sure dividend · 2019-10-13 · 5 sell recommendation: ecolab (ecl) we first recommended ecolab in...

Sure Dividend

LONG-TERM INVESTING IN HIGH-QUALITY DIVIDEND STOCKS

February 2019 Edition

By Ben Reynolds, Nick McCullum, & Bob Ciura

Edited by Brad Beams

Published on February 3rd, 2019

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Table of Contents

Opening Thoughts - Our Biggest Mistakes - .............................................................................. 3

Sell Recommendation: Walmart (WMT) .................................................................................. 4

Sell Recommendation: Ecolab (ECL) ........................................................................................ 5

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

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

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

Western Digital Corp. (WDC) .................................................................................................. 12

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

Walgreens Boots Alliance Inc. (WBA) .................................................................................... 22

Eaton Vance Corp. (EV) ........................................................................................................... 27

T. Rowe Price Group Inc. (TROW) .......................................................................................... 32

Invesco Ltd (IVZ) ..................................................................................................................... 37

Newell Brands Inc. (NWL) ....................................................................................................... 42

AT&T Inc. (T) .......................................................................................................................... 47

Cardinal Health Inc. (CAH) ...................................................................................................... 52

Closing Thoughts - Our Biggest Successes - ............................................................................. 57

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

Portfolio Building Guide ............................................................................................................ 59

Examples ................................................................................................................................... 59

Past Recommendations & Sells.................................................................................................. 60

Sell Rules .................................................................................................................................. 60

Current Holds ............................................................................................................................ 60

Pending Sells ............................................................................................................................. 63

Sold Positions............................................................................................................................ 63

List of Stocks by Dividend Risk Score ...................................................................................... 64

List of Stocks by Sector .............................................................................................................. 69

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Opening Thoughts - Our Biggest Mistakes -

Analyzing past investment mistakes is one of the best ways to improve in the future. This month’s Opening Thoughts analyzes what went wrong with three of our worst performing investments.

Notes: See this month’s Closing Thoughts for analyses on our three best performing investments. See

the Performance Page for the performance of all past Sure Dividend Newsletter recommendations.

Big Mistake #3: Cardinal Health (CAH)

Our Cardinal Health recommendation has performed poorly to date. With that said, we continue to like

the business and see it as very undervalued. It remains a buy and Top 10 recommendation today.

We first recommended Cardinal Health in the May 2016 edition of The Sure Dividend Newsletter. Looking back on Cardinal Health at the time, the company was showing ~20% adjusted earnings-per-

share growth and was trading at a price-to-earnings ratio of ~15. Cardinal Health has seen earnings-

per-share decline since, as margins have compressed. Predicting future growth is fraught with

difficulty; that’s not where the big lesson is with Cardinal Health. The lesson is in our overly rosy

valuation. In the May 2016 newsletter, we pegged a fair value price-to-earnings ratio of 20 for Cardinal Health. This was wildly optimistic. The company’s highest average price-to-earnings ratio

for a year over the last decade was 19.1 (in 2015). We priced Cardinal Health as if rapid growth was

likely, which was foolish. The lesson: be cautious and conservative with fair value estimations.

Big Mistake #2: Vector Group (VGR)

Vector Group could have easily taken the #1 slot for our big mistakes. It is probably the

recommendation I most regret personally. We first recommended Vector Group in the August 2017

edition of The Sure Dividend Newsletter. We recommended Vector Group because of tweaks to our

ranking methodology. In short, we stopped relying on payout ratios for quantitative dividend safety

analysis because they do not work well for REITs, MLPs, and some cyclical stocks (we have since improved our methodology and rely on payout ratios again with adjustments for these unique corporate

structures). This allowed Vector Group to pass through our screens.

Qualitative analysis showed elevated dividend risk, but we allowed it through to stay true to trusting our quantitative approach (this is why I regret this recommendation). We ended up recommending the

sale of Vector Group in December of 2018 with -28.7% total returns. The lesson: combine

quantitative and qualitative analysis to get the best of both. This is the approach we take now.

Big Mistake #1: Owens & Minor (OMI)

We first recommended Owens & Minor in the January 2018 edition of The Sure Dividend Newsletter.

We recommended it as a pending sell in the November 2018 edition after it slashed its dividend. The

company appeared to be an excellent investment with a low P/E ratio, fairly conservative payout ratio,

and strong historical growth. Careful analysis of the company’s 2017 annual report (which didn’t

come out until February of 2018) would have revealed a company with far lower cash flows than earnings due to a ballooning accounts receivable number. Debt from acquisitions ballooned at the

same time. Then business results deteriorated further resulting in a cash crunch that ultimately caused

a dividend cut. The lesson: pay careful attention to cash flows, rising accounts receivable, and

rising debt levels in addition to earnings.

Disclosure: I (Ben Reynolds) am long OMI and CAH.

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Sell Recommendation: Walmart (WMT)

As a reminder, we are selling up to two securities a month from our past recommendations that have low expected total returns ahead.

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

could be incredibly high-quality – but with a share price that already accounts for years of future growth. In Walmart’s case, it has both a strong and durable competitive advantage that tends to

strengthen during recessions… But it has mediocre growth prospects and is overvalued. Details on

our pending sell announcement on Walmart are below.

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

where it was ranked 1st out of 10. Since that time, Walmart shares have gone on to deliver total

returns1 of 36.1% (6.6% annualized) versus 61.2% (10.4% annualized) for the S&P 500.

While our Walmart investment has worked out to be reasonably profitable, it has not performed as

we’d hoped. It should be noted that if we do enter into a recession soon (or if we had in the past 5

years), Walmart’s performance would likely look much better relative to the S&P 500.

Walmart’s Growth

Walmart’s earnings-per-share peaked in 2013 (technically fiscal 2014 as the company’s year ends in

January) at $5.11 per share. We expect earnings-per-share of $4.80 in 2018 (fiscal 2019) for Walmart.

The company’s share count has decreased, while dividends have increased since 2013. Sales have

grown at Walmart as well. The earnings decline is due entirely to serious margin erosion. Attempting to compete with Amazon online is, in our view, the cause. We do not expect Walmart’s earnings-per-

share to decline indefinitely. We actually project 5.5% annualized growth ahead, but these growth

prospects do not give enough of a boost to returns when valuation is considered.

Walmart’s Yield & Valuation

Walmart is currently yielding a 2.2% dividend. Based on its growth and yield alone, we expect total

returns of 7.7% annually for Walmart. This in itself is no reason to sell – I would happily hold a

company as recession-resistant as Walmart for 7.7% annualized total returns.

Valuation is where Walmart’s stock really lags. The company is currently trading for a price-to-

earnings ratio of 19.6 using its current share price of $93.86 and expected fiscal 2019 earnings-per-

share of $4.80. The company’s historical average price-to-earnings ratio over the last decade is 15.0

for comparison. Based on mediocre recent performance, we feel a fair price-to-earnings ratio of 15.0 (its historical average) is appropriate. If Walmart reverts to its historical average price-to-earnings ratio

over the next 5 years, its total returns will be reduced by 5.2% annually.

When valuation is factored in, Walmart’s expected total returns over the next 5 years are just 2.5% annually, a weak return when compared to alternatives.

Performance, Recommendation, & Review

Our Walmart recommendation delivered positive total returns despite declining earnings-per-share

because Walmart’s valuation multiple expanded significantly from our recommendation P/E of 15.7.

We recommend selling Walmart now and reinvesting into one of this month’s Top 10.

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

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Sell Recommendation: Ecolab (ECL)

We first recommended Ecolab in the October 2014 edition of The Sure Dividend Newsletter (our 7th

issue), where it was ranked 10th out of 10.

Like Walmart, Ecolab is a recession-resistant dividend growth stock. And like Walmart, it is a

Dividend Aristocrat. But unlike Walmart, Ecolab has solid growth prospects ahead. With a payout ratio in the low 30% range, Ecolab is very likely to pay rising dividends into the future.

We recommend selling Ecolab now because it is set to deliver poor total returns ahead due largely to its

expensive valuation.

Since we recommended Ecolab, it has generated total returns2 of 50.0% (9.8% annualized) versus

47.1% (9.3% annualized) for the S&P 500 (SPY). With returns slightly exceeding the S&P 500, this

investment has worked out satisfactorily, but not overwhelmingly so.

Ecolab’s Growth

When we first recommended Ecolab back in October of 2014, we expected annual adjusted-earnings-

per-share growth of around 10.5% annually. Today, we are still targeting solid growth of 9.0%

annually. From 2014 through expected full year 2018 earnings, Ecolab compounded its earnings-per-

share at 5.9% annually, well below our expectations. Fortunately, valuation multiple expansion worked out in this investment’s favor.

Ecolab’s Yield & Valuation

We recommended Ecolab with a yield of 1.0% and a price-to-earnings ratio of 27x the full year’s expected earnings. Dividend growth gives the company’s stock a 1.2% current yield today. Ecolab’s

historical average price-to-earnings ratio over the last decade (excluding low years 2008 and 2009) is

24.3. With solid but not excellent growth prospects, we feel a price-to-earnings ratio of 20.0 is fair for

a high-quality business, like Ecolab. We expect the valuation to come down from historical levels.

The stock is trading for a sky-high price-to-earnings ratio of 30.2 at current prices. If Ecolab reverts to

our estimate of a fair price-to-earnings ratio of 20 over the next 5 years, it will realize a 7.9%

annualized drag on returns.

When valuation is factored in, Ecolab’s expected total returns over the next 5 years are just 2.3% annually – not nearly high enough to justify holding Ecolab shares.

Performance, Recommendation, & Review

Ecolab was an outlier recommendation for Sure Dividend in that it had strong growth prospects, a high price-to-earnings ratio, and a relatively low yield. We typically look for stocks with higher yields and

lower price-to-earnings ratios than Ecolab. But the stock’s dividend history and safety made it look

interesting. And the investment has worked out well, beating the S&P 500 since we recommended it.

Since our initial recommendation, Ecolab has grown its earnings-per-share and seen its valuation multiple expand. This has resulted in returns just ahead of the S&P 500 for investors. The stock now

appears significantly overvalued. Now is a good time to harvest gains and reinvest into better

opportunities.

We recommend selling Ecolab 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 2/1/19.

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Return to Top 10 List

The Sure Dividend Top 10 – February 2019

Name & Ticker Div. Risk

Score Price

Fair Value

Exp. Value Ret.

Div. Yield

Payout Ratio

Exp. Growth

ETR

AbbVie (ABBV) A $80 $126 7.0% 5.3% 49.2% 10.0% 22.3%

Western Digital (WDC) A $47 $61 8.4% 4.6% 24.7% 6.5% 19.5%

Caterpillar (CAT) A $131 $190 8.0% 2.6% 28.1% 6.0% 16.6%

Walgreens (WBA) A $72 $98 6.4% 2.5% 27.1% 8.0% 16.9%

Eaton Vance (EV) A $39 $54 6.8% 3.6% 41.7% 6.0% 16.9%

T. Rowe Price (TROW) A $94 $111 3.8% 3.0% 39.2% 6.0% 12.8%

Invesco (IVZ) B3 $18 $26 6.8% 6.5% 42.9% 5.0% 18.3%

Newell Brands (NWL) B $21 $38 12.1% 4.3% 34.1% 5.4% 21.8%

AT&T (T) B $30 $47 9.8% 6.9% 58.3% 6.0% 22.7%

Cardinal Health (CAH) B $50 $70 7.0% 3.9% 38.0% 5.0% 15.9%

Notes: Data for the table above is from The Sure Analysis Research Database, 1/30/19 spreadsheet. ‘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.

Disclosure: Ben Reynolds is personally long the following from this month’s Top 10: WBA, NWL,

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

Portfolio is long EV.

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: 4.3%

Growth Rate: 6.4%

Valuation Expansion: 7.6%

Expected Annual Total Returns: 18.3%

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 1/30/19 and market close 2/1/19.

3 Note: since the rankings were originally computed for this newsletter, Invesco’s Dividend Risk score has dropped to C. We use the

data from Wednesday’s ranking procedure to determine the stocks for this newsletter and the data to be included in the top 10 table.

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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. In that time, the company has generated strong growth, and now has a current market capitalization of approximately $121 billion.

AbbVie reported its fourth quarter and full year earnings results on January 25. The company generated revenues of $8.3 billion during the fourth quarter, which represents a 7.4% increase over the same period a year ago. AbbVie’s top line performance was driven by strong growth from Imbruvica, which grossed sales of $1.0 billion – 42% year-over-year growth. AbbVie’s flagship drug Humira continued to be the world’s best-selling drug (and AbbVie’s most important product by far), but its sales growth rate decelerated meaningfully to just 0.5%. We believe that Humira’s days as a growth product have concluded, but AbbVie should still be able to use the cash generated by Humira to invest aggressively in new product opportunities moving forward.

On the bottom line, AbbVie’s earnings-per-share of $1.90 were 28% higher than the same period a year ago. For the full fiscal year, earnings-per-share of $7.91 expanded by 41%. Lastly, AbbVie’s management team announced that it sees earnings-per-share between $8.65 and $8.75 for fiscal 2019. AbbVie missed top and bottom line expectations, and this earnings miss combined with worse-than-expected financial guidance caused the shares to drop meaningfully following the announcement.

