Boeing Co. (BA): 1.9%

38. The Walt Disney Co. (DIS): 1.6%

39. Petróleo Brasileiro SA - Petrobras (PBR): 0.6%

40. Bank of Montreal (BMO.TO): 3.9%

41. Digital Realty Trust Inc. (DLR): 3.8%

42. John Wiley & Sons Inc. (JW.A): 2.6%

43. Conagra Brands Inc. (CAG): 3.6%

44. General Mills Inc. (GIS): 4.2%

45. Campbell Soup Co. (CPB): 4.3%

46. SEI Investments Co. (SEIC): 1.3%

47. Novartis AG (NVS): 3.2%

48. Starbucks Corp. (SBUX): 2%

49. Tiffany & Co. (TIF): 2.3%

50. Simon Property Grp. Inc. (SPG): 4.5%

51. Kohl's Corp. (KSS): 3.7%

52. American Electric Power Co. Inc. (AEP): 3.3%

53. Yamana Gold Inc. (AUY): 0.8%

54. QUALCOMM Inc. (QCOM): 4.7%

55. The J. M. Smucker Co. (SJM): 3.2%

56. Unilever plc (UL): 3.2%

57. Yum! Brands Inc. (YUM): 1.8%

58. Fastenal Co. (FAST): 2.7%

59. Mondelez Intl. Inc. (MDLZ): 2.2%

60. ResMed Inc. (RMD): 1.5%

61. Eaton Corp. plc (ETN): 3.3%

62. Dunkin Brands Group Inc. (DNKN): 2.1%

63. W. P. Carey Inc. (WPC): 5.6%

64. Urstadt Biddle Properties Inc. (UBA): 5.2%

65. Keurig Dr Pepper Inc. (KDP): 2.3%

66. Sony Corp. (SNE): 0.6%

67. Taiwan Semiconductor Mfg. Co. Ltd (TSM): 3.4%

68. Rockwell Automation Inc. (ROK): 2.2%

69. Host Hotels & Resorts Inc. (HST): 4.1%

70. CF Industries Holdings Inc. (CF): 2.8%

71. National Fuel Gas Co. (NFG): 2.8%

72. Cisco Systems Inc. (CSCO): 2.7%

73. Edison International (EIX): 4%

74. Diageo plc (DEO): 1.7%

75. CenterPoint Energy, Inc. (CNP): 3.7%

76. Cracker Barrel Old Country Store Inc. (CBRL): 3.1%

77. Rogers Communications Inc. (RCI.B.TO): 2.8%

78. General Electric Co. (GE): 0.4%

79. Merck & Co. Inc. (MRK): 2.7%

80. NextEra Energy Inc. (NEE): 2.7%

81. Nestlé SA (NSRGY): 2.7%

82. National Retail Properties Inc. (NNN): 3.8%

83. Linde plc (LIN): 2%

84. Entergy Corp. (ETR): 3.9%

85. Universal Health Realty Income Trust (UHT): 3.6%

86. Eli Lilly & Co. (LLY): 2.1%

87. Erie Indemnity Co. (ERIE): 2%

D-Rated Dividend Risk Stocks 1. AmeriGas Partners LP (APU): 13.1%

2. Macy's Inc. (M): 6.1%

3. Sunoco LP (SUN): 10.9%

4. WPP plc (WPP): 7.3%

5. British American Tobacco plc (BTI): 7.2%

6. POSCO (PKX): 2.9%

7. Brookfield Property REIT (BPR): 6.7%

8. Manulife Financial Corp. (MFC): 4.4%

9. Carnival Corp. (CCL): 3.4%

10. Vodafone Grp. Plc (VOD): 9.7%

11. Synchrony Financial (SYF): 2.6%

12. Magellan Midstream Partners LP (MMP): 6.6%

13. Applied Materials Inc. (AMAT): 2%

14. Broadcom Inc. (AVGO): 3.9%

15. Principal Financial Grp. Inc. (PFG): 4.1%

16. TechnipFMC plc (FTI): 2.3%

17. Citigroup Inc. (C): 2.8%

18. Bank of America Corp. (BAC): 2.1%

19. Targa Resources Corp. (TRGP): 9%

20. Brookfield Property Partners LP (BPY): 6.7%

21. Hawaiian Holdings Inc. (HA): 1.6%

22. Royal Dutch Shell plc (RDS.B): 5.9%

23. Sun Life Financial Inc. (SLF): 3.9%

24. Discover Financial Services (DFS): 2.3%

25. DowDuPont Inc. (DWDP): 2.7%

26. Holly Energy Partners LP (HEP): 9.2%

27. LyondellBasell Industries NV (LYB): 4.6%

28. KeyCorp (KEY): 3.9%

29. Royal Caribbean Cruises Ltd (RCL): 2.3%

30. Seagate Technology plc (STX): 5.3%

31. Omega Healthcare Investors Inc. (OHI): 7.4%

32. Ryder System Inc. (R): 3.5%

33. Comerica Inc. (CMA): 3.1%

68

34. National Oilwell Varco Inc. (NOV): 0.7%

35. Aptiv plc (APTV): 1.1%

36. BT Grp. plc (BT): 4%

37. Alaska Air Grp. Inc. (ALK): 2.2%

38. Wells Fargo & Co. (WFC): 3.6%

39. Huntington Bancshares Inc. (HBAN): 3.9%

40. Williams-Sonoma Inc. (WSM): 3%

41. Dine Brands Global Inc. (DIN): 2.8%

42. Xerox Corp. (XRX): 3.2%

43. Kinder Morgan Inc. (KMI): 4.2%

44. Legg Mason Inc. (LM): 4.7%

45. KLA-Tencor Corp. (KLAC): 2.6%

46. BP plc (BP): 5.8%

47. Logitech Intl. SA (LOGI): 1.8%

48. ARMOUR Residential REIT Inc. (ARR): 11.3%

49. Prudential Financial Inc. (PRU): 4.2%

50. Iron Mountain Inc. (IRM): 7%

51. The Bank of New York Mellon Corp. (BK): 2.1%

52. ConocoPhillips (COP): 1.8%

53. Occidental Petroleum Corp. (OXY): 4.7%

54. Bristol-Myers Squibb Co. (BMY): 3.3%

55. Pearson plc (PSO): 2.1%

56. JPMorgan Chase & Co. (JPM): 3%

57. Dominion Energy Inc. (D): 4.6%

58. Ping An Insurance Grp. Co. of China Ltd (PNGAY): 1.7%

59. General Motors Co. (GM): 3.8%

60. Marathon Petroleum Corp. (MPC): 3.3%

61. Patterson Companies Inc. (PDCO): 4.7%

62. Navient Corporation (NAVI): 5.1%

63. Autoliv Inc. (ALV): 3%

64. Flowers Foods Inc. (FLO): 3.5%

65. Restaurant Brands Intl. Inc. (QSR): 3.2%

66. Novo Nordisk A/S (NVO): 2.6%

67. Public Storage (PSA): 4%

68. Valero Energy Corp. (VLO): 4.3%

69. Honda Motor Co. Ltd (HMC): 3.4%

70. PetroChina Co. Ltd (PTR): 2%

71. Duke Energy Corp. (DUK): 4.2%

72. PACCAR Inc. (PCAR): 1.9%

73. BCE Inc. (BCE): 5.4%

74. The Southern Co. (SO): 4.9%

75. Delta Air Lines Inc. (DAL): 2.7%

76. TELUS Corp. (T.TO): 4.6%

77. Popular Inc. (BPOP): 2.2%

78. Pfizer Inc. (PFE): 3.4%

79. Ventas Inc. (VTR): 5%

