How Compounding Can Turn Underperfomers Into Big Winners

More on dividend growth investing  -> Join our market newsletter!  The corporate life cycle is an important yet often overlooked factor in investing. Like all things, companies age over time, with each phase having its own pros and cons. In this episode, Greg explores the corporate life cycle's impact on dividend growth investing. Using research from Morgan Stanley and Aswath Damodaran, he covers various stages of a company's life, including startup, young growth, high growth, mature growth, mature stable, and decline— with examples from companies like Rivian, Nvidia, Microsoft, PepsiCo, GE, IBM, Intel, AT&T, and Tesla. Highlights include the prolonged profitability in maturity phases, industry-specific aging rates, and risks associated with corporate debt and large acquisitions. Greg emphasizes understanding a company's phase for strategic investment decisions and the critical role of suitable CEOs.00:00 Introduction01:12 The Importance of Understanding the Corporate Life Cycle02:10 Morgan Stanley's Five Stages of the Corporate Life Cycle02:58 Key Metrics in the Corporate Life Cycle05:39 Profitability and Debt in Different Stages08:37 Cost of Equity and Capital in Mature Companies11:10 Aswath Damodaran's Six Stages of the Corporate Life Cycle14:08 Examples of Companies in Different Life Cycle Stages20:15 Dividend Investing: High Growth to Mature Growth21:48 Mature Stable Phase: Dividend Income and Growth22:56 Challenges in Mature Stable Phase24:24 Decline Phase: Managing Declining Cashflow25:44 Narrative vs. Numbers in Company Growth29:08 Pricing and Valuation Across Growth Phases31:59 CEO Roles in Different Growth Phases35:59 Conclusion: Investing Across Lifecycle StagesSend us a textNotes & Resources:DCM Investment Reports & ModelsIf you submit a question to us and we use it in an episode, we will send you an official The Dividend Mailbox Yeti® Tumbler -> Email us at [email protected] our website to learn more about our investment strategy and wealth management services.Follow us on:Instagram - Facebook - LinkedIn - TwitterIf you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

 More on dividend growth investing  -> Join our market newsletter! When a company’s stock price has struggled for years, a change in management may be just what it needs to get back on track. Even still, new management can’t fix everything.  Historically, Starbucks has been an impressive growth story, generating phenomenal wealth for investors. Despite its profitability and strong cash flows, recent challenges have raised questions about whether those days are long gone. In this episode, Greg analyzes the Starbucks story as a potential dividend growth candidate and what the future may hold. He discusses the implications of Starbucks' new CEO (who previously turned around Chipotle), and the company's strategy to address operational inefficiencies. Later, Greg transitions to an update on Chevron which has been part of the model portfolio since 2010. Although higher dividend yields can signal problems for a company, Chevron’s resilience makes it worth considering adding to the position.  00:00 Introduction to Dividend Mailbox00:47 Starbucks: A Familiar Name with a Compelling Story03:33 Starbucks' Financial Performance and Challenges05:22 Evaluating Starbucks as a Dividend Growth Investment11:33 Starbucks' Debt and Cash Flow Analysis27:10 Conclusion on Starbucks and Transition to Chevron28:04 Chevron: A Reliable Dividend Growth Story29:41 Chevron's Financial Health and Future Prospects35:41 Final Thoughts and Wrap-UpSend us a textNotes & Resources:DCM Investment Reports & ModelsIf you submit a question to us and we use it in an episode, we will send you an official The Dividend Mailbox Yeti® Tumbler -> Email us at [email protected] our website to learn more about our investment strategy and wealth management services.Follow us on:Instagram - Facebook - LinkedIn - TwitterIf you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