Competitive Advantage & Recession Performance AbbVie’s competitive advantage is not as strong as it once was because of the patent loss for major product Humira, which is facing increased competition in a number of countries. AbbVie has resorted to steep price cuts in Europe to fend off this new competition. This poses a risk to AbbVie’s future growth, similar to what Pfizer experienced after it lost patent protection on Lipitor. In response to these looming patent expirations, AbbVie has invested aggressively in research and development, spending $10.3 billion on R&D in fiscal 2018 and $5.3 billion on R&D in fiscal 2017.

AbbVie was not an independent company during the 2007-2009 financial crisis, but its parent company (Abbott Laboratories) was, and actually grew its earnings each year of the last recession. AbbVie is assumed to be similarly recession-resistant.

Growth Prospects, Valuation, & Catalyst AbbVie should earn about $9.70 per share in fiscal 2019. Using this estimate, the company is trading at a current price-to-earnings ratio of 9.3. We believe that fair value for a company of AbbVie’s caliber is somewhere around 13 times earnings. If AbbVie’s valuation expands to a price-to-earnings ratio of 13 over the next 5 years, this will boost its annualized returns by 7% per year during this time period. Simultaneously, the company continues to guide for 10% earnings growth, and it pays a dividend that yields around 5%. It is possible that AbbVie could deliver annualized returns of 20% moving forward.

Key Statistics, Ratios, & Metrics Maximum Drawdown4: N/A 10-Year EPS Growth Rate: N/A Dividend Yield: 5.3% 10-Year Dividend Growth Rate: N/A Most Recent Dividend Increase: 11.5% 10-Year Historical Avg. P/E Ratio: N/A Estimated Fair Value: $126 10-Year Annualized Total Return: N/A Dividend History: 46 years of increases5 Next Ex-Dividend Date: 4/14/19 (est.)

4 AbbVie was not publicly-traded during the last recession. 5 Including the company’s history as a wholly-owned subsidiary of Abbott Laboratories.

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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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AbbVie Inc. (ABBV): Valuation Analysis

Average Annual PE Ratio Current PE 10-Year Average

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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 $12.7 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 actually 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 due to the current down cycle in data storage demand that has hurt pricing.

Western Digital had forecasted that second quarter results would be relatively weak, and the company also forecasts that this year’s third quarter will not be overly strong. The company 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 (a type of flash memory) demand bit growth is forecasted in a 36% to 38% range in the long run.

Competitive Advantages & Recession Performance It is difficult for technology companies to establish competitive advantages, particularly when it comes to hardware manufacturing which has a tendency to become commoditized over time. 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.

Growth Prospects, Valuation, & Catalyst Based on expected earnings-per-share of $8.10 for fiscal 2019, Western Digital shares trade for a price-to-earnings ratio of just 5.4. 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 8.4% to Western Digital’s annual returns if mean reversion 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 4.6% will contribute to shareholder returns. In all, we expect annual returns of 19.5% over the next five years.

Key Statistics, Ratios, & Metrics Maximum Drawdown6: 75.2% 10-Year EPS Growth Rate: 12.3% Dividend Yield: 4.6% 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: 12.3% Dividend History: Steady or increasing since 2012 Next Ex-Dividend Date: 3/28/19 (est.)

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

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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

Operating Profit 627 1525 806 2065 2085 1886 1787 811 2186 3832

Operating Margin 8.4% 15.5% 8.5% 16.5% 13.6% 12.5% 12.3% 6.2% 11.4% 18.6%

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

Cash & Equivalents 1794 2734 3490 3208 4309 4804 5024 8151 6354 5005

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

Total Liabilities 2099 2619 2630 6537 6143 6657 5951 21717 18442 17704

Accounts Payable 1101 1507 1545 2773 1990 1971 1881 1888 2144 2265

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

Shareholder’s Equity 3192 4709 5488 7669 7893 8842 9219 11145 11418 11531

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

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

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Western Digital Corp. (WDC) Dividend Yield History

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Western Digital Corp. (WDC) Fundamentals


16


7.9

6.3

10.4

3.9

5.3

9.7

12.8

11.7

7.4

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Western Digital Corp. (WDC): Valuation Analysis


17


Caterpillar Inc. (CAT)

Overview & Current Events

Caterpillar manufactures and sells construction and mining equipment as well as products in several other categories, including diesel engines and industrial gas turbines. Caterpillar was founded in 1925,

is headquartered in Peoria, Illinois and is currently valued at $73 billion. Caterpillar recently raised its

dividend for the 25th consecutive year and became a new member of the Dividend Aristocrats Index.

In late January, Caterpillar reported (1/28/19) financial results for the fourth quarter of fiscal 2019. In

the quarter, the company generated revenues of $14.3 billion, which represents a growth rate of 10.9%

versus the same period a year ago. Caterpillar’s robust sales performance was driven by strong

showings from its most important segments, as Construction sales increased by 8% while Resources

sales grew by an even better 21%. Separately, Energy & Transportation sales increased by 11% and Financial Products saw revenues grow by just 4%. Moving down the income statement, Caterpillar

grew its operating earnings by 36% year-over-year while earnings-per-share increased by 18%. The

company also provided preliminary financial guidance for fiscal 2019, expecting earnings-per-share to

fall in a range between $11.75 and $12.75. The markets expected an even stronger showing from the

company, and Caterpillar’s stock fell by 9% on the first trading day following its earnings release.

Competitive Advantage & Recession Performance

Caterpillar’s competitive advantage comes from its combination of size, brand, and manufacturing expertise. The Caterpillar name is synonymous with heavy equipment in the construction, forestry, and

resource sector. At the same time, Caterpillar generates more revenue than any of its domestic peers

and all but one (Hitachi) of its international competitors.

Despite the company’s status as a Dividend Aristocrat, Caterpillar is far from the most recession-

resistant company recommended in this month’s edition of the Sure Dividend Newsletter. During weak

economic times, Caterpillar’s customers (primarily mining companies and construction companies) are

far less likely to expand their operations and will defer the purchase of new equipment. This results in

lower sales for Caterpillar. As an example, Caterpillar’s earnings-per-share declined from $5.71 in 2008 to $1.43 in 2009 – failing to cover its dividend payment for the latter fiscal year.

Growth Prospects, Valuation, & Catalyst

As mentioned, Caterpillar expects earnings-per-share of $12.25 at the midpoint of fiscal 2019

guidance. Using fiscal 2019 guidance, the company is trading at a price-to-earnings ratio of 10.7 today. Caterpillar has traded at an average price-to-earnings ratio of 15.5 over the last decade. If the

company’s price-to-earnings ratio can expand to its 10-year average over the next 5 years, this will

boost its annualized returns by ~8% per year. Also, we believe that Caterpillar is capable of growing

earnings at a 6% annualized rate, and the company currently pays a dividend that yields 2.6%. Adding

it all together, Caterpillar could generate returns of over 16% per year over the next half-decade.

Key Statistics, Ratios, & Metrics Maximum Drawdown7: 73.4% 10-Year EPS Growth Rate: 22.9%

Dividend Yield: 2.6% 10-Year Dividend Growth Rate: 11.5%

Most Recent Dividend Increase: 10.3% 10-Year Historical Avg. P/E Ratio: 15.5

Estimated Fair Value: $190 10-Year Annualized Total Return: 18.8%

Dividend History: 25 years of increases Next Ex-Dividend Date: 4/18/19 (est.)

7 Using the company’s maximum drawdown during the 2007-2009 financial crisis.

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 Inc. (CAT) Dividend Yield History

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Caterpillar Inc. (CAT) Fundamentals


21


29.4

16.6

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17.1

22.8

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Caterpillar Inc. (CAT): Valuation Analysis


22


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 other business 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.

In late December (12/20/18) Walgreens reported 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 recent acquisition of 1,932 Rite Aid stores. Walgreens’

adjusted earnings-per-share increased 15% for the quarter. Walgreens reiterated its guidance of 7% to 12% earnings-per-share growth for fiscal 2019.

Competitive Advantages & Recession Performance

Walgreens’ competitive advantage is its leading market share. It is the largest pharmacy retailer in the U.S. and Europe. Walgreens’ robust retail presence gives the company a number of 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 very 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 healthcare products. Cost cuts will

also help Walgreens grow profitability in the years ahead. The company is launching a cost management program, targeting $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, which represents a more reasonable valuation for a high-quality business. As a result, we view Walgreens as significantly undervalued. Expansion of the price-to-earnings ratio could add 6.4% to Walgreens’ annual returns if mean reversion were to occur in the next 5 years. 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.



Most Recent Dividend Increase: 10% 10-Year Historical Avg. P/E Ratio: 16.7 Estimated Fair Value: $98 10-Year Annualized Total Return: 12.2%



23



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


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


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



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


24


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Walgreens Boots Alliance, Inc. (WBA) Dividend Yield History

25


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Walgreens Boots Alliance, Inc. (WBA) Fundamentals


26


13.9

15.914.8

13.2

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Walgreens Boots Alliance, Inc. (WBA): Valuation Analysis


27


Eaton Vance Corp. (EV)


Eaton Vance is an asset management firm based in Boston, Massachusetts, and founded in 1924. The company is far from the largest investment management firm based on its $4.5 billion market cap (for

context, BlackRock has a market capitalization of approximately $65 billion). 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 (ETFs). Their ETFs trade under the NextShares

name. Eaton Vance had $423.1 billion of assets under management (AUM) on October 31st, 2018.

In late November, Eaton Vance reported (11/27/18) financial results for the fourth quarter of fiscal

2018 (like many financial companies, Eaton Vance’s financial calendar concludes on October 31st). In the quarter, the company generated revenues of $436 million, which represents growth of 7.5% over

the same period a year ago. This revenue growth was primarily due to increases in the company’s

assets under management, which rose 4% year-over-year.

On the bottom line, Eaton Vance’s performance was similarly strong. The company’s adjusted

earnings-per-share totaled $0.85 in the quarter (which represents 21.4% growth) and $3.31 for the

twelve-month reporting period (which increased by 29.4% year-over-year). Eaton Vance shared this performance with its shareholders by repurchasing $290 million of stock in fiscal 2018 while also

implementing a 12.9% dividend increase in October. The company also announced on November 1st a

new buyback program for about 6.6% of its outstanding shares.


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 $17.3 billion in fiscal 2018.

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. 6


Eaton Vance is likely to generate earnings-per-share of around $3.36 in the current fiscal year. Using

this estimate, the company is trading at a price-to-earnings ratio of 11.5. Eaton Vance has 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, this will boost its returns by ~7% annually. Separately, Eaton Vance is

likely to generate 6% annualized earnings growth and currently pays a dividend that yields 3.6%.

Overall, we believe that Eaton Vance could potentially deliver annual total returns of ~17%.






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

28



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



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


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


29


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Eaton Vance Corp. (EV) Dividend Yield History

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Eaton Vance Corp. (EV) Fundamentals


31


22.121.7

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Eaton Vance Corp. (EV): Valuation Analysis


32


T. Rowe Price Group Inc. (TROW) Overview & Current Events

T. Rowe Price was founded in 1937 by Thomas Rowe Price, Jr. In the eight decades since, T. Rowe Price has grown into one of the largest financial services providers in the United States. Today, the company has a market cap of $23 billion and manages nearly $1 trillion in assets. It provides mutual funds, advisory services, and separately managed accounts for individuals, institutional investors, retirement plans, and financial intermediaries. T. Rowe Price has a diverse client base both in terms of assets and client type.

In late January, T. Rowe reported (1/30/19) its fourth quarter and full year 2018 earnings results. Revenue of $1.31 billion for the quarter rose 2.2% compared to the prior year’s period. Revenue grew despite a decline in T. Rowe’s assets under management, or AUM. Market declines in combination with net outflows of $8.4 billion during the fourth quarter caused AUM to decline to $960 billion from more than $1 trillion at the beginning of the fourth quarter. Earnings-per-share of $1.54 increased 1% for the fourth quarter.

Competitive Advantages & Recession Performance Competition for client assets is fierce within the investment management industry. As a result, asset managers must rely on their reputation to retain clients. This is where T. Rowe has a measurable competitive advantage. According to the company, 83% of its funds outperformed the Morningstar median fund performance over the past 10 years. Furthermore, more than half of T. Rowe’s funds fall in the top quartile of their respective categories over the past decade.

Investors should not expect T. Rowe to perform well during a recession. Declining stock markets typically result in client withdrawals, and thus lower AUM. This has a corresponding negative effect on revenue and earnings for asset managers. Indeed, T. Rowe’s earnings-per-share declined 24% in 2008 and 9% in 2009 during the Great Recession. This indicates T. Rowe’s sensitivity to recessions.

Growth Prospects, Valuation, & Catalyst The most important growth catalysts for T. Rowe are AUM growth and continued positive performance of the global stock markets. In addition, T. Rowe is working on expanding its product and service offerings to drive growth. Some of its related initiatives include the introduction of the Dynamic Credit Fund. The company is also looking abroad for growth in new markets. Last year, T. Rowe launched its first locally-domiciled Japan Investment Trust, and also added new sub-funds and share classes to its Australian Unit Trust, with more planned for 2019. Overall, we expect T. Rowe to increase earnings-per-share by 6% annually over the next five years.