80. Methanex Corp. (MEOH): 2.3%

81. Accenture plc (ACN): 1.8%

82. Otter Tail Corp. (OTTR): 2.8%

83. MGM Resorts Intl. (MGM): 1.9%

84. Realty Income Corp. (O): 3.9%

85. Best Buy Co. Inc. (BBY): 3%

86. Copa Holdings SA (CPA): 2.9%

87. Telephone & Data Systems Inc. (TDS): 2.1%

88. Suncor Energy Inc. (SU.TO): 3.7%

89. Welltower Inc. (WELL): 4.7%

90. HCP Inc. (HCP): 4.8%

91. Ferrari NV (RACE): 0.7%

92. R.R. Donnelley & Sons Co. (RRD): 1.9%

93. Scholastic Corp. (SCHL): 1.4%

94. Hasbro Inc. (HAS): 3.2%

95. PPL Corp. (PPL): 5.2%

96. Paychex Inc. (PAYX): 2.9%

97. Westamerica Bancorporation (WABC): 2.5%

98. Telefonaktiebolaget LM Ericsson (ERIC): 1.4%

99. Kulicke & Soffa Industries Inc. (KLIC): 2%

F-Rated Dividend Risk Stocks 1. Nabors Industries Ltd (NBR): 7.8%

2. Aegon NV (AEG): 6.1%

3. Genesis Energy LP (GEL): 10%

4. Vector Grp. Ltd (VGR): 13.7%

5. Senior Housing Properties Trust (SNH): 11.7%

6. Compass Diversified Holdings (CODI): 9%

7. EQM Midstream Partners LP (EQM): 11.1%

8. GameStop Corp. (GME): 13.1%

9. Lazard Ltd (LAZ): 4.7%

10. HSBC Holdings plc (HSBC): 10.3%

11. Suburban Propane Partners LP (SPH): 10.7%

12. Buckeye Partners LP (BPL): 9.3%

13. Stage Stores Inc. (SSI): 18.4%

14. Apollo Global Mgmt. LLC (APO): 7.7%

15. Fiat Chrysler Automobiles NV (FCAU): 5%

16. Macquarie Infra. Corp. (MIC): 9.8%

17. New Residential Inv. Corp. (NRZ): 12.1%

18. Artisan Partners Asset Mgmt. Inc. (APAM): 8.7%

19. China Petroleum & Chemical Corp. (SNP): 10%

20. Banco Santander SA (SAN): 6.3%

21. Schlumberger Ltd/NV (SLB): 4.5%

22. Johnson Controls Intl. plc (JCI): 2.9%

23. MPLX LP (MPLX): 7.8%

24. Tenaris SA (TS): 4.2%

25. L Brands Inc. (LB): 4.4%

26. Brookfield Infra. Partners LP (BIP): 4.9%

27. Ford Motor Co. (F): 6.8%

28. Brookfield Renewable Partners LP (BEP): 6.8%

29. Summit Hotel Properties Inc. (INN): 6.3%

30. Six Flags Entertainment Corp. (SIX): 5.8%

31. Macerich Co. (MAC): 7%

32. Imperial Brands plc (IMBBY): 7.1%

33. Waddell & Reed Financial Inc. (WDR): 5.5%

34. ONEOK Inc. (OKE): 5.4%

35. Crown Castle Intl. Corp. (CCI): 3.8%

36. Anheuser-Busch InBev NV (BUD): 4.4%

37. B&G Foods Inc. (BGS): 7.7%

38. Spark Energy Inc. (SPKE): 7.4%

39. Daimler AG (DDAIF): 7.4%

40. The Blackstone Grp. LP (BX): 6.9%

41. TC PipeLines LP (TCP): 7.8%

42. Toyota Motor Corp. (TM): 2.9%

43. TransCanada Corp. (TRP): 5%

44. Global Net Lease Inc. (GNL): 11%

45. Eni SpA (E): 5.5%

46. CenturyLink Inc. (CTL): 7.7%

47. STAG Industrial Inc. (STAG): 5.1%

48. Owens & Minor Inc. (OMI): 0.2%

69

49. Apache Corp. (APA): 3%

50. Deutsche Telekom AG (DTEGY): 4.7%

51. Lamar Advertising Co. (LAMR): 4.7%

52. GlaxoSmithKline plc (GSK): 5.9%

53. Telefónica SA (TEF): 5.2%

54. Apollo Comml. Real Estate Finance Inc. (ARI): 10.2%

55. Baker Hughes, a GE Co. (BHGE): 2.7%

56. Bayer AG (BAYRY): 4.3%

57. CNOOC Ltd (CEO): 4.1%

58. Weyerhaeuser Co. (WY): 5.3%

59. OUTFRONT Media Inc. (OUT): 6.6%

60. China Mobile Ltd (CHL): 4.1%

61. Kimco Realty Corp. (KIM): 6.4%

62. Taubman Centers, Inc. (TCO): 4.9%

63. Starwood Property Trust Inc. (STWD): 8.7%

64. Las Vegas Sands Corp. (LVS): 5%

65. Seaspan Corp. (SSW): 5.6%

66. Helmerich & Payne Inc. (HP): 5.3%

67. Luxottica Grp. SpA (LUXTY): 2.1%

68. Calvin B. Taylor Bankshares Inc. (TYCB): 2.9%

69. Consolidated Water Co. Ltd (CWCO): 2.6%

70. Boston Properties Inc. (BXP): 2.8%

71. Patterson-UTI Energy Inc. (PTEN): 1.2%

72. Nielsen Holdings plc (NLSN): 5.5%

73. Canon Inc. (CAJ): 5.1%

74. Orchid Island Capital Inc. (ORC): 13.8%

75. Williams Companies (WMB): 5.6%

76. Nokia Corp. (NOK): 3.9%

77. Abercrombie & Fitch Co. (ANF): 3.8%

78. Ambev SA (ABEV): 4.9%

79. Melco Resorts & Entertainment Ltd (MLCO): 2.7%

80. Gladstone Inv. Corp. (GAIN): 6.8%

81. Rio Tinto plc (RIO): 4.3%

82. Wynn Resorts Ltd (WYNN): 2.3%

83. The Wendy's Co. (WEN): 2.3%

84. BHP Group Ltd (BHP): 4.3%

85. Garmin Ltd (GRMN): 2.7%

86. Equity Residential (EQR): 2.9%

87. Koninklijke Philips NV (PHG): 2.5%

88. AvalonBay Communities Inc. (AVB): 3.1%

89. Thomson Reuters Corp. (TRI): 2.6%

90. Shaw Communications Inc. (SJR.A.): 4.2%

91. Meredith Corp. (MDP): 4%

92. AstraZeneca plc (AZN): 3.3%

93. Barrick Gold Corp. (GOLD): 2.2%

94. Newmont Mining Corp. (NEM): 1.6%

95. Wheaton Precious Metals Corp. (WPM): 1.6%

96. Mercury General Corp. (MCY): 4.7%

70

List of Stocks by Sector

Each of the securities in The Sure Analysis Research Database are grouped according to sector and

Dividend Risk Score and sorted (from highest to lowest) by Expected Total Returns. Dividend or

distribution yield is included next to each security’s ticker symbol. The Dividend Risk Score uses

payout ratio, dividend history, and recession resiliency to measure a company’s dividend safety.

You can learn more about how the score is calculated at The Sure Analysis Glossary.