More on dividend growth investing  -> Join our market newsletter!  In our August episode, Greg interviews longtime friend and fellow financial advisor Kent Hughes. Kent has worked in the industry for over 40 years, focusing his investment strategy on quality and market indices. During his career as an advisor, Kent's expertise has earned him placement on both the Forbes and Barron's Top Wealth Advisor lists.  Greg and Kent begin the episode by discussing the evolution of the investment industry over the past four decades, the impact of technological advances on market information, and investor behavior. The duo also delves into market expectations, secular bull markets, and the potential effects of AI on investing.   Following their conversation, Greg mentions that he was able to speak with the investor relations department at Snap-on, and concludes the episode by providing answers to the questions we had about the company from the previous episode.    Timestamps:00:00 Introduction to The Dividend Mailbox 00:45 Interview with Kent Hughes: A Journey Through the Financial Industry 03:33 Changes in the Financial Industry Over 40 Years 05:35 Lessons Learned and Biggest Mistakes 08:13 Impact of AI and Investor Expectations 12:29 Economic Outlook and Market Predictions 17:21 Commercial Real Estate Concerns 19:25 Forecasting Future Returns 25:50 Investment Strategies and Dividend Growth 32:36 The Importance of Dividend Growth 34:07 Historical Performance and Market Trends 36:27 Understanding Compounding and Market Sentiment 39:37 Favorite Investment Books and Influential Figures 43:40 International Investing Considerations 49:20 The Competitive Advantage of Patience 55:43 Snap-on: A Potential Investment Opportunity 01:00:53 Closing Thoughts and Key Takeaways Send us a textNotes & Resources:DCM Investment Reports & ModelsIf you submit a question to us and we use it in an episode, we will send you an official The Dividend Mailbox Yeti® Tumbler -> Email us at [email protected] our website to learn more about our investment strategy and wealth management services.Follow us on:Instagram - Facebook - LinkedIn - TwitterIf you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

More on dividend growth investing  -> Join our market newsletter!In this episode of The Dividend Mailbox, Greg takes an in-depth look at Snap-on (SNA), a company with a rich history of tool innovation and consistent dividend payments since 1939.  He discusses the company's evolution from automotive tools to specialized equipment for various industries, its unique franchise model, and its financing arm. By examining Snap-on's business model, financial performance, valuation, management discipline, and potential risks, he makes the case that this seemingly "boring" business checks almost all the boxes and is a compelling investment idea for dividend growth investors.  Send us a textNotes & Resources:DCM Investment Reports & ModelsIf you submit a question to us and we use it in an episode, we will send you an official The Dividend Mailbox Yeti® Tumbler -> Email us at [email protected] our website to learn more about our investment strategy and wealth management services.Follow us on:Instagram - Facebook - LinkedIn - TwitterIf you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

More on dividend growth investing  -> Join our market newsletter! To start our fourth year of The Dividend Mailbox, Greg is joined by Daniel Peris, author of The Ownership Dividend: The Coming Paradigm Shift in the U.S. Stock Market and Head of the Income and Value Group at Federated Hermes. Daniel's deep historical perspective and expertise offer valuable insights into the future of dividend growth strategies and the importance of sustainable dividend investing.Their conversation covers a range of topics including:Historical context and the evolving dynamics of dividend growth investing.Challenges and opportunities in the dividend space, including the impact of interest rates and market cycles.The role of stock buybacks and their effectiveness in shareholder returns.Strategies for managing dividend cuts and maintaining a high and rising income stream.The foundational importance of cash flow for all investors.Follow Daniel on X/Twitter @HistoryInvestorSend us a textNotes & Resources:DCM Investment Reports & ModelsIf you submit a question to us and we use it in an episode, we will send you an official The Dividend Mailbox Yeti® Tumbler -> Email us at [email protected] our website to learn more about our investment strategy and wealth management services.Follow us on:Instagram - Facebook - LinkedIn - TwitterIf you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

More on dividend growth investing  -> Join our market newsletter! In today's episode, Greg dives into a practical application of our dividend growth strategy by discussing a recent buy, a watch, and a sell. He starts the episode with Hershey (HSY), exploring why this classic chocolate maker made it into our portfolio despite soaring cocoa prices. Although it may sound like a boring name,  companies like this can generate outsized long-term returns. For the watch candidate, Greg turns his attention to CVS Health (CVS). Despite its financial strength and attractive valuation, he discusses CVS's coming headwinds. Sometimes when there is a lot of negative sentiment surrounding a company, there is potential to make a lot of money. Lastly, Greg explains his decision to trim our position in Emerson Electric (EMR). Even though it is a long-time dividend growth stalwart and has seen strong price performance recently, it no longer meets our dividend growth criteria.Send us a textNotes & Resources:DCM Investment Reports & ModelsIf you submit a question to us and we use it in an episode, we will send you an official The Dividend Mailbox Yeti® Tumbler -> Email us at [email protected] our website to learn more about our investment strategy and wealth management services.Follow us on:Instagram - Facebook - LinkedIn - TwitterIf you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