T. Rowe shares currently trade for a price-to-earnings ratio of 13.3, which is below our fair value estimate of 16. As a result, expansion of the stock valuation could fuel 3.8% annual returns. In addition, expected earnings growth of 6% and the current 3.0% dividend yield result in total expected returns of 12.8% per year over the next five years, which makes T. Rowe stock a high-quality buy.

Key Statistics, Ratios, & Metrics Maximum Drawdown10: 67.5% 10-Year EPS Growth Rate: 15.5% Dividend Yield: 3.0% 10-Year Dividend Growth Rate: 11.3%

Most Recent Dividend Increase: 23% 10-Year Historical Avg. P/E Ratio: 17.8 Estimated Fair Value: $111 10-Year Annualized Total Return: 15.7% Dividend History: 32 years of increases Next Ex-Dividend Date: 2/14/19 (est.)


33



Revenue 2116 1867 2364 2747 3023 3484 3982 4201 4223 4793

Gross Profit 2015 1765 1461 1703 1879 2210 2509 2606 2587 2981

Gross Margin 95.2% 94.5% 61.8% 62.0% 62.2% 63.4% 63.0% 62.0% 61.3% 62.2%

SG&A Exp. 920 847 87 91 89 87 76 80 80 92

D&A Exp. 62 66 63 72 81 91 112 126 133 144



Net Profit 491 434 672 773 884 1048 1230 1223 1215 1498

Net Margin 23.2% 23.2% 28.4% 28.1% 29.2% 30.1% 30.9% 29.1% 28.8% 31.2%

Free Cash Flow 598 402 615 866 826 1127 1218 1379 22 43

Income Tax 305 255 398 477 552 653 774 779 707 924


Total Assets 2819 3210 3642 3770 4203 5033 5644 5107 6225 7535



Goodwill & Int. Ass. 666 666 666 666 666 666 666 666 666 666



Long-Term Debt 0 0 0 0 0 0 0 0 0 0


D/E Ratio 0 0 0 0 0 0 0 0 0 0


Return on Assets 16.4% 14.4% 19.6% 20.9% 22.2% 22.7% 23.0% 22.8% 21.4% 21.8%

Return on Equity 18.6% 16.1% 21.8% 23.0% 24.3% 24.2% 24.1% 24.1% 24.9% 27.7%

ROIC 18.6% 16.1% 21.8% 23.0% 24.3% 24.2% 24.1% 24.1% 24.9% 27.7%

Shares Out. 257 259 259 253 257 262 261 250 245 245

Revenue/Share 7.84 7.12 8.92 10.43 11.58 13.08 14.89 16.10 16.87 19.56

FCF/Share 2.21 1.53 2.32 3.29 3.16 4.23 4.55 5.29 0.09 0.18


34


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T. Rowe Price Group, Inc. (TROW) Dividend Yield History

35


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T. Rowe Price Group, Inc. (TROW) Fundamentals


36


24.2

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

T. Rowe Price Group (TROW): Valuation Analysis


37


Invesco Ltd (IVZ)


Invesco is an investment management firm serving clients around the world. It has more than 7,000 employees and serves customers in more than 150 countries. Invesco trades with a market

capitalization of $7.6 billion and has over $900 billion of assets under management (AUM).

In late January, Invesco reported (1/30/19) fourth quarter financial results. In the quarter, the company generated revenue of $919 million, which represents a steep decline of 8.1% year-over-year. This decrease was primarily caused by a decline in Invesco’s assets under management, which totaled $924

billion at the end of the quarter – 6.2% lower than the company’s AUM in the quarter prior (3Q2018) and 0.7% less than the company’s AUM in last year’s comparable period (4Q2017). AUM declines were caused by a combination of market losses due to the equity market selloff that occurred in late

2018 as well as $20 billion of net outflows in the quarter. On the bottom line, Invesco generated $0.44 of earnings-per-share during the fourth quarter, 40% less than the same quarter a year ago. Revenue declines and margin contractions were to blame for Invesco’s poor bottom line performance.

Previously, Invesco published (10/18/18) a press release that covered three important topics. First, Invesco and MassMutual announced a definitive agreement whereby Invesco will acquire

MassMutual’s asset management subsidiary OppenheimerFunds. MassMutual will receive equity that makes MassMutual a significant shareholder in Invesco, with an approximate ownership of 15.5%. Second, Invesco announced a new $1.2 billion share repurchase program (~16% of its current market

capitalization) that will be completed in the next two years. Lastly, Invesco reported financial results for the third quarter of fiscal 2018, which we covered in last month’s edition of the newsletter.


Invesco’s top competitive advantage is its brand reputation and position within the asset management industry. As one of the largest asset managers, Invesco can recruit top portfolio managers and analysts

to generate fund performance above its peer group. Its scale is also a competitive advantage, thanks to its recent acquisition activity.

However, Invesco is not a recession-resistant company. When the global economy enters a recession, markets typically decline, which causes AUM to decline in tandem. This is why Invesco’s earnings-

per-share declined 37% in 2009 and should be expected to decline if another global recession occurs.

Valuation

Invesco stock trades for a price-to-earnings ratio of 7.9 based on expected earnings-per-share of $2.34 for 2019. We believe a fair valuation for Invesco is a price-to-earnings ratio of 11. This gives us a fair

value target of $26 for this asset management business. A rising valuation could add approximately 7% to the annual returns of the stock if mean reversion were to occur over the next 5 years. In

addition, returns will benefit from earnings growth (5%), as well as the 6.5% dividend yield. In total, we believe Invesco could potentially deliver total returns near 20% per year over the next 5 years.




Estimated Fair Value: $26 10-Year Annualized Total Return: 7.6% Dividend History: Increasing since 2009 Next Ex-Dividend Date: 2/13/19

11 Using the company’s maximum drawdown during the 2007-2009 financial crisis.

38



Revenue 3307.6 2627.3 3487.7 3982.3 4050.4 4644.6 5147.1 5122.9 4734.4 5160.3

Gross Profit N/A N/A 1319 1522.2 1514.2 1826.1 2121.9 2147.5 1948.4 2136.4

Gross Margin N/A N/A 37.8% 38.2% 37.4% 39.3% 41.2% 41.9% 41.2% 41.4%

SG&A Exp. 2559.8 2143 670 610.7 663.4 702.7 845 789.1 772 859.3

D&A Exp. 67.6 77.6 96.7 117.4 95 88.4 89.4 93.6 101.2 116.8

Operating Profit 747.8 484.3 595.6 911.5 850.8 1123.4 1276.9 1358.4 1176.4 1277.1

Op. Margin 22.6% 18.4% 17.1% 22.9% 21.0% 24.2% 24.8% 26.5% 24.8% 24.7%

Net Profit 481.7 322.5 465.7 729.7 677.1 940.3 988.1 968.1 854.2 1127.3

Net Margin 14.6% 12.3% 13.4% 18.3% 16.7% 20.2% 19.2% 18.9% 18.0% 21.8%

Free Cash Flow 441.4 323.2 289.6 857.8 720 692 1067.2 1003.9 23.6 1259

Income Tax 236 148.2 197 280 261.4 336.9 390.6 398 338.3 268.2


Total Assets 9757 10910 20444 19347 17492 19271 20450 25073 25734 31669



Goodwill & Int. Ass. 6110 6607 8317 8231 8336 8131 7826 7530 7529 8149



Long-Term Debt 1159 746 7181 6798 5085 5806 6726 7510 6506 6876


D/E Ratio 0.20 0.11 0.87 0.84 0.61 0.69 0.81 0.95 0.87 0.79


Return on Assets 4.2% 3.1% 3.0% 3.7% 3.7% 5.1% 5.0% 4.3% 3.4% 3.9%

Return on Equity 7.8% 5.1% 6.1% 8.9% 8.2% 11.3% 11.8% 11.9% 11.1% 13.9%

ROIC 5.8% 4.0% 3.7% 4.5% 4.5% 6.5% 6.5% 6.0% 5.6% 7.5%

Shares Out. 427 431 460 446 441 433 429 418 404 407

Revenue/Share 8.31 6.20 7.53 8.57 8.93 10.72 12.16 12.24 11.75 12.98

FCF/Share 1.11 0.76 0.63 1.85 1.59 1.60 2.52 2.40 0.06 3.17


39


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Inveco Ltd. (IVZ) Dividend Yield History

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Invesco Ltd. (IVZ) Fundamentals


41


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Invesco Ltd. (IVZ): Valuation Analysis


42


Newell Brands Inc. (NWL) Overview & Current Events

Newell Brands is a consumer products company. It has a number of popular consumer brands, some of which include Coleman, Mr. Coffee, Sharpie, Paper Mate, Elmer’s, Rubbermaid, First Alert, and Yankee Candle. Newell is in the middle of a major restructuring. It is selling off under-performing brands that are no longer deemed to be a critical part of the future growth strategy. For example, Newell sold the Waddington and Rawlings brands, as well as the Goody Products line. More recently, Newell struck a deal to sell its Pure Fishing and Jostens brands, which will contribute a combined $2.5

billion of after-tax proceeds. In addition, Newell is currently soliciting bids for the United States Playing Card Co., the maker of Bicycle playing cards, which could bring in as much as $200 million.

In early November (11/2/18) Newell reported third quarter earnings that showed it is making progress in its key strategic goals, namely deleveraging and share repurchases. Sales fell 7.7% from the same quarter a year ago, influenced primarily by its various divestments. Adjusted earnings-per-share declined 5.8% year-over-year. That said, Newell reduced its debt by $2.5 billion and has reduced its share count by 4%. Newell also raised revenue and earnings estimates for the full year.


Newell Brands’ core competitive advantage is its strong brand portfolio. A high level of brand loyalty is paramount in the consumer products industry, as it helps set a company apart from the competition, and also provides pricing power. Newell has leading products across multiple categories including life, work, and play. Its category-leading brands fuel steady demand, even during recessions.

One of the attractive features of Newell’s business model is that it is fairly resistant to recessions. For example, the company grew its earnings-per-share by 23% in 2009, during the Great Recession. An explanation for this could be that consumers tend to seek at-home entertainment with greater frequency during difficult economic climates, rather than spending more money going out.

Growth Prospects, Valuation, & Catalyst The transformation is clearly working for Newell as management meaningfully boosted estimates for this year after the third quarter report. Once the product portfolio transformation is complete, the company’s new assortment of brands should provide long-term revenue and margin expansion. We see annual earnings-per-share growth averaging 5.4% for the next five years, comprised mainly of margin improvements and share repurchases offsetting lost revenue from divestitures.

Based on expected earnings-per-share of $2.70 for 2018, Newell shares trade for a relatively low price-to-earnings ratio of 7.9. This is well below our fair value estimate, which is a price-to-earnings ratio of 14, a more reasonable valuation for a profitable company with strong brands. Reversion to the fair value estimate could yield annual returns of 12.1% per year if this mean reversion occurred over a 5-year period. In addition, the stock has a 4.3% dividend yield, and is expected to produce 5.4% annual earnings growth. Total returns are expected to reach 21.8% annually over the next five years.

Key Statistics, Ratios, & Metrics Maximum Drawdown12: 84.5% 10 Year EPS Growth Rate: 13.1% Dividend Yield: 4.3% 10 Year Dividend Growth Rate: 0.9%

Most Recent Dividend Increase: 21% 10 Year Historical Avg. P/E Ratio: 21.1 Estimated Fair Value: $38 10 Year Annualized Total Return: 12.4% Dividend History: Steady or increasing since 2009 Next Ex-Dividend Date: 2/27/19 (est.)


43



Revenue 6471 5578 5658 5512 5509 5607 5727 5916 13264 14742

Gross Profit 2123 2050 2149 2101 2094 2125 2203 2305 4399 5089

Gross Margin 32.8% 36.7% 38.0% 38.1% 38.0% 37.9% 38.5% 39.0% 33.2% 34.5%

SG&A Exp. 1503 1375 1448 1422 1404 1400 1546 1626 3224 3667

D&A Exp. 183 175 172 162 164 159 156 172 437 636



Net Profit -52 286 293 125 401 475 378 350 528 2749

Net Margin -0.8% 5.1% 5.2% 2.3% 7.3% 8.5% 6.6% 5.9% 4.0% 18.6%

Free Cash Flow 297 450 418 338 441 467 472 382 1399 526

Income Tax 54 143 6 21 162 120 89 78 286 -1320


Total Assets 6793 6424 6405 6161 6222 6070 6564 7260 33838 33136



Inventories 912 688 702 700 696 684 709 722 2116 2499

Goodwill & Int. Ass. 3339 3401 3398 3032 3024 2976 3433 3855 24331 24796



Long-Term Debt 2879 2509 2369 2177 1918 1836 2482 3058 11893 10552


D/E Ratio 1.82 1.41 1.25 1.18 0.96 0.89 1.34 1.68 1.05 0.75


Return on Assets -0.8% 4.3% 4.6% 2.0% 6.5% 7.7% 6.0% 5.1% 2.6% 8.2%

Return on Equity -2.7% 17.0% 15.9% 6.7% 20.9% 23.3% 19.3% 19.1% 8.0% 21.6%

ROIC -1.2% 6.5% 6.8% 3.0% 10.1% 12.1% 9.2% 7.6% 3.7% 11.5%

Shares Out. 277 279 291 288 287 279 269 267 483 485

Revenue/Share 23.12 18.95 18.53 18.61 18.76 19.22 20.53 21.79 31.35 30.21

FCF/Share 1.06 1.53 1.37 1.14 1.50 1.60 1.69 1.41 3.31 1.08


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Newell Brands Inc. (NWL) Dividend Yield History

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Newell Brands Inc. (NWL): Valuation Analysis


47


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

AT&T provides a wide range of telecom services, including wireless, broadband, and television through its cable operations and its satellite brand DirecTV. AT&T generates more than $170 billion

in annual revenue and the company has increased its dividend for over 30 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. This remarkable

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, representing annual growth of 10%. For the year, AT&T reported revenue of $170.8 billion, up 6.4% 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. Although AT&T met its guidance for financial

performance and continues to follow its deleveraging schedule, shares opened 5% lower on the news.