Basic Materials A-Ranked Dividend Risk 1. PPG Industries Inc. (PPG): 1.7%

2. The Sherwin-Williams Co. (SHW): 1%

3. RPM Intl. Inc. (RPM): 2.4%

4. H.B. Fuller Co. (FUL): 1.2%

5. Ecolab Inc. (ECL): 1.1%

6. Stepan Co. (SCL): 1.1%

B-Ranked Dividend Risk 1. Domtar Corp. (UFS): 3.4%

2. NACCO Industries Inc. (NC): 1.8%

3. MDU Resources Grp. Inc. (MDU): 3.1%

4. Air Products & Chemicals Inc. (APD): 2.6%

5. Nucor Corp. (NUE): 2.6%

C-Ranked Dividend Risk 1. ArcelorMittal (MT): 0.4%

2. Yamana Gold Inc. (AUY): 0.8%

3. CF Industries Holdings Inc. (CF): 2.8%

4. Linde plc (LIN): 2%

D-Ranked Dividend Risk 1. POSCO (PKX): 2.9%

2. DowDuPont Inc. (DWDP): 2.7%

3. LyondellBasell Industries NV (LYB): 4.6%

4. Methanex Corp. (MEOH): 2.3%

F-Ranked Dividend Risk 1. Weyerhaeuser Co. (WY): 5.3%

2. Rio Tinto plc (RIO): 4.3%

3. BHP Group Ltd (BHP): 4.3%

4. Barrick Gold Corp. (GOLD): 2.2%

5. Newmont Mining Corp. (NEM): 1.6%

6. Wheaton Precious Metals Corp. (WPM): 1.6%

Communication Services A-Ranked Dividend Risk 1. N/A

B-Ranked Dividend Risk 1. AT&T Inc. (T): 6.5%

2. Comcast Corp. (CMCSA): 2.2%

3. América Móvil SAB de CV (AMX): 2.1%

C-Ranked Dividend Risk 1. Verizon Communications Inc. (VZ): 4.3%

2. Rogers Communications Inc. (RCI.B.TO): 2.8%

D-Ranked Dividend Risk 1. Vodafone Grp. Plc (VOD): 9.7%

2. BT Grp. plc (BT): 4%

3. BCE Inc. (BCE): 5.4%

4. TELUS Corp. (T.TO): 4.6%

5. Telephone & Data Systems Inc. (TDS): 2.1%

F-Ranked Dividend Risk 1. CenturyLink Inc. (CTL): 7.7%

2. Deutsche Telekom AG (DTEGY): 4.7%

3. Telefónica SA (TEF): 5.2%

4. China Mobile Ltd (CHL): 4.1%

5. Shaw Communications Inc. (SJR.A.): 4.2%

Consumer Cyclical A-Ranked Dividend Risk 1. Leggett & Platt Inc. (LEG): 3.3%

2. McDonald's Corp. (MCD): 2.5%

3. Genuine Parts Co. (GPC): 2.8%

4. Sonoco Products Co. (SON): 2.8%

5. Lowe's Companies Inc. (LOW): 1.8%

6. V. F. Corp. (VFC): 2.3%

7. Ross Stores Inc. (ROST): 1%

8. The TJX Companies Inc. (TJX): 1.6%

9. Bemis Co. Inc. (BMS): 2.4%

10. Dillard's Inc. (DDS): 0.5%

11. Advance Auto Parts Inc. (AAP): 0.2%

B-Ranked Dividend Risk 1. WestRock Co. (WRK): 4.6%

2. Omnicom Grp. Inc. (OMC): 3.4%

3. Whirlpool Corp. (WHR): 3.2%

https://www.suredividend.com/sure-analysis-research-database/

https://www.suredividend.com/procedures-glossary-definitions/

71


4. Foot Locker Inc. (FL): 2.6%

5. Tractor Supply Co. (TSCO): 1.3%

6. Hanesbrands Inc. (HBI): 3.2%

7. Domino's Pizza Inc. (DPZ): 1%

8. Jack in the Box Inc. (JACK): 2%

9. International Paper Co. (IP): 4.2%

10. Bed Bath & Beyond Inc. (BBBY): 3.9%

11. WEYCO Grp. Inc. (WEYS): 3.1%

12. Nike Inc. (NKE): 1%

13. Twenty-First Century Fox Inc. (FOXA): 0.7%

C-Ranked Dividend Risk 1. Nordstrom Inc. (JWN): 3.3%

2. H&R Block Inc. (HRB): 4.1%

3. The Home Depot Inc. (HD): 2.9%

4. The Walt Disney Co. (DIS): 1.6%

5. John Wiley & Sons Inc. (JW.A): 2.6%

6. Starbucks Corp. (SBUX): 2%

7. Tiffany & Co. (TIF): 2.3%

8. Kohl's Corp. (KSS): 3.7%

9. Yum! Brands Inc. (YUM): 1.8%

10. Dunkin Brands Group Inc. (DNKN): 2.1%

11. Cracker Barrel Old Country Store (CBRL): 3.1%

D-Ranked Dividend Risk 1. Macy's Inc. (M): 6.1%

2. WPP plc (WPP): 7.3%

3. Carnival Corp. (CCL): 3.4%

4. Royal Caribbean Cruises Ltd (RCL): 2.3%

5. Aptiv plc (APTV): 1.1%

6. Williams-Sonoma Inc. (WSM): 3%

7. Dine Brands Global Inc. (DIN): 2.8%

8. Pearson plc (PSO): 2.1%

9. General Motors Co. (GM): 3.8%

10. Autoliv Inc. (ALV): 3%

11. Restaurant Brands Intl. Inc. (QSR): 3.2%

12. Honda Motor Co. Ltd (HMC): 3.4%

13. MGM Resorts Intl. (MGM): 1.9%

14. Best Buy Co. Inc. (BBY): 3%

15. Ferrari NV (RACE): 0.7%

16. Scholastic Corp. (SCHL): 1.4%

17. Hasbro Inc. (HAS): 3.2%

F-Ranked Dividend Risk 1. GameStop Corp. (GME): 13.1%

2. Stage Stores Inc. (SSI): 18.4%

3. Fiat Chrysler Automobiles NV (FCAU): 5%

4. L Brands Inc. (LB): 4.4%

5. Ford Motor Co. (F): 6.8%

6. Six Flags Entertainment Corp. (SIX): 5.8%

7. Daimler AG (DDAIF): 7.4%

8. Toyota Motor Corp. (TM): 2.9%

9. Las Vegas Sands Corp. (LVS): 5%

10. Luxottica Grp. SpA (LUXTY): 2.1%

11. Abercrombie & Fitch Co. (ANF): 3.8%

12. Melco Resorts & Entertainment Ltd (MLCO): 2.7%

13. Wynn Resorts Ltd (WYNN): 2.3%

14. The Wendy's Co. (WEN): 2.3%

15. Meredith Corp. (MDP): 4%

Consumer Defensive A-Ranked Dividend Risk 1. Walgreens Boots Alliance Inc. (WBA): 2.5%

