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After Williams Sonoma reported earnings before market open on March 19th, 2025, we saw their results as an excellent example of how to execute a dividend growth strategy on a day-to-day basis. While we have covered $WSM in several previous episodes, it is a case study on dividend growth investing. In what normally takes 10+ years to deliver to investors, Williams Sonoma has provided us with attractive dividend growth and total return in less than 3 years. 

In this "express mail" episode, Greg looks at Williams-Sonoma's latest earnings and how recent weakness in the stock price could be a long-term positive for total return. He analyzes how if the stock goes lower, there is room for more share repurchases, which boosts dividend growth and earnings growth. Additionally, he points out that if the stock turns around and goes much higher again, we may consider selling more of the stock. As we stand somewhere in the middle, Greg concludes by looking at where he would buy into the stock again.

00:55 Special Episode: Williams Sonoma Earnings Update

01:24 Williams Sonoma: A Case Study in Dividend Growth

02:33 Strategic Decisions and Market Reactions

05:22 Evaluating Dividend Growth and Future Prospects

12:27 Conclusion and Investment Strategy

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Disclaimer: Past performance does not guarantee future results. This episode is for educational purposes only and is not investment advice.

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While it may be a somewhat misused paraphrase of Warren Buffett's famous baseball analogy, 'fat pitch' is a term often thrown around in investing circles. In most settings, it implies that an investment opportunity is extremely lucrative with a high probability of success—but they are rare. Beyond having the discipline to patiently wait for these opportunities, what does a 'fat pitch' actually look like?

In this episode, Greg discusses the concept of 'fat pitches' by exploring the extraordinary long-term performance of Altria (formerly Philip Morris), despite numerous industry challenges and negative headlines. Through a detailed analysis of Altria's historical performance, including its high dividend yield and impressive cash flow management, he emphasizes the timeless principles of dividend growth, patient investing, and compounding. 

00:00 Introduction to The Dividend Mailbox Podcast
02:34 Review of Current Dividend Growth Performance and Market Observations
06:13 Case Study: The Success of Philip Morris
15:58 Key Takeaways from Philip Morris's Performance
24:51 Lessons on Dividend Growth and Compounding
32:14 Conclusion and Final Thoughts 

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Disclaimer: Past performance does not guarantee future results. This episode is for educational purposes only and is not investment advice.

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RESOURCES:

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Following brief upward momentum after we first bought Hershey, the stock proceeded to slide downward. Cocoa prices remain elevated, and there is significant uncertainty surrounding the short-term impacts on the company's operations. However, Hershey's recent earnings report shows that the company is more resilient than it may appear.

Despite a 20% stock decline, Greg emphasizes that there are still many things to like about Hershey. Simply put, there is much more to the story than the current price of cocoa. Going a bit deeper, Greg examines the cocoa supply chain, specifically the impact of weather and geopolitical issues on production in major countries like Ivory Coast, Ecuador, and Ghana, highlighting several factors that suggest a possible future drop in cocoa prices. He further discusses Hershey's superb hedging strategies, strong balance sheet, and potential for high returns through dividends and stock growth within the next decade. Ultimately, Hershey's attractive valuation, dividend yield, and potential dividend growth allow investors to start with an advantage. In closing, Greg presents a Suber Bowl analogy to underscore the patience required for long-term investing, contrasting it with the short-term focus prevalent in current market analysis. 

00:00 Introduction to The Dividend Mailbox

02:16 Revisiting the Hershey Story

05:37 Hershey's Market Position and Challenges

07:36 Cocoa Market Dynamics

12:04 Hershey's Financial Health and Strategy

15:29 Investment Strategies and Long-Term Outlook

25:50 Rant on Market Commentary and Short-Term Thinking

31:14 Super Bowl Analogy and Final Thoughts

37:50 Conclusion and Contact Information

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Disclaimer: Past performance does not guarantee future results. This episode is for educational purposes only and is not investment advice.

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RESOURCES:

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Is there anything predictable about the stock market? If so, how much power or truth does it hold? Do sophisticated models and strategies have a predictive edge? Even if you’re an investor with limited experience, the odds are at least one of these questions has piqued your interest at some point in your investing career.

In episode 43, Greg discusses predictability in ETF income and dividend growth. He examines various ETFs tracking the S&P 500, such as SPY, IVV, and VOO, highlighting discrepancies in their dividend growth rates from year to year. Greg emphasizes the importance of not making investment decisions based solely on headline numbers, as these may not tell the full story. The episode also explores the limitations of discounted cash flow models, touching on the challenges of long-term forecasts and the uncertainties of market competition. Ultimately, he advises investors to focus on understanding what they own and cautions against overly sophisticated financial models that may introduce more risk and uncertainty. 

00:00 Introduction to The Dividend Mailbox
00:46 Understanding ETF Predictability
01:46 Analyzing S&P 500 Dividend Growth
04:09 Comparing Different S&P 500 ETFs
10:49 Exploring the S&P 100 and Other Indexes
16:57 The Complexity of Enhanced Income ETFs
24:27 The Power and Pitfalls of Predictability
25:46 Diving into Discounted Cash Flow Models
31:13 The Terminal Value Trap
38:53 Conclusion and Final Thoughts

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Disclaimer: Past performance does not guarantee future results. This episode is for educational purposes only and is not investment advice.

