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ALERT: Removing Intel (INTC) from the Newsletter Portfolios
Image: Intel's share price performance since the inaugural edition of the Dividend Growth Newsletter portfolio. We're removing shares of Intel from both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.
By Brian Nelson, CFA
Today, we are removing Intel (INTC) from both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. Intel has been a part of both newsletter portfolios for a long time. The stock was included in the September 2011 edition of the Best Ideas Newsletter with a ~2% weighting in the portfolio at $19.89 per share, and it was included in the inaugural edition of the Dividend Growth Newsletter (January 2012) with a large 7% weighting at $24.25 per share
Most recently, Intel was within the top-weighted range for ideas in the Dividend Growth Newsletter portfolio, but we'll be changing that today. We're removing Intel from both newsletter portfolios in its entirety. Though we continue to like the company as we outline in our latest work here, competitive pressures and a balance sheet that sports a growing net debt position make it much less attractive of a stock, in our view. We tend to prefer healthier balance sheets in this environment, namely ones with huge net cash positions.
As the COVID-19 pandemic continues to spread, we believe that net cash rich, free-cash-flow generating powerhouses with strong competitive advantages and that are levered to secular growth tailwinds will remain the relative outperformers. Entities such as Facebook (FB), Alphabet (GOOG), PayPal (PYPL) are ones that fit the bill nicely, for example. We continue to emphasize ideas that have cash-based sources of intrinsic value as their core foundation (i.e. net cash on the balance sheet and strong expected free cash flows).
At the time of the inaugural Dividend Growth Newsletter in January 2012, Intel was paying an annualized dividend rate of $0.84 per share. Now, the company pays out an annualized dividend of $1.32 per share, showcasing nearly 60% growth over this time period. Intel's Dividend Cushion ratio remains a very healthy 2.4x (a ratio comfortably above 1 indicates a strong dividend payer from a forward-looking financial standpoint). Intel has surely fit the mold of a strong dividend growth entity that has experienced strong capital appreciation, too.
In the Best Ideas Newsletter portfolio, the stock has advanced well over 125% when including dividends since its inaugural price, and in the Dividend Growth Newsletter portfolio, the stock has advanced well over 85% when including dividends since its inaugural price. After its removal, there will now be roughly a 6% cash weighting in the Best Ideas Newsletter portfolio and a 10% cash weighing in the Dividend Growth Newsletter portfolio.
Kind regards,
The Valuentum Team
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This email, its contents, and the reports or articles (links) or comments referenced or attached in this email are for information purposes only and should not be considered a solicitation to buy or sell any security. Valuentum is not responsible for any errors or omissions or for results obtained from the use of the reports, articles, Best Ideas Newsletter, Dividend Growth Newsletter, Nelson Exclusive publication, or any other communication and accepts no liability for how readers may choose to utilize the content. Assumptions, opinions, and estimates are based on our judgment as of the date of the reports or articles and are subject to change without notice. For more information about Valuentum and the products and services it offers, please contact us at info@valuentum.com. The Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio are not real money portfolios. Any performance, including that in the Nelson Exclusive publication, is hypothetical and does not represent actual trading. Past simulated performance, back-tested or walk-forward or other, is not a guarantee of future results. Valuentum is not a money manager, is not a registered investment advisor, and does not offer brokerage or investment banking services. Valuentum is an investment research publishing company. No warranty or guarantee may be created or extended by sales or promotional materials, whether by email or in any other format. Further, this e-mail and attachments relating thereto, is intended for the abovementioned recipient. If you have received this e-mail in error, kindly notify the sender and delete it immediately as it contains information relating to the official business of Valuentum Securities Inc, which is confidential, legally privileged and proprietary to Valuentum Securities Inc.
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