2. Target Corp. (TGT): 3.5%

3. Sysco Corp. (SYY): 2.3%

4. Archer-Daniels-Midland Co. (ADM): 3.3%

5. McCormick & Co. Inc. (MKC): 1.7%

6. The Procter & Gamble Co. (PG): 2.9%

7. Church & Dwight Co. Inc. (CHD): 1.4%

8. Brown-Forman Corp. (BF.B): 1.4%

9. Walmart Inc. (WMT): 2.2%

10. Hormel Foods Corp. (HRL): 2%

11. Colgate-Palmolive Co. (CL): 2.5%

12. Tootsie Roll Industries Inc. (TR): 1%

13. Lancaster Colony Corp. (LANC): 1.7%

B-Ranked Dividend Risk 1. Constellation Brands Inc. (STZ): 1.8%

2. Molson Coors Brewing Co. (TAP): 2.7%

3. Dollar General Corp. (DG): 1%

4. The Hershey Co. (HSY): 2.6%

5. Kimberly-Clark Corp. (KMB): 3.5%

6. The Kroger Co. (KR): 1.9%

7. PepsiCo Inc. (PEP): 3.2%

8. Costco Wholesale Corp. (COST): 1.1%

9. The Coca-Cola Co. (KO): 3.6%

10. Universal Corp. (UVV): 5.1%

11. The Clorox Co. (CLX): 2.4%

C-Ranked Dividend Risk 1. The Kraft Heinz Co. (KHC): 4.8%

2. Newell Brands Inc. (NWL): 5.4%

3. Altria Grp. Inc. (MO): 6.1%

4. Kellogg Co. (K): 4%

5. Philip Morris Intl. Inc. (PM): 5.3%

6. Conagra Brands Inc. (CAG): 3.6%

7. General Mills Inc. (GIS): 4.2%

8. Campbell Soup Co. (CPB): 4.3%

9. The J. M. Smucker Co. (SJM): 3.2%

10. Unilever plc (UL): 3.2%

11. Mondelez Intl. Inc. (MDLZ): 2.2%

12. Keurig Dr Pepper Inc. (KDP): 2.3%

13. Diageo plc (DEO): 1.7%

14. Nestlé SA (NSRGY): 2.7%

D-Ranked Dividend Risk 1. British American Tobacco plc (BTI): 7.2%

2. Flowers Foods Inc. (FLO): 3.5%

F-Ranked Dividend Risk 1. Vector Grp. Ltd (VGR): 13.7%

2. Imperial Brands plc (IMBBY): 7.1%

3. Anheuser-Busch InBev NV (BUD): 4.4%

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4. B&G Foods Inc. (BGS): 7.7%