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 extremely difficult 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. The company made a huge splash in content with the $81 billion acquisition of Time Warner Inc., owner of 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 acquisitions to boost its growing content businesses as well. AT&T recently announced it will acquire AppNexus for approximately $1.6 billion. It will also acquire Otter Media, which has a large online subscription video service.

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

has a price-to-earnings ratio of just 8.4. AT&T has 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 fair value, this will boost its total returns by around 9.8% per year over the next five years. In addition to the 6.9% dividend and 6%

expected earnings growth, total expected returns could exceed 20% over the next five years.



Most Recent Dividend Increase: 2.0% 10-Year Historical Avg. P/E Ratio: 13.4 Estimated Fair Value: $47 10-Year Annualized Total Return: 7.8%


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

48



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


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AT&T Inc. (T) Dividend Yield History

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AT&T Inc. (T) Fundamentals


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AT&T Inc. (T): Valuation Analysis


52


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 over 60 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 November, Cardinal Health reported (11/8/18) first quarter 2019 fiscal year earnings. The

company reported $35.2 billion in revenue, an 8% increase as compared to the first quarter of fiscal year 2018. On the bottom line, adjusted earnings-per-share came in at $1.29 versus $1.09 in the year ago period for a growth rate of 18%. Pharmaceutical segment profit declined 12% from the previous

quarter, partially offset by 5% profit growth in the smaller Medical segment. Cardinal Health reaffirmed its 2019 outlook for earnings between $4.90 and $5.15 per share. It also approved a new $1

billion share repurchase program and declared a $0.4763 common stock dividend.


The pharmaceutical distribution industry is challenged right now, but we still view Cardinal Health positively. Our bullish view is based on the company’s entrenched position in the industry, as well as

the expected growth of the U.S. healthcare industry. Cardinal Health serves over 24,000 pharmacies and more than 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.

Another benefit of Cardinal Health’s business model is that it is exceptionally resistant to recessions. Pharmaceutical and medical product distribution enjoys steady demand from year to year. Adjusting

for the CareFusion spin-off, Cardinal Health managed to grow revenue, operating profits, and

dividends during the Great Recession. People will always 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 distribution 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 10.0 based on expected earnings-per-share of $5.02 for fiscal 2019. Our fair value estimate for the stock is a price-to-earnings ratio of 14.0,

meaning valuation changes could add 7.0% per year to shareholder returns. In addition, we expect Cardinal Health to grow earnings-per-share by 5.0% per year. Adding in the 3.9% dividend yield, total expected returns could reach 15.9% per year for Cardinal Health stock over the next five years.

Key Statistics, Ratios, & Metrics Maximum Drawdown14: 61.6% 10-Year EPS Growth Rate: N/A (CareFusion spin-off) Dividend Yield: 3.9% 10-Year Dividend Growth Rate: 12.3%





53



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


54


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Cardinal Health Inc. (CAH) Dividend Yield History

55


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Cardinal Health Inc. (CAH) Fundamentals


56


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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cardinal Health Inc. (CAH): 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 - Our Biggest Successes -

In this month’s Opening Thoughts we examined our biggest mistakes. In this Closing Thoughts section, we analyze our biggest investing successes, a decidedly more enjoyable exercise.

Big Success #3: Abbott Laboratories (ABT)

We first recommended Abbott Labs in the 4th ever Sure Dividend Newsletter (the July 2014 edition).

We recommended selling in last month’s edition due to mediocre expected total returns. Our Abbott recommendation generated total returns of 83.6% (14.5% annualized returns) versus 40.9% (7.9%) for

the S&P 500 (SPY). Abbott saw adjusted earnings-per-share decline slightly from 2014 through 2016.

And the investment had underperformed the S&P 500 through the first half of 2017. The company

realized strong growth in 2017 and 2018 – and the price-to-earnings multiple expanded from an

average of 18.0 in 2014 to an average of 22.9 in 2018. The lesson: high-quality businesses grow in

fits and starts. You can hold them and collect dividends through mediocre years and sell when

valuation multiples rise significantly (usually when growth returns).

Big Success #2: McDonald’s (MCD)

We first recommended McDonald’s in the first-ever edition of The Sure Dividend Newsletter (April 2014). Since that time, the stock generated total returns of 115.6%15 (17.3% annualized) versus 59.9%

(10.2% annualized) for the S&P 500. McDonald’s had a poor 2014 but was (and still is) one of the

strongest franchises around. After Steve Easterbrook took over as CEO, McDonald’s earnings-per-

share returned to strong growth and the stock’s price-to-earnings ratio grew. The lesson: strong

franchises can often withstand middling management and return to rapid growth in the future.

Big Success #1: Boeing (BA)

We recommended selling Abbott Labs. We will likely make a similar recommendation for

McDonald’s in the coming months as the stock’s strong run has diminished expected total returns ahead. We still expect ~12% total returns going forward from Boeing, despite it gaining 209.3%

(62.5% annualized) since we recommended it in the October 2016 Sure Dividend Newsletter. We

recommended Boeing when it had a price-to-earnings ratio of 15.3. We believed the stock to be deeply

undervalued at the time based on its historical average price-to-earnings ratio. The price-to-earnings-

ratio has expanded considerably, and the business has gone on to grow rapidly, generating phenomenal results for shareholders. The lesson: buying into businesses with strong growth prospects when

they are undervalued has the potential to generate excellent results.

Thanks for reading,

Ben Reynolds

The next newsletter publishes on Sunday, March 3rd, 2019

15 Data through 1/30/19 for McDonald’s, Boeing, and S&P 500 returns.

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 AbbVie (ABBV). AbbVie has an “A” Dividend Risk Score combined

with a high 5%+ dividend yield. Moreover, AbbVie has a quality management team lead by

Richard Gonzalez and appears deeply undervalued at current prices due to the company losing

patent protection on its highly successful Humira drug. See our section on AbbVie for more on

the company.

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

holdings and performance. As we have only 1 stock in the portfolio so far – Eaton Vance (EV)

– there is not much data to show. The image below from our Interactive Brokers account shows

our one position, which is up 7.0%.

59

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

WDC Western Digital Corp. $ - WDC Western Digital Corp. $ 4,878

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

WBA Walgreens Boots Alliance $ - WBA Walgreens Boots Alliance $ 7,428

EV Eaton Vance $ - EV Eaton Vance $ 3,309

TROW T. Rowe Price Group $ - TROW T. Rowe Price Group $ 8,099

IVZ Invesco Ltd. $ - IVZ Invesco Ltd. $ 5,629

NWL Newell Brands Inc. $ - NWL Newell Brands Inc. $ 2,176

T AT&T Inc. $ - T AT&T Inc. $ 1,079

CAH Cardinal Health Inc $ - CAH Cardinal Health Inc $ 4,864

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

- If you had portfolio 2, you would buy T, 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/

60

Past Recommendations & Sells

Every past Sure Dividend Newsletter recommendation from the Top 10 is shown in this section16. 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 2.0%, and valuation multiple mean reversion at

-2.8% (S&P 500 fair value P/E of 15.7 versus current P/E of 20.8) for an expected total return sell threshold of

4.7%. 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)17

5 Year Forward Expected Tot. Ret.

McDonald's MCD 4/7/2014 B 111% 7.5%

Clorox CLX 4/7/2014 B 93% 3.6%

AFLAC AFL 4/7/2014 A 74% 10.7%

PepsiCo PEP 4/7/2014 B 54% 6.3%

Coca-Cola KO 4/7/2014 B 47% 5.2%

Target TGT 4/7/2014 A 38% 11.3%

Kimberly-Clark KMB 4/7/2014 B 23% 8.9%

ExxonMobil XOM 4/7/2014 C -7% 10.8%

3M MMM 5/5/2014 A 61% 7.4%

Genuine Parts Company GPC 5/5/2014 A 35% 8.4%

Becton, Dickinson BDX 6/2/2014 A 126% 9.0%

AT&T T 6/2/2014 B 9% 16.3%

Philip Morris PM 6/2/2014 D 7% 13.4%

General Mills GIS 6/2/2014 C -6% 10.6%

J. M. Smucker SJM 8/4/2014 C 16% 8.6%

16 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. 17 All performance data for holds and pending sells is through midday 2/1/19.

61

Kellogg K 12/8/2014 C 0% 13.1%

Deere & Company DE 1/5/2015 B 108% 7.1%

Altria MO 4/6/2015 C 11% 15.8%

W.W. Grainger GWW 7/6/2015 A 36% 11.3%

Caterpillar CAT 8/3/2015 A 90% 16.2%

United Technology UTX 8/3/2015 B 31% 5.7%

BCE BCE 8/3/2015 D 26% 7.7%

Eaton ETN 9/8/2015 C 51% 6.7%

Computer Services CSVI 11/2/2015 A 61% 7.8%

Cummins CMI 11/2/2015 B 52% 15.7%

Johnson & Johnson JNJ 11/2/2015 A 43% 9.0%

Verizon VZ 12/7/2015 C 38% 12.0%

Procter & Gamble PG 12/7/2015 A 38% 6.3%

Johnson Controls JCI 12/7/2015 D 16% 13.5%

Archer-Daniels-Midland ADM 2/8/2016 A 48% 7.5%

General Dynamics GD 3/7/2016 A 36% 9.1%

Flowers Foods FLO 3/7/2016 D 20% 8.5%

Cardinal Health CAH 5/2/2016 B -33% 16.4%

Disney DIS 6/6/2016 C 18% 11.0%

Phillips 66 PSX 7/5/2016 B 31% 11.7%

Walgreens Boots Alliance WBA 9/6/2016 A -7% 17.0%

Boeing BA 10/3/2016 C 211% 12.8%

AbbVie ABBV 10/3/2016 A 40% 22.6%

VF Corp. VFC 11/7/2016 A 62% 6.3%

Medtronic MDT 12/5/2016 A 30% 5.5%

Mondelez MDLZ 4/3/2017 C 10% 9.6%

Nike NKE 5/8/2017 B 53% 5.1%

Lowe's LOW 5/8/2017 A 16% 8.2%

Macy's M 5/8/2017 D -1% 18.7%

IBM IBM 5/8/2017 B -6% 13.4%

Occidental Petroleum OXY 6/5/2017 C 22% 10.9%

Ameriprise Financial AMP 6/5/2017 B 8% 14.3%

Qualcomm QCOM 6/5/2017 C -11% 15.3%

CVS Health CVS 6/5/2017 B -13% 13.8%

Royal Dutch Shell RDS.B 7/3/2017 D 26% 11.2%

Kohl's KSS 9/5/2017 C 74% 7.3%

62

HNI Corporation HNI 12/4/2017 C 15% 12.1%

ONEOK OKE 1/8/2018 D 22% 9.3%

Axis Capital AXS 1/8/2018 B 16% 5.8%

Leggett & Platt LEG 1/8/2018 B -13% 11.2%

Universal Corporation UVV 2/5/2018 B 30% 7.9%

Southwest Airlines LUV 2/5/2018 A 2% 12.5%

Invesco IVZ 3/5/2018 C -42% 19.0%

Church & Dwight CHD 4/2/2018 B 34% 5.0%

Franklin Resources BEN 4/2/2018 A -9% 8.2%

Illinois Tool Works ITW 11/5/2018 A 3% 10.0%

United Parcel Service UPS 11/5/2018 B 0% 16.0%

Northrop Grumman NOC 11/5/2018 B -1% 13.6%

S&P Global SPGI 12/3/2018 B 5% 9.7%

Bank OZK OZK 1/7/2019 B 24% 22.7%

Whirlpool WHR 1/7/2019 B 14% 14.1%

Hanesbrands HBI 1/7/2019 B 13% 15.0%

Eaton Vance EV 1/7/2019 A 10% 17.4%

Newell Brands NWL 1/7/2019 B 9% 22.1%

T. Rowe Price Group TROW 2/4/2019 A N/A 13.0%

Western Digital WDC 2/4/2019 A N/A 17.3%

63

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, 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 15 (~$18/share at current EPS). It has generated total returns of

-59.0% at current prices.

Walmart (WMT): We first recommended Walmart to be purchased on April 7th, 2014. Due to low expected

total returns, we recommend selling Walmart on February 4th, 2019. Walmart has generated total returns of

36.1% since we first recommended it, versus 61.28% for the S&P 500.