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RESOURCES:

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You, the investor, must choose between investing in two companies based on their financial results over two years. One has steady revenue and earnings growth, alongside decent dividend growth. The other experiences moderate financial decline, but boasts strong dividend growth. Given this information beforehand, which would be the better investment?

In our final episode of the year, Greg revives the classic game show Let's Make a Deal to illustrate that even if you know the future, some aspects of investing will always be unknowable. Later, Greg continues this theme by discussing broader market valuation, and predictions from various analysts for 2025 and beyond. To tie everything together, Greg concludes the episode by reflecting on a TED Talk that emphasizes the importance of a long-term strategy and the pitfalls of short-term thinking.

Happy Holidays from The Dividend Mailbox Team

00:00 Introduction to The Dividend Mailbox
00:46 Let's Make a Deal: Investment Choices
02:47 Behind Door Number One: A Declining Company
04:54 Behind Door Number Two: A Growing Company
05:45 Comparing the Two Companies
08:05 Revealing the Companies and Market Insights
12:34 When to Sell: Strategies and Considerations
19:16 Market Predictions and Analyst Opinions
27:43 Long-Term vs Short-Term Investing
33:38 Conclusion and Final Thoughts

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Disclaimer: Past performance does not guarantee future results. This episode is for educational purposes only and is not investment advice.

If you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

RESOURCES:

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The last time the S&P 500 dividend yield was sitting at 1.17% was in February of 2001. Many investors remember the stretched valuations 23 years ago, and even more so, how the following year proved to correct that exuberance. While stock prices are currently hovering around all-time highs, us dividend growth investors targeting a yield of 2.5-3% may find challenges in this environment.

Given this, and the uncertainty surrounding the recent presidential election, Greg spends episode 41 reviewing the foundational pillars behind our investment strategy. Even with low yields, the next 10 years of performance can be boiled down to relatively simple math. As GDP expands, corporate earnings grow, which in turn gives investors increasing dividend checks. Through several illustrations of what that looks like in your portfolio, Greg concludes that the dividend growth strategy is alive and well. Later, he reviews some recent actions we have taken, highlighting decisions on selling part of Emerson ($EMR), adding to Hershey ($HSY), and starting a position in Union Pacific ($UNP).

00:00 Introduction to The Dividend Mailbox
00:46 Current Market Overview
001:54 The Drivers Behind The Dividend Growth Strategy
005:10 Historical Performance Analysis
007:52 Future Predictions and Assumptions
010:28 Dividend Growth vs. Buybacks
12:15 Portfolio Growth & Return Illustration
20:16 Market Yields, Challenges, and Opportunities
27:46 Our Recent Portfolio Actions
35:16 Conclusion and Final Thoughts

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Disclaimer: Past performance does not guarantee future results. This episode is for educational purposes only and is not investment advice.

If you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

RESOURCES:

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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 Introduction
01:12 The Importance of Understanding the Corporate Life Cycle
02:10 Morgan Stanley's Five Stages of the Corporate Life Cycle
02:58 Key Metrics in the Corporate Life Cycle
05:39 Profitability and Debt in Different Stages
08:37 Cost of Equity and Capital in Mature Companies
11:10 Aswath Damodaran's Six Stages of the Corporate Life Cycle
14:08 Examples of Companies in Different Life Cycle Stages
20:15 Dividend Investing: High Growth to Mature Growth
21:48 Mature Stable Phase: Dividend Income and Growth
22:56 Challenges in Mature Stable Phase
24:24 Decline Phase: Managing Declining Cashflow
25:44 Narrative vs. Numbers in Company Growth
29:08 Pricing and Valuation Across Growth Phases
31:59 CEO Roles in Different Growth Phases
35:59 Conclusion: Investing Across Lifecycle Stages

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Disclaimer: Past performance does not guarantee future results. This episode is for educational purposes only and is not investment advice.

If you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

RESOURCES:

Schedule a meeting with us -> Financial Planning & Portfolio Management

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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 Mailbox
00:47 Starbucks: A Familiar Name with a Compelling Story
03:33 Starbucks' Financial Performance and Challenges
05:22 Evaluating Starbucks as a Dividend Growth Investment
11:33 Starbucks' Debt and Cash Flow Analysis
27:10 Conclusion on Starbucks and Transition to Chevron
28:04 Chevron: A Reliable Dividend Growth Story
29:41 Chevron's Financial Health and Future Prospects
35:41 Final Thoughts and Wrap-Up

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Disclaimer: Past performance does not guarantee future results. This episode is for educational purposes only and is not investment advice.

If you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

RESOURCES:

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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

 

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Disclaimer: Past performance does not guarantee future results. This episode is for educational purposes only and is not investment advice.

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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.  

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Disclaimer: Past performance does not guarantee future results. This episode is for educational purposes only and is not investment advice.

If you enjoy the show, we'd greatly appreciate it if you subscribe and leave a review

RESOURCES:

Schedule a meeting with us -> Financial Planning & Portfolio Management

Getting into the weeds -> DCM Investment Reports & Models

Visit our website to learn more about our investment strategy and wealth management services.

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