5. Ambev SA (ABEV): 4.9%

Energy A-Ranked Dividend Risk 1. Imperial Oil Ltd (IMO) – 2.1%

B-Ranked Dividend Risk 1. Canadian Natural Resources (CNQ.TO): 3.6%

2. Vermilion Energy Inc. (VET): 8.2%

3. Chevron Corp. (CVX): 4%

4. Enterprise Products Partners LP (EPD): 6.2%

5. Exxon Mobil Corp. (XOM): 4.2%

6. Phillips 66 (PSX): 3.3%

7. HollyFrontier Corp. (HFC): 2.5%

C-Ranked Dividend Risk 1. Energy Transfer LP (ET): 8.2%

2. Total SA (TOT): 5.1%

3. Halliburton Co. (HAL): 2.3%

4. Enbridge Inc. (ENB): 6%

5. Petróleo Brasileiro SA - Petrobras (PBR): 0.6%

6. National Fuel Gas Co. (NFG): 2.8%

D-Ranked Dividend Risk 1. Sunoco LP (SUN): 10.9%

2. Magellan Midstream Partners LP (MMP): 6.6%

3. TechnipFMC plc (FTI): 2.3%

4. Targa Resources Corp. (TRGP): 9%

5. Royal Dutch Shell plc (RDS.B): 5.9%

6. Holly Energy Partners LP (HEP): 9.2%

7. National Oilwell Varco Inc. (NOV): 0.7%

8. Kinder Morgan Inc. (KMI): 4.2%

9. BP plc (BP): 5.8%

10. ConocoPhillips (COP): 1.8%

11. Occidental Petroleum Corp. (OXY): 4.7%

12. Marathon Petroleum Corp. (MPC): 3.3%

13. Valero Energy Corp. (VLO): 4.3%

14. PetroChina Co. Ltd (PTR): 2%

15. Suncor Energy Inc. (SU.TO): 3.7%

F-Ranked Dividend Risk 1. Nabors Industries Ltd (NBR): 7.8%

2. Genesis Energy LP (GEL): 10%

3. EQM Midstream Partners LP (EQM): 11.1%

4. Buckeye Partners LP (BPL): 9.3%

5. China Petroleum & Chemical Corp. (SNP): 10%

6. Schlumberger Ltd/NV (SLB): 4.5%

7. MPLX LP (MPLX): 7.8%

8. Tenaris SA (TS): 4.2%

9. ONEOK Inc. (OKE): 5.4%

10. TC PipeLines LP (TCP): 7.8%

11. TransCanada Corp. (TRP): 5%

12. Eni SpA (E): 5.5%

13. Apache Corp. (APA): 3%

14. Baker Hughes, a GE Co. (BHGE): 2.7%

15. CNOOC Ltd (CEO): 4.1%

16. Helmerich & Payne Inc. (HP): 5.3%

17. Patterson-UTI Energy Inc. (PTEN): 1.2%

18. Williams Companies (WMB): 5.6%

Financial Services A-Ranked Dividend Risk 1. Eaton Vance Corp. (EV): 3.3%

2. The Goldman Sachs Grp. Inc. (GS): 1.6%

3. Farmers & Merchants Bancorp (FMCB): 1.9%

4. American Express Co. (AXP): 1.5%

5. T. Rowe Price Grp. Inc. (TROW): 3.1%

6. 1st Source Corp. (SRCE): 2.3%

7. Mastercard Inc. (MA): 0.6%

8. Commerce Bancshares Inc. (CBSH): 1.7%

9. Visa Inc. (V): 0.7%

10. Community Trust Bancorp Inc. (CTBI): 3.4%

11. Tompkins Financial Corp. (TMP): 2.5%

12. Aon plc (AON): 0.9%

13. United Bankshares Inc. (UBSI): 3.6%

14. The Travelers Companies Inc. (TRV): 2.3%

15. Brookfield Asset Mgmt. Inc. (BAM): 1.4%

16. UMB Financial Corp. (UMBF): 1.8%

17. Franklin Resources Inc. (BEN): 3.2%

18. Aflac Inc. (AFL): 2.2%

19. Cincinnati Financial Corp. (CINF): 2.6%

20. RLI Corp. (RLI): 1.2%

B-Ranked Dividend Risk 1. Bank OZK (OZK): 2.5%

2. Ameriprise Financial Inc. (AMP): 2.8%

3. M&T Bank Corp. (MTB): 2.4%

4. National Bank of Canada (NA.TO): 4.2%

5. U.S. Bancorp (USB): 2.9%

6. People's United Financial Inc. (PBCT): 4%

7. Eagle Financial Srvcs. Inc. (EFSI): 3%

8. MetLife Inc. (MET): 3.8%

9. S&P Global Inc. (SPGI): 1.1%

10. Chubb Ltd (CB): 2.2%

11. Everest Re Grp. Ltd (RE): 2.5%

12. Community Bank System Inc. (CBU): 2.4%

13. First Financial Corp. (THFF): 2.4%

14. Chesapeake Financial Shares Inc. (CPKF): 2.2%

15. Moody's Corp. (MCO): 1.2%

16. AXIS Capital Holdings Ltd (AXS): 2.8%

17. Assurant Inc. (AIZ): 2.4%

C-Ranked Dividend Risk 1. Invesco Ltd (IVZ): 6.3%

2. The Bank of Nova Scotia (BNS.TO): 4.8%

3. Canadian Imperial Bank of Comm. (CM): 4.8%

4. Royal Bank of Canada (RY.TO): 3.8%

5. Old Republic Intl. Corp. (ORI): 3.8%

6. The Toronto-Dominion Bank (TD.TO): 3.5%

7. Arthur J. Gallagher & Co. (AJG): 2.2%

8. The Western Union Co. (WU): 4.5%

9. BlackRock Inc. (BLK): 3%

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10. Bank of Montreal (BMO.TO): 3.9%