Ecolab (ECL): We first recommended Ecolab to be purchased on October 6th, 2014. Due to low expected total

returns, we recommend selling Ecolab on February 4th, 2019. Ecolab has generated total returns of 50.0%

since we first recommended it, versus 47.1% for the S&P 500.

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.

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.

64

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) - 5.5%

2. NVIDIA Corp. (NVDA) - 0.5%

3. Western Digital Corp. (WDC) - 4.7%

4. Caterpillar Inc. (CAT) - 2.7%

5. Walgreens Boots Alliance Inc. (WBA) - 2.5%

6. Eaton Vance Corp. (EV) - 3.6%

7. T. Rowe Price Group Inc. (TROW) - 3%

8. AmerisourceBergen Corp. (ABC) - 2%

9. Perrigo Co. plc (PRGO) - 1.7%

10. WestRock Co. (WRK) - 4.4%

11. Imperial Oil Ltd (IMO) - 2%

12. The Goldman Sachs Grp. Inc. (GS) - 1.6%

13. FedEx Corp. (FDX) - 1.5%

14. American Express Co. (AXP) - 1.6%

15. Franklin Resources Inc. (BEN) - 3.3%

16. Donaldson Co. Inc. (DCI) - 1.6%

17. Southwest Airlines Co. (LUV) - 1.1%

18. A. O. Smith Corp. (AOS) - 1.8%

19. Textron Inc. (TXT) - 0.2%

20. 1st Source Corp. (SRCE) - 2.4%

21. Target Corp. (TGT) - 3.6%

22. PPG Industries Inc. (PPG) - 1.8%

23. Parker-Hannifin Corp. (PH) - 1.9%

24. Canadian Pacific Railway Ltd (CP) - 1%

25. Stanley Black & Decker Inc. (SWK) - 2.1%

26. Visa Inc. (V) - 0.7%

27. United Bankshares Inc. (UBSI) - 3.9%

28. W.W. Grainger Inc. (GWW) - 1.8%

29. Aflac Inc. (AFL) - 2.2%

30. Sysco Corp. (SYY) - 2.5%

31. Community Trust Bancorp Inc. (CTBI) - 3.5%

32. Pentair plc (PNR) - 1.8%

33. Commerce Bancshares Inc. (CBSH) - 1.7%

34. Carlisle Companies Inc. (CSL) - 1.5%

35. Illinois Tool Works Inc. (ITW) - 3%

36. Tompkins Financial Corp. (TMP) - 2.7%

37. Becton, Dickinson & Co. (BDX) - 1.3%

38. CSX Corp. (CSX) - 1.4%

39. Johnson & Johnson (JNJ) - 2.8%

40. The Sherwin-Williams Co. (SHW) - 0.9%

41. Dillard's Inc. (DDS) - 0.6%

42. ABM Industries Inc. (ABM) - 2.2%

43. Aon plc (AON) - 1.1%

44. Emerson Electric Co. (EMR) - 3.1%

45. Lowe's Companies Inc. (LOW) - 2.1%

46. Genuine Parts Co. (GPC) - 2.9%

47. Mastercard Inc. (MA) - 0.7%

48. Farmers & Merchants Bancorp (FMCB) - 1.9%

49. Infosys Ltd (INFY) - 3.1%

50. Computer Services Inc. (CSVI) - 2.6%

51. McCormick & Co. Inc. (MKC) - 1.9%

52. Archer-Daniels-Midland Co. (ADM) - 3%

53. The Travelers Companies Inc. (TRV) - 2.5%

54. Methanex Corp. (MEOH) - 2.3%

55. Nordson Corp. (NDSN) - 1.1%

56. The Gorman-Rupp Co. (GRC) - 1.6%

57. UMB Financial Corp. (UMBF) - 1.8%

58. The Procter & Gamble Co. (PG) - 3.1%

59. H.B. Fuller Co. (FUL) - 1.3%

60. RPM Intl. Inc. (RPM) - 2.5%

61. Black Hills Corp. (BKH) - 3.1%

62. V. F. Corp. (VFC) - 2.4%

63. 3M Co. (MMM) - 2.8%

64. General Dynamics Corp. (GD) - 2.1%

65. Brady Corp. (BRC) - 2%

66. MSA Safety Inc. (MSA) - 1.6%

67. Bemis Co. Inc. (BMS) - 2.6%

68. Medtronic plc (MDT) - 2.3%

69. Abbott Laboratories (ABT) - 1.8%

70. Dover Corp. (DOV) - 2.2%

71. Ross Stores Inc. (ROST) - 1%

72. The TJX Companies Inc. (TJX) - 1.6%

73. Brown-Forman Corp. (BF.B) - 1.5%

74. SJW Grp. (SJW) - 1.9%

75. UGI Corp. (UGI) - 1.9%

76. Sonoco Products Co. (SON) - 2.9%

77. Hormel Foods Corp. (HRL) - 2%

78. Roper Technologies Inc. (ROP) - 0.7%

79. Ecolab Inc. (ECL) - 1.2%

80. Atmos Energy Corp. (ATO) - 2.2%

81. Colgate-Palmolive Co. (CL) - 2.6%

82. Cintas Corp. (CTAS) - 1.1%

83. Tennant Co. (TNC) - 1.5%

84. Walmart Inc. (WMT) - 2.2%

85. Vectron Corp. (VVC) - 2.7%

86. Tootsie Roll Industries Inc. (TR) - 1.1%

87. Stepan Co. (SCL) - 1.2%

88. Connecticut Water Service Inc. (CTWS) - 1.9%

89. Advance Auto Parts Inc. (AAP) - 0.2%

90. Lancaster Colony Corp. (LANC) - 1.7%

91. Cincinnati Financial Corp. (CINF) - 2.7%

92. California Water Service Grp. (CWT) - 1.6%

93. Middlesex Water Co. (MSEX) - 1.8%

https://www.suredividend.com/sure-analysis-research-database/

https://www.suredividend.com/procedures-glossary-definitions/

65

94. American States Water Co. (AWR) - 1.7%

95. West Pharmaceutical Srvcs. Inc. (WST) - 0.6%

B-Rated Dividend Risk Stocks 1. Invesco Ltd (IVZ) - 6.3%

2. Newell Brands Inc. (NWL) - 4.4%

3. AT&T Inc. (T) - 6.6%

4. Bank OZK (OZK) - 2.6%

5. Cardinal Health Inc. (CAH) - 3.9%

6. SEI Investments Co. (SEIC) - 1.4%

7. Canadian Natural Resources Ltd (CNQ.TO) - 3.8%

8. Cummins Inc. (CMI) - 3.1%

9. Apple Inc. (AAPL) - 1.9%

10. Ameriprise Financial Inc. (AMP) - 3%

11. Intel Corp. (INTC) - 2.7%

12. Vermilion Energy Inc. (VET) - 8.7%

13. Hanesbrands Inc. (HBI) - 3.9%

14. Cognizant Technology Solutions Corp. (CTSH) - 1.2%

15. M&T Bank Corp. (MTB) - 2.4%

16. Whirlpool Corp. (WHR) - 3.4%

17. MSC Industrial Direct Co. Inc. (MSM) - 3%

18. International Business Machines Corp. (IBM) - 4.7%

19. The Toro Co. (TTC) - 1.5%

20. Northrop Grumman Corp. (NOC) - 1.7%

21. CVS Health Corp. (CVS) - 3.1%

22. Kansas City Southern (KSU) - 1.3%

23. Constellation Brands Inc. (STZ) - 1.8%

24. Comcast Corp. (CMCSA) - 2.3%

25. Snap-on Inc. (SNA) - 2.3%

26. SAP SE (SAP) - 1.7%

27. Phillips 66 (PSX) - 3.4%

28. Eagle Financial Srvcs. Inc. (EFSI) - 3.1%

29. Foot Locker Inc. (FL) - 2.4%

30. Fresenius Medical Care AG & Co. KGaA (FMS) - 1.8%

31. Brookfield Asset Mgmt. Inc. (BAM) - 1.4%

32. Ingersoll-Rand plc (IR) - 2.2%

33. U.S. Bancorp (USB) - 2.9%

34. People's United Financial Inc. (PBCT) - 4.2%

35. Leggett & Platt Inc. (LEG) - 3.8%

36. Molson Coors Brewing Co. (TAP) - 2.5%

37. Fortis Inc. (FTS.TO) - 3.9%

38. Chevron Corp. (CVX) - 4%

39. Bed Bath & Beyond Inc. (BBBY) - 4.4%

40. HP Inc. (HPQ) - 2.9%

41. Stryker Corp. (SYK) - 1.3%

42. S&P Global Inc. (SPGI) - 1.1%

43. Federal Realty Inv. Trust (FRT) - 3.1%

44. HollyFrontier Corp. (HFC) - 2.4%

45. Tractor Supply Co. (TSCO) - 1.4%

46. Kimberly-Clark Corp. (KMB) - 3.8%

47. Microsoft Corp. (MSFT) - 1.8%

48. WEYCO Grp. Inc. (WEYS) - 3.4%

49. UnitedHealth Group Inc. (UNH) - 1.4%

50. Dollar General Corp. (DG) - 1%

51. Gilead Sciences Inc. (GILD) - 3.3%

52. Universal Corp. (UVV) - 5.4%

53. Chubb Ltd (CB) - 2.2%

54. International Paper Co. (IP) - 4.2%

55. Oracle Corp. (ORCL) - 1.5%

56. Everest Re Grp. Ltd (RE) - 2.6%

57. The Kroger Co. (KR) - 2%

58. Norfolk Southern Corp. (NSC) - 2.1%

59. Deere & Co. (DE) - 1.9%

60. Community Bank System Inc. (CBU) - 2.5%

61. Costco Wholesale Corp. (COST) - 1.1%

62. PepsiCo Inc. (PEP) - 3.4%

63. Air Products & Chemicals Inc. (APD) - 2.8%

64. Morningstar Inc. (MORN) - 0.9%

65. First Financial Corp. (THFF) - 2.5%

66. Assurant Inc. (AIZ) - 2.5%

67. Corning Inc. (GLW) - 2.1%

68. Moody's Corp. (MCO) - 1.1%

69. Franklin Electric Co. Inc. (FELE) - 1.3%

70. Xylem Inc. (XYL) - 1.2%

71. The Coca-Cola Co. (KO) - 3.3%

72. United Technologies Corp. (UTX) - 2.5%

73. Nike Inc. (NKE) - 1.1%

74. AXIS Capital Holdings Ltd (AXS) - 2.9%

75. Raytheon Co. (RTN) - 2%

76. Entergy Corp. (ETR) - 4.2%

77. Church & Dwight Co. Inc. (CHD) - 1.4%

78. Domino's Pizza Inc. (DPZ) - 0.8%

79. L3 Technologies Inc. (LLL) - 1.6%

80. McGrath RentCorp (MGRC) - 2.8%

81. Automatic Data Processing Inc. (ADP) - 2.4%

82. Chesapeake Financial Shares Inc. (CPKF) - 2.2%

83. Canadian National Railway Co. (CNI) - 1.6%

84. McDonald's Corp. (MCD) - 2.6%

85. Consolidated Edison Inc. (ED) - 3.9%

86. NextEra Energy Inc. (NEE) - 2.6%

87. Jack Henry & Associates Inc. (JKHY) - 1.1%

88. The Clorox Co. (CLX) - 2.6%

89. Waste Mgmt. Inc. (WM) - 2%

90. Nucor Corp. (NUE) - 2.7%

91. Union Pacific Corp. (UNP) - 2%

92. Twenty-First Century Fox Inc. (FOXA) - 0.7%

93. Northwest Natural Holding Co. (NWN) - 3.1%

94. Badger Meter Inc. (BMI) - 1.2%

95. CAE Inc. (CAE.TO) - 1.4%

96. MGE Energy Inc. (MGEE) - 2.2%

C-Rated Dividend Risk Stocks 1. AmeriGas Partners LP (APU) - 12.7%

2. Altria Grp. Inc. (MO) - 7%

3. ArcelorMittal (MT) - 0.4%

4. Mckesson Corp. (MCK) - 1.3%

5. Energy Transfer LP (ET) - 8.5%

6. The Bank of Nova Scotia (BNS.TO) - 4.6%

7. United Parcel Service Inc. (UPS) - 3.6%

8. Total SA (TOT) - 5.4%

9. Sanofi (SNY) - 4.4%

10. QUALCOMM Inc. (QCOM) - 5%

11. Canadian Imperial Bank of Commerce (CM) - 4.9%

12. Old Republic Intl. Corp. (ORI) - 3.9%

66

13. Royal Bank of Canada (RY.TO) - 3.9%

14. ABB Ltd (ABB) - 4.3%

15. Texas Instruments Inc. (TXN) - 3%

16. The Western Union Co. (WU) - 4.2%

17. Enbridge Inc. (ENB) - 6.1%

18. Kellogg Co. (K) - 3.9%

19. Sony Corp. (SNE) - 0.5%

20. Nordstrom Inc. (JWN) - 3.2%

21. Siemens AG (SIEGY) - 3.7%

22. The Toronto-Dominion Bank (TD.TO) - 3.6%

23. HNI Corp. (HNI) - 3.1%

24. BlackRock Inc. (BLK) - 3.1%

25. Verizon Communications Inc. (VZ) - 4.5%

26. Halliburton Co. (HAL) - 2.3%

27. Hospitality Properties Trust (HPT) - 8.1%

28. NetApp Inc. (NTAP) - 2.6%

29. Exxon Mobil Corp. (XOM) - 4.6%

30. The Home Depot Inc. (HD) - 2.3%

31. Conagra Brands Inc. (CAG) - 4%

32. Amgen Inc. (AMGN) - 3%

33. American Airlines Grp. Inc. (AAL) - 1.1%

34. Digital Realty Trust Inc. (DLR) - 3.8%

35. Arthur J. Gallagher & Co. (AJG) - 2.3%