More on dividend growth investing  -> Join our market newsletter! Between immediate information on the Internet and minute-by-minute stock quotes at your fingertips, investors appear to be more infatuated with price appreciation than anything else. In contrast, prior to the 1990s, investors primarily focused on earning returns through a cash flow of dividends. Even though there has undoubtedly been a shift from cash-focused investing to a market fixated on price performance, cash flows play a critical role in assessing company valuation.In this episode, Greg examines wisdom from "The Ownership Dividend: The Coming Paradigm Shift in the US Stock Market." Through several excerpts, he exposes how important dividends are to the structure of the market, investor goals, and company valuation. In the second half of the episode, Greg looks at Williams-Sonoma which has appreciated 200% since we first bought it two years ago. He analyzes whether its recent outperformance should warrant selling it to lock in gains.EDIT: In the episode, Greg comments that our Williams Sonoma position has appreciated 300%, however, it has only appreciated 200%. The stock prices were given, so simple calculations could identify this error. Send us a textNotes & Resources:DCM Investment Reports & ModelsIf you submit a question to us and we use it in an episode, we will send you an official The Dividend Mailbox Yeti® Tumbler -> Email us at [email protected] our website to learn more about our investment strategy and wealth management services.Follow us on:Instagram - Facebook - LinkedIn - TwitterIf you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

More on dividend growth investing  -> Join our market newsletter!Check out our Union Pacific Investment ReportIn most cases, holding quality stocks for the long term tends to play out in favor of the investor. However, if a company’s prospects change, there are situations where exiting a position can be warranted. In this episode of The Dividend Mailbox, Greg outlines our decision-making process behind selling off a portion of our IBM position. What started as a turnaround play transformed into a potential value trap. Using IBM as an illustration, Greg provides insight into the complexities of owning dividend growth investments and taking advantage of opportunities to exit positions that don't meet your expectations. Plus, get a sneak peek into next month's episode featuring a success story with Williams Sonoma, highlighting the potential rewards of high-conviction investments in the dividend growth landscape.Send us a textNotes & Resources:DCM Investment Reports & ModelsIf you submit a question to us and we use it in an episode, we will send you an official The Dividend Mailbox Yeti® Tumbler -> Email us at [email protected] our website to learn more about our investment strategy and wealth management services.Follow us on:Instagram - Facebook - LinkedIn - TwitterIf you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

More on dividend growth investing  -> Join our market newsletter!Check out our Union Pacific Investment ReportIn this episode, Greg analyzes the wisdom of renowned economist, Jeremey Seigle. Between his investing classic "Stocks for the Long Run," and "The Future for Investors," Siegle maintains that you don't need high growth numbers or a flashy industry, only consistent growth. Although it is seemingly counterintuitive, Seigle presents the power of compounding from a new perspective. Most investors would hope stocks go up, and the quicker the better. But there is an argument for how a stock that goes sideways, or even downward, can be beneficial to your long-term total return.Later, Greg provides an update on Emerson ($EMR) where faster dividend growth seems to be on the horizon. In case you missed it, the original Emerson Electric ($EMR) story is linked here: EP 17 - The Dilemma with Slow GrowSend us a textNotes & Resources:DCM Investment Reports & ModelsIf you submit a question to us and we use it in an episode, we will send you an official The Dividend Mailbox Yeti® Tumbler -> Email us at [email protected] our website to learn more about our investment strategy and wealth management services.Follow us on:Instagram - Facebook - LinkedIn - TwitterIf you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

More on dividend growth investing  -> Join our market newsletter!Check out our Union Pacific Investment ReportOver the past decade, the oil industry has become increasingly controversial and subsequently neglected by investors. No one knows when the industry's expiration date will come due, but there are great value and dividend growth investments to be made in the meantime. Even in declining industries, there can still be big winners. For episode 31, Greg focuses on Chevron's resilience in a politically incorrect landscape, including its recent Hess acquisition. He explores the intersection of environmental concerns and the indispensability of oil in everyday life, with investing as the backdrop. Despite the industry's challenges, he makes a compelling case for Chevron's sustainable dividend growth and long-term potential.Send us a textNotes & Resources:DCM Investment Reports & ModelsIf you submit a question to us and we use it in an episode, we will send you an official The Dividend Mailbox Yeti® Tumbler -> Email us at [email protected] our website to learn more about our investment strategy and wealth management services.Follow us on:Instagram - Facebook - LinkedIn - TwitterIf you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review