11. SEI Investments Co. (SEIC): 1.3%

12. Erie Indemnity Co. (ERIE): 2%

D-Ranked Dividend Risk 1. Manulife Financial Corp. (MFC): 4.4%

2. Synchrony Financial (SYF): 2.6%

3. Principal Financial Grp. Inc. (PFG): 4.1%

4. Citigroup Inc. (C): 2.8%

5. Bank of America Corp. (BAC): 2.1%

6. Sun Life Financial Inc. (SLF): 3.9%

7. Discover Financial Services (DFS): 2.3%

8. KeyCorp (KEY): 3.9%

9. Comerica Inc. (CMA): 3.1%

10. Wells Fargo & Co. (WFC): 3.6%

11. Huntington Bancshares Inc. (HBAN): 3.9%

12. Legg Mason Inc. (LM): 4.7%

13. Prudential Financial Inc. (PRU): 4.2%

14. The Bank of New York Mellon Corp. (BK): 2.1%

15. JPMorgan Chase & Co. (JPM): 3%

16. Ping An Insurance Grp. Co. of China Ltd (PNGAY):

1.7%

17. Navient Corporation (NAVI): 5.1%

18. Popular Inc. (BPOP): 2.2%

19. Westamerica Bancorporation (WABC): 2.5%

F-Ranked Dividend Risk 1. Aegon NV (AEG): 6.1%

2. Lazard Ltd (LAZ): 4.7%

3. HSBC Holdings plc (HSBC): 10.3%

4. Apollo Global Mgmt. LLC (APO): 7.7%

5. Artisan Partners Asset Mgmt. Inc. (APAM): 8.7%

6. Banco Santander SA (SAN): 6.3%

7. Waddell & Reed Financial Inc. (WDR): 5.5%

8. The Blackstone Grp. LP (BX): 6.9%

9. Calvin B. Taylor Bankshares Inc. (TYCB): 2.9%

10. Gladstone Inv. Corp. (GAIN): 6.8%

11. Thomson Reuters Corp. (TRI): 2.6%

12. Mercury General Corp. (MCY): 4.7%

Healthcare A-Ranked Dividend Risk 1. AbbVie Inc. (ABBV): 5.3%

2. AmerisourceBergen Corp. (ABC): 1.9%

3. Perrigo Co. plc (PRGO): 1.6%

4. Becton, Dickinson & Co. (BDX): 1.2%

5. Johnson & Johnson (JNJ): 2.6%

6. Medtronic plc (MDT): 2.2%

7. Abbott Laboratories (ABT): 1.7%

8. West Pharmaceutical Srvcs. Inc. (WST): 0.6%

B-Ranked Dividend Risk 1. Cardinal Health Inc. (CAH): 3.6%

2. CVS Health Corp. (CVS): 3.3%

3. Fresenius Medical Care AG & Co. KGaA (FMS):

1.6%

4. Stryker Corp. (SYK): 1.1%

5. UnitedHealth Grp. Inc. (UNH): 1.4%

C-Ranked Dividend Risk 1. Mckesson Corp. (MCK): 1.2%

2. Sanofi (SNY): 4.5%

3. Gilead Sciences Inc. (GILD): 3.9%

4. Amgen Inc. (AMGN): 3.1%

5. Novartis AG (NVS): 3.2%

6. ResMed Inc. (RMD): 1.5%

7. Merck & Co. Inc. (MRK): 2.7%

8. Eli Lilly & Co. (LLY): 2.1%

D-Ranked Dividend Risk 1. Bristol-Myers Squibb Co. (BMY): 3.3%

2. Patterson Companies Inc. (PDCO): 4.7%

3. Novo Nordisk A/S (NVO): 2.6%

4. Pfizer Inc. (PFE): 3.4%

F-Ranked Dividend Risk 1. Owens & Minor Inc. (OMI): 0.2%

2. GlaxoSmithKline plc (GSK): 5.9%

3. Bayer AG (BAYRY): 4.3%

4. Koninklijke Philips NV (PHG): 2.5%

5. AstraZeneca plc (AZN): 3.3%

Industrials A-Ranked Dividend Risk 1. Caterpillar Inc. (CAT): 2.5%

2. Southwest Airlines Co. (LUV): 1.2%

3. FedEx Corp. (FDX): 1.4%

4. Textron Inc. (TXT): 0.2%

5. Canadian Pacific Railway Ltd (CP): 0.9%

6. Donaldson Co. Inc. (DCI): 1.5%

7. A. O. Smith Corp. (AOS): 1.7%

8. W.W. Grainger Inc. (GWW): 1.8%

9. Parker-Hannifin Corp. (PH): 1.7%

10. Carlisle Companies Inc. (CSL): 1.3%

11. Illinois Tool Works Inc. (ITW): 2.8%

12. Stanley Black & Decker Inc. (SWK): 1.9%

13. Pentair plc (PNR): 1.7%

14. General Dynamics Corp. (GD): 2.2%

15. Dover Corp. (DOV): 2.1%

16. CSX Corp. (CSX): 1.3%

17. ABM Industries Inc. (ABM): 2%

18. Emerson Electric Co. (EMR): 2.9%

19. 3M Co. (MMM): 2.8%

20. The Gorman-Rupp Co. (GRC): 1.6%

21. Brady Corp. (BRC): 1.8%

22. Nordson Corp. (NDSN): 1%

23. MSA Safety Inc. (MSA): 1.5%

24. Tennant Co. (TNC): 1.4%

25. Roper Technologies Inc. (ROP): 0.6%

26. Cintas Corp. (CTAS): 1%

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B-Ranked Dividend Risk 1. Snap-on Inc. (SNA): 2.4%