36. Petróleo Brasileiro SA - Petrobras (PBR) - 0.7%

37. Enterprise Products Partners LP (EPD) - 6.2%

38. The Walt Disney Co. (DIS) - 1.6%

39. General Mills Inc. (GIS) - 4.5%

40. Bank of Montreal (BMO.TO) - 4.1%

41. Mondelez Intl. Inc. (MDLZ) - 2.4%

42. Occidental Petroleum Corp. (OXY) - 4.7%

43. H&R Block Inc. (HRB) - 3.9%

44. Tiffany & Co. (TIF) - 2.5%

45. Domtar Corp. (UFS) - 3.8%

46. Simon Property Grp. Inc. (SPG) - 4.5%

47. Omnicom Grp. Inc. (OMC) - 3.1%

48. Starbucks Corp. (SBUX) - 2.2%

49. NACCO Industries Inc. (NC) - 1.9%

50. John Wiley & Sons Inc. (JW.A) - 2.6%

51. Campbell Soup Co. (CPB) - 4.1%

52. ResMed Inc. (RMD) - 1.6%

53. The J. M. Smucker Co. (SJM) - 3.3%

54. Host Hotels & Resorts Inc. (HST) - 4.5%

55. Novartis AG (NVS) - 3.4%

56. Taiwan Semiconductor Mfg. Co. Ltd (TSM) - 3.7%

57. Suncor Energy Inc. (SU.TO) - 3.4%

58. Cisco Systems Inc. (CSCO) - 2.9%

59. Edison International (EIX) - 4.4%

60. MDU Resources Grp. Inc. (MDU) - 3.2%

61. Eaton Corp. plc (ETN) - 3.7%

62. The Hershey Co. (HSY) - 2.8%

63. Lockheed Martin Corp. (LMT) - 3%

64. Diageo plc (DEO) - 2.9%

65. General Electric Co. (GE) - 0.5%

66. Jack in the Box Inc. (JACK) - 2%

67. The Boeing Co. (BA) - 2.3%

68. Honeywell Intl. Inc. (HON) - 2.3%

69. Rockwell Automation Inc. (ROK) - 2.2%

70. Urstadt Biddle Properties Inc. (UBA) - 5.3%

71. Yum! Brands Inc. (YUM) - 1.8%

72. Kohl's Corp. (KSS) - 3.5%

73. National Fuel Gas Co. (NFG) - 3%

74. Hasbro Inc. (HAS) - 2.8%

75. Rogers Communications Inc. (RCI.B.TO) - 2.8%

76. Cracker Barrel Old Country Store Inc. (CBRL) - 3%

77. Aqua America Inc. (WTR) - 2.6%

78. Linde plc (LIN) - 2.1%

79. Universal Health Realty Income Trust (UHT) - 4%

80. América Móvil SAB de CV (AMX) - 2%

81. Erie Indemnity Co. (ERIE) - 2.5%

82. Merck & Co. Inc. (MRK) - 3%

83. Eli Lilly & Co. (LLY) - 2.2%

D-Rated Dividend Risk Stocks 1. Owens & Minor Inc. (OMI) - 3.9%

2. Micro Focus Intl. plc (MFGP) - 6%

3. British American Tobacco plc (BTI) - 8.2%

4. Lazard Ltd (LAZ) - 4.5%

5. Macy's Inc. (M) - 5.9%

6. Vodafone Grp. Plc (VOD) - 9.8%

7. WPP plc (WPP) - 7%

8. Applied Materials Inc. (AMAT) - 2.1%

9. POSCO (PKX) - 3%

10. Carnival Corp. (CCL) - 3.6%

11. Seagate Technology plc (STX) - 5.9%

12. Principal Financial Grp. Inc. (PFG) - 4.4%

13. Manulife Financial Corp. (MFC) - 4.7%

14. Broadcom Inc. (AVGO) - 4%

15. Magellan Midstream Partners LP (MMP) - 6.4%

16. Sun Life Financial Inc. (SLF) - 4.1%

17. Citigroup Inc. (C) - 2.9%

18. TechnipFMC plc (FTI) - 2.3%

19. Bank of America Corp. (BAC) - 2%

20. Autoliv Inc. (ALV) - 3.2%

21. Hawaiian Holdings Inc. (HA) - 1.5%

22. KeyCorp (KEY) - 4.1%

23. LyondellBasell Industries NV (LYB) - 4.6%

24. Ryder System Inc. (R) - 3.9%

25. BT Group plc (BT) - 3.8%

26. Philip Morris Intl. Inc. (PM) - 6.1%

27. Comerica Inc. (CMA) - 3.3%

28. Johnson Controls Intl. plc (JCI) - 3.2%

29. Aptiv plc (APTV) - 1.2%

30. BP plc (BP) - 6.1%

31. Xerox Corp. (XRX) - 3.7%

32. The Kraft Heinz Co. (KHC) - 5.3%

33. KLA-Tencor Corp. (KLAC) - 3%

34. Williams-Sonoma Inc. (WSM) - 3.3% 35. Huntington Bancshares Inc. (HBAN) - 4.1%

36. Legg Mason Inc. (LM) - 4.7%

37. Wynn Resorts Ltd (WYNN) - 2.6%

38. Kinder Morgan Inc. (KMI) - 4.4%

39. Ping An Insurance Grp. Co. of China Ltd (PNGAY) - 1.9%

40. Royal Dutch Shell plc (RDS.B) - 6.3%

41. DowDuPont Inc. (DWDP) - 2.6%

42. Royal Caribbean Cruises Ltd (RCL) - 2.5%

43. Wells Fargo & Co. (WFC) - 3.6%

44. Tenaris SA (TS) - 2.1%

67

45. Logitech Intl. SA (LOGI) - 1.9%

46. Alaska Air Grp. Inc. (ALK) - 2.2%

47. Global Net Lease Inc. (GNL) - 10.8%

48. Prudential Financial Inc. (PRU) - 4%

49. Navient Corporation (NAVI) - 5.6%

50. Marathon Petroleum Corp. (MPC) - 3.3%

51. Novo Nordisk A/S (NVO) - 2.7%

52. Omega Healthcare Investors Inc. (OHI) - 6.6%

53. ConocoPhillips (COP) - 1.9%

54. Bristol-Myers Squibb Co. (BMY) - 3.4%

55. Dominion Energy Inc. (D) - 5%

56. The Bank of New York Mellon Corp. (BK) - 2.1%

57. JPMorgan Chase & Co. (JPM) - 3.1%

58. ONEOK Inc. (OKE) - 5.4%

59. Flowers Foods Inc. (FLO) - 3.8%

60. Iron Mountain Inc. (IRM) - 6.7%

61. Patterson Companies Inc. (PDCO) - 4.7%

62. PetroChina Co. Ltd (PTR) - 2.1%

63. Delta Air Lines Inc. (DAL) - 2.9%

64. Pearson plc (PSO) - 2%

65. BCE Inc. (BCE) - 5.3%

66. Pfizer Inc. (PFE) - 3.5%

67. ARMOUR Residential REIT Inc. (ARR) - 10.9%

68. The Southern Co. (SO) - 5%

69. General Motors Co. (GM) - 4%

70. Yamana Gold Inc. (AUY) - 0.7%

71. PACCAR Inc. (PCAR) - 2%

72. Unilever plc (UL) - 3.4%

73. W. P. Carey Inc. (WPC) - 5.6%

74. Duke Energy Corp. (DUK) - 4.3%

75. Accenture plc (ACN) - 1.9%

76. Public Storage (PSA) - 3.8%

77. Popular Inc. (BPOP) - 1.8%

78. Honda Motor Co. Ltd (HMC) - 3.3%

79. Ferrari NV (RACE) - 0.8%

80. Otter Tail Corp. (OTTR) - 2.8%

81. Ventas Inc. (VTR) - 5%

82. Realty Income Corp. (O) - 4.1%

83. TELUS Corp. (T.TO) - 4.7%

84. Restaurant Brands Intl. Inc. (QSR) - 3.2%

85. R.R. Donnelley & Sons Co. (RRD) - 2.4%

86. PPL Corp. (PPL) - 5.4%

87. Scholastic Corp. (SCHL) - 1.4%

88. Paychex Inc. (PAYX) - 3.2%

89. HCP Inc. (HCP) - 4.8%

90. Telephone & Data Systems Inc. (TDS) - 1.8%

91. Welltower Inc. (WELL) - 4.6%

92. Westamerica Bancorporation (WABC) - 2.5%

93. Nestlé SA (NSRGY) - 2.8%

94. Telefonaktiebolaget LM Ericsson (ERIC) - 1.4%

95. Kulicke & Soffa Industries Inc. (KLIC) - 2.3%

F-Rated Dividend Risk Stocks 1. Vector Grp. Ltd (VGR) - 15.5%

2. Aegon NV (AEG) - 6.3%

3. Nabors Industries Ltd (NBR) - 8.1%

4. Artisan Partners Asset Mgmt. Inc. (APAM) - 10.5%

5. Buckeye Partners LP (BPL) - 9.9%

6. Compass Diversified Holdings (CODI) - 9.8%

7. Genesis Energy LP (GEL) - 10.2%

8. Stage Stores Inc. (SSI) - 21.8%

9. Senior Housing Properties Trust (SNH) - 11.6%

10. GameStop Corp. (GME) - 13.5%

11. CenturyLink Inc. (CTL) - 14.4%

12. Waddell & Reed Financial Inc. (WDR) - 5.8%

13. Suburban Propane Partners LP (SPH) - 10.4%

14. Apollo Global Mgmt. LLC (APO) - 7%

15. Brookfield Property Partners LP (BPY) - 7.2%

16. Spark Energy Inc. (SPKE) - 8.9%

17. Daimler AG (DDAIF) - 7.6%

18. China Petroleum & Chemical Corp. (SNP) - 10.6%

19. Sunoco LP (SUN) - 10.9%

20. Summit Hotel Properties Inc. (INN) - 6.6%

21. Macquarie Infra. Corp. (MIC) - 9.5%

22. Schlumberger Ltd/NV (SLB) - 4.6%

23. Imperial Brands plc (IMBBY) - 7.5%

24. Canon Inc. (CAJ) - 5.3%

25. Brookfield Infra. Partners LP (BIP) - 4.9%

26. Ford Motor Co. (F) - 6.9%

27. L Brands Inc. (LB) - 4.3%

28. Banco Santander SA (SAN) - 6%

29. New Residential Inv. Corp. (NRZ) - 11.9%

30. National Oilwell Varco Inc. (NOV) - 0.7%

31. Apollo Comml. Real Estate Finance Inc. (ARI) - 10.3%

32. Crown Castle Intl. Corp. (CCI) - 3.9%

33. Holly Energy Partners LP (HEP) - 8.8%

34. Macerich Co. (MAC) - 6.5%

35. Anheuser-Busch InBev NV (BUD) - 4.5%

36. TC PipeLines LP (TCP) - 8%

37. Baker Hughes, a GE Co. (BHGE) - 3.1%

38. Eni SpA (E) - 5.7%

39. Six Flags Entertainment Corp. (SIX) - 5.4%

40. Toyota Motor Corp. (TM) - 2.9%

41. Brookfield Renewable Partners LP (BEP) - 6.8%

42. Patterson-UTI Energy Inc. (PTEN) - 1.4%

43. Taubman Centers, Inc. (TCO) - 5.3%

44. MPLX LP (MPLX) - 7.6%

45. OUTFRONT Media Inc. (OUT) - 6.9%

46. Apache Corp. (APA) - 3%

47. Lamar Advertising Co. (LAMR) - 5%

48. Las Vegas Sands Corp. (LVS) - 5.5%

49. Dine Brands Global Inc. (DIN) - 3.3%

50. GlaxoSmithKline plc (GSK) - 5.1%

51. Telefónica SA (TEF) - 5.2%

52. STAG Industrial Inc. (STAG) - 5.2%

53. Weyerhaeuser Co. (WY) - 5.3%

54. China Mobile Ltd (CHL) - 4.2%

55. Kimco Realty Corp. (KIM) - 6.5%

56. Orchid Island Capital Inc. (ORC) - 13.6%

57. HSBC Holdings plc (HSBC) - 4.8%

58. Starwood Property Trust Inc. (STWD) - 8.9%

59. Helmerich & Payne Inc. (HP) - 5.3%

60. Consolidated Water Co. Ltd (CWCO) - 2.7%

61. B&G Foods Inc. (BGS) - 7%

62. Gladstone Inv. Corp. (GAIN) - 7.7%

63. Calvin B. Taylor Bankshares Inc. (TYCB) - 2.9%

68

64. CF Industries Holdings Inc. (CF) - 2.8%

65. Deutsche Telekom AG (DTEGY) - 4.7%

66. TransCanada Corp. (TRP) - 4.8%

67. Luxottica Grp. SpA (LUXTY) - 2.1%

68. Seaspan Corp. (SSW) - 5.4%

69. Nielsen Holdings plc (NLSN) - 5.5%

70. Rio Tinto plc (RIO) - 4.7%

71. BHP Billiton Ltd (BHP) - 5.1%

72. Ambev SA (ABEV) - 5%

73. Valero Energy Corp. (VLO) - 4.4%

74. Williams Companies (WMB) - 5.1%

75. Abercrombie & Fitch Co. (ANF) - 3.8%

76. Copa Holdings SA (CPA) - 3.6%

77. Thomson Reuters Corp. (TRI) - 3%

78. AstraZeneca plc (AZN) - 3.9%

79. Mercury General Corp. (MCY) - 4.9%

80. Garmin Ltd (GRMN) - 3.1%

81. The Wendy's Co. (WEN) - 2%

82. Shaw Communications Inc. (SJR.A) - 4.3%

83. Melco Resorts & Entertainment Ltd (MLCO) - 2.8%

84. Koninklijke Philips NV (PHG) - 2.6%

85. Meredith Corp. (MDP) - 4%

86. MGM Resorts Intl. (MGM) - 1.7%

87. Wheaton Precious Metals Corp. (WPM) - 1.8%

88. Nokia Corp. (NOK) - 3.6%

89. National Retail Properties Inc. (NNN) - 3.8%

90. Newmont Mining Corp. (NEM) - 1.7%

91. RLI Corp. (RLI) - 1.3%

69

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.