2. MSC Industrial Direct Co. Inc. (MSM): 3%

3. Kansas City Southern (KSU): 1.3%

4. Northrop Grumman Corp. (NOC): 1.7%

5. Cummins Inc. (CMI): 2.9%

6. The Toro Co. (TTC): 1.3%

7. Lockheed Martin Corp. (LMT): 2.9%

8. Ingersoll-Rand plc (IR): 2%

9. Xylem Inc. (XYL): 1.3%

10. Deere & Co. (DE): 1.9%

11. Raytheon Co. (RTN): 1.9%

12. Morningstar Inc. (MORN): 0.9%

13. Norfolk Southern Corp. (NSC): 1.9%

14. Honeywell Intl. Inc. (HON): 2.1%

15. Canadian National Railway Co. (CNI): 1.9%

16. United Technologies Corp. (UTX): 2.3%

17. Franklin Electric Co. Inc. (FELE): 1.1%

18. Jack Henry & Associates Inc. (JKHY): 1.2%

19. Waste Mgmt. Inc. (WM): 2.1%

20. McGrath RentCorp (MGRC): 2.6%

21. L3 Technologies Inc. (LLL): 1.6%

22. Automatic Data Processing Inc. (ADP): 2.1%

23. Union Pacific Corp. (UNP): 2.1%

24. CAE Inc. (CAE.TO): 1.4%

C-Ranked Dividend Risk 1. United Parcel Service Inc. (UPS): 3.5%

2. HNI Corp. (HNI): 3.2%

3. Siemens AG (SIEGY): 3.9%

4. ABB Ltd (ABB): 4%

5. American Airlines Grp. Inc. (AAL): 1.1%

6. The Boeing Co. (BA): 1.9%

7. Fastenal Co. (FAST): 2.7%

8. Eaton Corp. plc (ETN): 3.3%

9. Rockwell Automation Inc. (ROK): 2.2%

10. General Electric Co. (GE): 0.4%

D-Ranked Dividend Risk 1. Hawaiian Holdings Inc. (HA): 1.6%

2. Ryder System Inc. (R): 3.5%

3. Alaska Air Grp. Inc. (ALK): 2.2%

4. Iron Mountain Inc. (IRM): 7%

5. PACCAR Inc. (PCAR): 1.9%

6. Delta Air Lines Inc. (DAL): 2.7%

7. Copa Holdings SA (CPA): 2.9%

8. R.R. Donnelley & Sons Co. (RRD): 1.9%

9. Paychex Inc. (PAYX): 2.9%

F-Ranked Dividend Risk 1. Compass Diversified Holdings (CODI): 9%

2. Macquarie Infra. Corp. (MIC): 9.8%

3. Johnson Controls Intl. plc (JCI): 2.9%

4. Seaspan Corp. (SSW): 5.6%

5. Nielsen Holdings plc (NLSN): 5.5%

6. Canon Inc. (CAJ): 5.1%

Real Estate A-Ranked Dividend Risk 1. Federal Realty Inv. Trust (FRT) - 3.1%

B-Ranked Dividend Risk 1. N/A

C-Ranked Dividend Risk 1. Hospitality Properties Trust (HPT): 7.8%

2. Digital Realty Trust Inc. (DLR): 3.8%

3. Simon Property Grp. Inc. (SPG): 4.5%

4. W. P. Carey Inc. (WPC): 5.6%

5. Urstadt Biddle Properties Inc. (UBA): 5.2%

6. Host Hotels & Resorts Inc. (HST): 4.1%

7. National Retail Properties Inc. (NNN): 3.8%

8. Universal Health Realty Income (UHT): 3.6%

D-Ranked Dividend Risk 1. Brookfield Property REIT (BPR): 6.7%

2. Brookfield Property Partners LP (BPY): 6.7%

3. Omega Healthcare Investors Inc. (OHI): 7.4%

4. ARMOUR Residential REIT Inc. (ARR): 11.3%

5. Public Storage (PSA): 4%

6. Ventas Inc. (VTR): 5%

7. Realty Income Corp. (O): 3.9%

8. Welltower Inc. (WELL): 4.7%

9. HCP Inc. (HCP): 4.8%

F-Ranked Dividend Risk 1. Senior Housing Properties Trust (SNH): 11.7%

2. New Residential Inv. Corp. (NRZ): 12.1%

3. Summit Hotel Properties Inc. (INN): 6.3%

4. Macerich Co. (MAC): 7%

5. Crown Castle Intl. Corp. (CCI): 3.8%

6. Global Net Lease Inc. (GNL): 11%

7. STAG Industrial Inc. (STAG): 5.1%

8. Lamar Advertising Co. (LAMR): 4.7%

9. Apollo Comml. Real Estate Fin. (ARI): 10.2%

10. OUTFRONT Media Inc. (OUT): 6.6%