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) - 1.8%

2. The Sherwin-Williams Co. (SHW) - 0.9%

3. Methanex Corp. (MEOH) - 2.3%

4. H.B. Fuller Co. (FUL) - 1.3%

5. RPM Intl. Inc. (RPM) - 2.5%

6. Ecolab Inc. (ECL) - 1.2%

7. Stepan Co. (SCL) - 1.2%

B-Ranked Dividend Risk 1. Air Products & Chemicals Inc. (APD) - 2.8%

2. Nucor Corp. (NUE) - 2.7%

C-Ranked Dividend Risk 1. ArcelorMittal (MT) - 0.4%

2. Domtar Corp. (UFS) - 3.8%

3. NACCO Industries Inc. (NC) - 1.9%

4. MDU Resources Grp. Inc. (MDU) - 3.2%

5. Linde plc (LIN) - 2.1%

D-Ranked Dividend Risk 1. POSCO (PKX) - 3%

2. LyondellBasell Industries NV (LYB) - 4.6%

3. DowDuPont Inc. (DWDP) - 2.6%

4. Yamana Gold Inc. (AUY) - 0.7%

F-Ranked Dividend Risk 1. Weyerhaeuser Co. (WY) - 5.3%

2. CF Industries Holdings Inc. (CF) - 2.8%

3. Rio Tinto plc (RIO) - 4.7%

4. BHP Billiton Ltd (BHP) - 5.1%

5. Wheaton Precious Metals Corp. (WPM) - 1.8%

6. Newmont Mining Corp. (NEM) - 1.7%

Communication Services A-Ranked Dividend Risk 1. N/A

B-Ranked Dividend Risk 1. AT&T Inc. (T) - 6.6%

2. Comcast Corp. (CMCSA) - 2.3%

C-Ranked Dividend Risk 1. Verizon Communications Inc. (VZ) - 4.5%

2. Rogers Communications Inc. (RCI.B.TO) - 2.8%

3. América Móvil SAB de CV (AMX) - 2%

D-Ranked Dividend Risk 1. Vodafone Grp. Plc (VOD) - 9.8%

2. BT Group plc (BT) - 3.8%

3. BCE Inc. (BCE) - 5.3%

4. TELUS Corp. (T.TO) - 4.7%

5. Telephone & Data Systems Inc. (TDS) - 1.8%

F-Ranked Dividend Risk 1. CenturyLink Inc. (CTL) - 14.4%

2. Telefónica SA (TEF) - 5.2%

3. China Mobile Ltd (CHL) - 4.2%

4. Deutsche Telekom AG (DTEGY) - 4.7%

5. Shaw Communications Inc. (SJR.A) - 4.3%

Consumer Cyclical A-Ranked Dividend Risk 1. WestRock Co. (WRK) - 4.4%

https://www.suredividend.com/sure-analysis-research-database/

https://www.suredividend.com/procedures-glossary-definitions/

70


2. Dillard's Inc. (DDS) - 0.6%

3. Lowe's Companies Inc. (LOW) - 2.1%

4. Genuine Parts Co. (GPC) - 2.9%

5. V. F. Corp. (VFC) - 2.4%

6. Bemis Co. Inc. (BMS) - 2.6%

7. Ross Stores Inc. (ROST) - 1%

8. The TJX Companies Inc. (TJX) - 1.6%

9. Sonoco Products Co. (SON) - 2.9%

10. Advance Auto Parts Inc. (AAP) - 0.2%

B-Ranked Dividend Risk 1. Hanesbrands Inc. (HBI) - 3.9%

2. Whirlpool Corp. (WHR) - 3.4%

3. Foot Locker Inc. (FL) - 2.4%

4. Leggett & Platt Inc. (LEG) - 3.8%

5. Bed Bath & Beyond Inc. (BBBY) - 4.4%

6. Tractor Supply Co. (TSCO) - 1.4%

7. WEYCO Grp. Inc. (WEYS) - 3.4%

8. International Paper Co. (IP) - 4.2%

9. Nike Inc. (NKE) - 1.1%

10. Domino's Pizza Inc. (DPZ) - 0.8%

11. McDonald's Corp. (MCD) - 2.6%

12. Twenty-First Century Fox Inc. (FOXA) - 0.7%

C-Ranked Dividend Risk 1. Nordstrom Inc. (JWN) - 3.2%

2. The Home Depot Inc. (HD) - 2.3%

3. The Walt Disney Co. (DIS) - 1.6%

4. H&R Block Inc. (HRB) - 3.9%

5. Tiffany & Co. (TIF) - 2.5%

6. Omnicom Grp. Inc. (OMC) - 3.1%

7. Starbucks Corp. (SBUX) - 2.2%

8. John Wiley & Sons Inc. (JW.A) - 2.6%

9. Jack in the Box Inc. (JACK) - 2%

10. Yum! Brands Inc. (YUM) - 1.8%

11. Kohl's Corp. (KSS) - 3.5%

12. Hasbro Inc. (HAS) - 2.8%

13. Cracker Barrel Old Country Store Inc. (CBRL) - 3%

D-Ranked Dividend Risk 1. Macy's Inc. (M) - 5.9%

2. WPP plc (WPP) - 7%

3. Carnival Corp. (CCL) - 3.6%

4. Autoliv Inc. (ALV) - 3.2%

5. Aptiv plc (APTV) - 1.2%

6. Williams-Sonoma Inc. (WSM) - 3.3%

7. Wynn Resorts Ltd (WYNN) - 2.6%

8. Royal Caribbean Cruises Ltd (RCL) - 2.5%

9. Pearson plc (PSO) - 2%

10. General Motors Co. (GM) - 4%

11. Honda Motor Co. Ltd (HMC) - 3.3%

12. Ferrari NV (RACE) - 0.8%

13. Restaurant Brands Intl. Inc. (QSR) - 3.2%

14. Scholastic Corp. (SCHL) - 1.4%

F-Ranked Dividend Risk 1. Stage Stores Inc. (SSI) - 21.8%

2. GameStop Corp. (GME) - 13.5%

3. Daimler AG (DDAIF) - 7.6%

4. Ford Motor Co. (F) - 6.9%

5. L Brands Inc. (LB) - 4.3%

6. Six Flags Entertainment Corp. (SIX) - 5.4%

7. Toyota Motor Corp. (TM) - 2.9%

8. Las Vegas Sands Corp. (LVS) - 5.5%

9. Dine Brands Global Inc. (DIN) - 3.3%

10. Luxottica Grp. SpA (LUXTY) - 2.1%

11. Abercrombie & Fitch Co. (ANF) - 3.8%

12. The Wendy's Co. (WEN) - 2%

13. Melco Resorts & Entertainment Ltd (MLCO) - 2.8%

14. Meredith Corp. (MDP) - 4%

15. MGM Resorts Intl. (MGM) - 1.7%

Consumer Defensive A-Ranked Dividend Risk 1. Walgreens Boots Alliance Inc. (WBA) - 2.5%