11. Kimco Realty Corp. (KIM): 6.4%

12. Taubman Centers, Inc. (TCO): 4.9%

13. Starwood Property Trust Inc. (STWD): 8.7%

14. Boston Properties Inc. (BXP): 2.8%

15. Orchid Island Capital Inc. (ORC): 13.8%

16. Equity Residential (EQR): 2.9%

17. AvalonBay Communities Inc. (AVB): 3.1%

Technology A-Ranked Dividend Risk 1. NVIDIA Corp. (NVDA): 0.4%

2. Infosys Ltd (INFY): 3.1%

3. Computer Services Inc. (CSVI): 2.5%

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B-Ranked Dividend Risk 1. Western Digital Corp. (WDC): 3.9%

2. International Business Machines Corp. (IBM): 4.5%

3. Intel Corp. (INTC): 2.4%

4. SAP SE (SAP): 1.6%

5. Apple Inc. (AAPL): 1.7%

6. Cognizant Technology Solutions Corp. (CTSH): 1.1%

7. Microsoft Corp. (MSFT): 1.6%

8. HP Inc. (HPQ): 2.7%

9. Oracle Corp. (ORCL): 1.4%

10. Corning Inc. (GLW): 2.3%

11. Badger Meter Inc. (BMI): 1%

C-Ranked Dividend Risk 1. Micro Focus Intl. plc (MFGP): 4.7%

2. Texas Instruments Inc. (TXN): 2.9%

3. NetApp Inc. (NTAP): 2.4%

4. QUALCOMM Inc. (QCOM): 4.7%

5. Sony Corp. (SNE): 0.6%

6. Taiwan Semiconductor Mfg. Co. Ltd (TSM): 3.4%

7. Cisco Systems Inc. (CSCO): 2.7%

D-Ranked Dividend Risk 1. Applied Materials Inc. (AMAT): 2%

2. Broadcom Inc. (AVGO): 3.9%

3. Seagate Technology plc (STX): 5.3%

4. Xerox Corp. (XRX): 3.2%

5. KLA-Tencor Corp. (KLAC): 2.6%

6. Logitech Intl. SA (LOGI): 1.8%

7. Accenture plc (ACN): 1.8%

8. Telefonaktiebolaget LM Ericsson (ERIC): 1.4%

9. Kulicke & Soffa Industries Inc. (KLIC): 2%

F-Ranked Dividend Risk 1. Nokia Corp. (NOK): 3.9%

2. Garmin Ltd (GRMN): 2.7%

Utilities A-Ranked Dividend Risk 1. Black Hills Corp. (BKH): 2.9%

2. SJW Grp. (SJW): 2%

3. UGI Corp. (UGI): 1.9%

4. Atmos Energy Corp. (ATO): 2.1%

5. Connecticut Water Service Inc. (CTWS): 1.9%

6. MGE Energy Inc. (MGEE): 2.1%

7. Middlesex Water Co. (MSEX): 1.6%

8. California Water Service Grp. (CWT): 1.5%

9. American States Water Co. (AWR): 1.6%

B-Ranked Dividend Risk 1. Fortis Inc. (FTS.TO): 3.8%

2. Consolidated Edison Inc. (ED): 3.6%

3. Aqua America Inc. (WTR): 2.4%

4. Northwest Natural Holding Co. (NWN): 3%

C-Ranked Dividend Risk 1. American Electric Power Co. Inc. (AEP): 3.3%

2. Edison International (EIX): 4%

3. CenterPoint Energy, Inc. (CNP): 3.7%

4. NextEra Energy Inc. (NEE): 2.7%

5. Entergy Corp. (ETR): 3.9%

D-Ranked Dividend Risk 1. AmeriGas Partners LP (APU): 13.1%

2. Dominion Energy Inc. (D): 4.6%

3. Duke Energy Corp. (DUK): 4.2%

4. The Southern Co. (SO): 4.9%

5. Otter Tail Corp. (OTTR): 2.8%

6. PPL Corp. (PPL): 5.2%

F-Ranked Dividend Risk 1. Suburban Propane Partners LP (SPH): 10.7%

2. Brookfield Infra. Partners LP (BIP): 4.9%

3. Brookfield Renewable Partners LP (BEP): 6.8%

4. Spark Energy Inc. (SPKE): 7.4%

5. Consolidated Water Co. Ltd (CWCO): 2.6%

LONG-TERM INVESTING IN HIGH-QUALITY DIVIDEND STOCKS€¦ · 3 Opening Thoughts - On Newell Brands,...

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Transcript of LONG-TERM INVESTING IN HIGH-QUALITY DIVIDEND STOCKS€¦ · 3 Opening Thoughts - On Newell Brands,...