2. Target Corp. (TGT) - 3.6%

3. Sysco Corp. (SYY) - 2.5%

4. McCormick & Co. Inc. (MKC) - 1.9%

5. Archer-Daniels-Midland Co. (ADM) - 3%

6. The Procter & Gamble Co. (PG) - 3.1%

7. Brown-Forman Corp. (BF.B) - 1.5%

8. Hormel Foods Corp. (HRL) - 2%

9. Colgate-Palmolive Co. (CL) - 2.6%

10. Walmart Inc. (WMT) - 2.2%

11. Tootsie Roll Industries Inc. (TR) - 1.1%

12. Lancaster Colony Corp. (LANC) - 1.7%

B-Ranked Dividend Risk 1. Newell Brands Inc. (NWL) - 4.4%

2. Constellation Brands Inc. (STZ) - 1.8%

3. Molson Coors Brewing Co. (TAP) - 2.5%

4. Kimberly-Clark Corp. (KMB) - 3.8%

5. Dollar General Corp. (DG) - 1%

6. Universal Corp. (UVV) - 5.4%

7. The Kroger Co. (KR) - 2%

8. Costco Wholesale Corp. (COST) - 1.1%

9. PepsiCo Inc. (PEP) - 3.4%

10. The Coca-Cola Co. (KO) - 3.3%

11. Church & Dwight Co. Inc. (CHD) - 1.4%

12. The Clorox Co. (CLX) - 2.6%

C-Ranked Dividend Risk 1. Altria Grp. Inc. (MO) - 7%

2. Kellogg Co. (K) - 3.9%

3. Conagra Brands Inc. (CAG) - 4%

4. General Mills Inc. (GIS) - 4.5%

5. Mondelez Intl. Inc. (MDLZ) - 2.4%

6. Campbell Soup Co. (CPB) - 4.1%

7. The J. M. Smucker Co. (SJM) - 3.3%

8. The Hershey Co. (HSY) - 2.8%

9. Diageo plc (DEO) - 2.9%

D-Ranked Dividend Risk 1. British American Tobacco plc (BTI) - 8.2%

71


2. Philip Morris Intl. Inc. (PM) - 6.1%

3. The Kraft Heinz Co. (KHC) - 5.3%

4. Flowers Foods Inc. (FLO) - 3.8%

5. Unilever plc (UL) - 3.4%

6. Nestlé SA (NSRGY) - 2.8%

F-Ranked Dividend Risk 1. Vector Grp. Ltd (VGR) - 15.5%

2. Imperial Brands plc (IMBBY) - 7.5%

3. Anheuser-Busch InBev NV (BUD) - 4.5%

4. B&G Foods Inc. (BGS) - 7%

5. Ambev SA (ABEV) - 5%

Energy A-Ranked Dividend Risk 1. Imperial Oil Ltd (IMO) - 2%

B-Ranked Dividend Risk 1. Canadian Natural Resources Ltd (CNQ.TO) - 3.8%

2. Vermilion Energy Inc. (VET) - 8.7%

3. Phillips 66 (PSX) - 3.4%

4. Chevron Corp. (CVX) - 4%

5. HollyFrontier Corp. (HFC) - 2.4%

C-Ranked Dividend Risk 1. Energy Transfer LP (ET) - 8.5%

2. Total SA (TOT) - 5.4%

3. Enbridge Inc. (ENB) - 6.1%

4. Halliburton Co. (HAL) - 2.3%

5. Exxon Mobil Corp. (XOM) - 4.6%

6. Petróleo Brasileiro SA - Petrobras (PBR) - 0.7%

7. Enterprise Products Partners LP (EPD) - 6.2%

8. Occidental Petroleum Corp. (OXY) - 4.7%

9. Suncor Energy Inc. (SU.TO) - 3.4%

10. National Fuel Gas Co. (NFG) - 3%

D-Ranked Dividend Risk 1. Magellan Midstream Partners LP (MMP) - 6.4%

2. TechnipFMC plc (FTI) - 2.3%

3. BP plc (BP) - 6.1%

4. Kinder Morgan Inc. (KMI) - 4.4%

5. Royal Dutch Shell plc (RDS.B) - 6.3%

6. Tenaris SA (TS) - 2.1%

7. Marathon Petroleum Corp. (MPC) - 3.3%

8. ConocoPhillips (COP) - 1.9%

9. ONEOK Inc. (OKE) - 5.4% 10. PetroChina Co. Ltd (PTR) - 2.1%

F-Ranked Dividend Risk 1. Nabors Industries Ltd (NBR) - 8.1%

2. Buckeye Partners LP (BPL) - 9.9%

3. Genesis Energy LP (GEL) - 10.2%

4. China Petroleum & Chemical Corp. (SNP) - 10.6%

5. Sunoco LP (SUN) - 10.9%

6. Schlumberger Ltd/NV (SLB) - 4.6%

7. National Oilwell Varco Inc. (NOV) - 0.7%

8. Holly Energy Partners LP (HEP) - 8.8%

9. TC PipeLines LP (TCP) - 8%

10. Baker Hughes, a GE Co. (BHGE) - 3.1%

11. Eni SpA (E) - 5.7%

12. Patterson-UTI Energy Inc. (PTEN) - 1.4%

13. MPLX LP (MPLX) - 7.6%

14. Apache Corp. (APA) - 3%

15. Helmerich & Payne Inc. (HP) - 5.3%

16. TransCanada Corp. (TRP) - 4.8%

17. Valero Energy Corp. (VLO) - 4.4%

18. Williams Companies (WMB) - 5.1%

Financial Services A-Ranked Dividend Risk 1. Eaton Vance Corp. (EV) - 3.6%

2. T. Rowe Price Group Inc. (TROW) - 3%

3. The Goldman Sachs Grp. Inc. (GS) - 1.6%

4. American Express Co. (AXP) - 1.6%

5. Franklin Resources Inc. (BEN) - 3.3%

6. 1st Source Corp. (SRCE) - 2.4%

7. Visa Inc. (V) - 0.7%

8. United Bankshares Inc. (UBSI) - 3.9%

9. Aflac Inc. (AFL) - 2.2%

10. Community Trust Bancorp Inc. (CTBI) - 3.5%

11. Commerce Bancshares Inc. (CBSH) - 1.7%

12. Tompkins Financial Corp. (TMP) - 2.7%

13. Aon plc (AON) - 1.1%

14. Mastercard Inc. (MA) - 0.7%

15. Farmers & Merchants Bancorp (FMCB) - 1.9%

16. The Travelers Companies Inc. (TRV) - 2.5%

17. UMB Financial Corp. (UMBF) - 1.8%

18. Cincinnati Financial Corp. (CINF) - 2.7%

B-Ranked Dividend Risk 1. Invesco Ltd (IVZ) - 6.3%

2. Bank OZK (OZK) - 2.6%

3. SEI Investments Co. (SEIC) - 1.4%

4. Ameriprise Financial Inc. (AMP) - 3%

5. M&T Bank Corp. (MTB) - 2.4%

6. Eagle Financial Srvcs. Inc. (EFSI) - 3.1%

7. Brookfield Asset Mgmt. Inc. (BAM) - 1.4%

8. U.S. Bancorp (USB) - 2.9%

9. People's United Financial Inc. (PBCT) - 4.2%

10. S&P Global Inc. (SPGI) - 1.1%

11. Chubb Ltd (CB) - 2.2%

12. Everest Re Grp. Ltd (RE) - 2.6%

13. Community Bank System Inc. (CBU) - 2.5%

14. First Financial Corp. (THFF) - 2.5%

15. Assurant Inc. (AIZ) - 2.5%

16. Moody's Corp. (MCO) - 1.1%

17. AXIS Capital Holdings Ltd (AXS) - 2.9%

18. Chesapeake Financial Shares Inc. (CPKF) - 2.2%

C-Ranked Dividend Risk 1. The Bank of Nova Scotia (BNS.TO) - 4.6%

2. Canadian Imperial Bank of Commerce (CM) - 4.9%

72


3. Old Republic Intl. Corp. (ORI) - 3.9%

4. Royal Bank of Canada (RY.TO) - 3.9%

5. The Western Union Co. (WU) - 4.2%

6. The Toronto-Dominion Bank (TD.TO) - 3.6%

7. BlackRock Inc. (BLK) - 3.1%

8. Arthur J. Gallagher & Co. (AJG) - 2.3%

9. Bank of Montreal (BMO.TO) - 4.1%

10. Erie Indemnity Co. (ERIE) - 2.5%

D-Ranked Dividend Risk 1. Lazard Ltd (LAZ) - 4.5%

2. Principal Financial Grp. Inc. (PFG) - 4.4%

3. Manulife Financial Corp. (MFC) - 4.7%

4. Sun Life Financial Inc. (SLF) - 4.1%

5. Citigroup Inc. (C) - 2.9%

6. Bank of America Corp. (BAC) - 2%

7. KeyCorp (KEY) - 4.1%

8. Comerica Inc. (CMA) - 3.3%

9. Huntington Bancshares Inc. (HBAN) - 4.1%

10. Legg Mason Inc. (LM) - 4.7%

11. Ping An Insurance Grp. Co. of China Ltd (PNGAY) -

1.9%

12. Wells Fargo & Co. (WFC) - 3.6%

13. Prudential Financial Inc. (PRU) - 4%

14. Navient Corporation (NAVI) - 5.6%

15. The Bank of New York Mellon Corp. (BK) - 2.1%

16. JPMorgan Chase & Co. (JPM) - 3.1%

17. Popular Inc. (BPOP) - 1.8%

18. Westamerica Bancorporation (WABC) - 2.5%

F-Ranked Dividend Risk 1. Aegon NV (AEG) - 6.3%

2. Artisan Partners Asset Mgmt. Inc. (APAM) - 10.5%

3. Waddell & Reed Financial Inc. (WDR) - 5.8%

4. Apollo Global Mgmt. LLC (APO) - 7%

5. Banco Santander SA (SAN) - 6%

6. HSBC Holdings plc (HSBC) - 4.8%

7. Gladstone Inv. Corp. (GAIN) - 7.7%

8. Calvin B. Taylor Bankshares Inc. (TYCB) - 2.9%

9. Thomson Reuters Corp. (TRI) - 3%

10. Mercury General Corp. (MCY) - 4.9%

11. RLI Corp. (RLI) - 1.3%

Healthcare A-Ranked Dividend Risk 1. AbbVie Inc. (ABBV) - 5.5%

2. AmerisourceBergen Corp. (ABC) - 2%

3. Perrigo Co. plc (PRGO) - 1.7%

4. Becton, Dickinson & Co. (BDX) - 1.3%

5. Johnson & Johnson (JNJ) - 2.8%

6. Medtronic plc (MDT) - 2.3%

7. Abbott Laboratories (ABT) - 1.8%

8. West Pharmaceutical Srvcs. Inc. (WST) - 0.6%

B-Ranked Dividend Risk 1. Cardinal Health Inc. (CAH) - 3.9%

2. CVS Health Corp. (CVS) - 3.1%

3. Fresenius Medical Care AG (FMS) - 1.8%

4. Stryker Corp. (SYK) - 1.3%

5. UnitedHealth Group Inc. (UNH) - 1.4%

6. Gilead Sciences Inc. (GILD) - 3.3%%

C-Ranked Dividend Risk 7. Mckesson Corp. (MCK) - 1.3%

8. Sanofi (SNY) - 4.4%

9. Amgen Inc. (AMGN) - 3%

10. ResMed Inc. (RMD) - 1.6%

11. Novartis AG (NVS) - 3.4%

12. Merck & Co. Inc. (MRK) - 3%

13. Eli Lilly & Co. (LLY) - 2.2%

D-Ranked Dividend Risk 1. Owens & Minor Inc. (OMI) - 3.9%

2. Novo Nordisk A/S (NVO) - 2.7%

3. Bristol-Myers Squibb Co. (BMY) - 3.4%

4. Patterson Companies Inc. (PDCO) - 4.7%

5. Pfizer Inc. (PFE) - 3.5%

F-Ranked Dividend Risk 1. GlaxoSmithKline plc (GSK) - 5.1%

2. AstraZeneca plc (AZN) - 3.9%

3. Koninklijke Philips NV (PHG) - 2.6%%

Industrials A-Ranked Dividend Risk 1. Caterpillar Inc. (CAT) - 2.7%

2. FedEx Corp. (FDX) - 1.5%

3. Donaldson Co. Inc. (DCI) - 1.6%

4. Southwest Airlines Co. (LUV) - 1.1%

5. A. O. Smith Corp. (AOS) - 1.8%

6. Textron Inc. (TXT) - 0.2%

7. Parker-Hannifin Corp. (PH) - 1.9%

8. Canadian Pacific Railway Ltd (CP) - 1%

9. Stanley Black & Decker Inc. (SWK) - 2.1%

10. W.W. Grainger Inc. (GWW) - 1.8%

11. Pentair plc (PNR) - 1.8%

12. Carlisle Companies Inc. (CSL) - 1.5%

13. Illinois Tool Works Inc. (ITW) - 3%

14. CSX Corp. (CSX) - 1.4%

15. ABM Industries Inc. (ABM) - 2.2% 16. Emerson Electric Co. (EMR) - 3.1%

17. Nordson Corp. (NDSN) - 1.1%

18. The Gorman-Rupp Co. (GRC) - 1.6%

19. 3M Co. (MMM) - 2.8%

20. General Dynamics Corp. (GD) - 2.1%

21. Brady Corp. (BRC) - 2%

22. MSA Safety Inc. (MSA) - 1.6%

23. Dover Corp. (DOV) - 2.2%

24. Roper Technologies Inc. (ROP) - 0.7%

25. Cintas Corp. (CTAS) - 1.1%

73


26. Tennant Co. (TNC) - 1.5%

B-Ranked Dividend Risk 1. Cummins Inc. (CMI) - 3.1%

2. MSC Industrial Direct Co. Inc. (MSM) - 3%

3. The Toro Co. (TTC) - 1.5%

4. Northrop Grumman Corp. (NOC) - 1.7%

5. Kansas City Southern (KSU) - 1.3%

6. Snap-on Inc. (SNA) - 2.3%

7. Ingersoll-Rand plc (IR) - 2.2%

8. Norfolk Southern Corp. (NSC) - 2.1%

9. Deere & Co. (DE) - 1.9%

10. Morningstar Inc. (MORN) - 0.9%

11. Franklin Electric Co. Inc. (FELE) - 1.3%

12. Xylem Inc. (XYL) - 1.2%

13. United Technologies Corp. (UTX) - 2.5%

14. Raytheon Co. (RTN) - 2%

15. L3 Technologies Inc. (LLL) - 1.6%

16. McGrath RentCorp (MGRC) - 2.8%

17. Automatic Data Processing Inc. (ADP) - 2.4%

18. Canadian National Railway Co. (CNI) - 1.6%

19. Jack Henry & Associates Inc. (JKHY) - 1.1%

20. Waste Mgmt. Inc. (WM) - 2%

21. Union Pacific Corp. (UNP) - 2%

22. CAE Inc. (CAE.TO) - 1.4%

C-Ranked Dividend Risk 1. United Parcel Service Inc. (UPS) - 3.6%

2. ABB Ltd (ABB) - 4.3%

3. Siemens AG (SIEGY) - 3.7%

4. HNI Corp. (HNI) - 3.1%

5. American Airlines Grp. Inc. (AAL) - 1.1%

6. Eaton Corp. plc (ETN) - 3.7%

7. Lockheed Martin Corp. (LMT) - 3%

8. General Electric Co. (GE) - 0.5%

9. The Boeing Co. (BA) - 2.3%

10. Honeywell Intl. Inc. (HON) - 2.3%

11. Rockwell Automation Inc. (ROK) - 2.2%

D-Ranked Dividend Risk 1. Hawaiian Holdings Inc. (HA) - 1.5%

2. Ryder System Inc. (R) - 3.9%

3. Johnson Controls Intl. plc (JCI) - 3.2%

4. Alaska Air Grp. Inc. (ALK) - 2.2%

5. Iron Mountain Inc. (IRM) - 6.7%

6. Delta Air Lines Inc. (DAL) - 2.9%

7. PACCAR Inc. (PCAR) - 2%

8. R.R. Donnelley & Sons Co. (RRD) - 2.4%

9. Paychex Inc. (PAYX) - 3.2%%

F-Ranked Dividend Risk 1. Compass Diversified Holdings (CODI) - 9.8%

2. Macquarie Infra. Corp. (MIC) - 9.5%

3. Canon Inc. (CAJ) - 5.3%

4. Seaspan Corp. (SSW) - 5.4%

5. Nielsen Holdings plc (NLSN) - 5.5%

6. Copa Holdings SA (CPA) - 3.6%%

Real Estate A-Ranked Dividend Risk 1. N/A

B-Ranked Dividend Risk 1. Federal Realty Inv. Trust (FRT) - 3.1%

C-Ranked Dividend Risk 1. Hospitality Properties Trust (HPT) - 8.1%

2. Digital Realty Trust Inc. (DLR) - 3.8%

3. Simon Property Grp. Inc. (SPG) - 4.5%

4. Host Hotels & Resorts Inc. (HST) - 4.5%

5. Urstadt Biddle Properties Inc. (UBA) - 5.3%

6. Universal Health Realty Income Trust (UHT) - 4%

D-Ranked Dividend Risk 1. Global Net Lease Inc. (GNL) - 10.8%

2. Omega Healthcare Investors Inc. (OHI) - 6.6%

3. ARMOUR Residential REIT Inc. (ARR) - 10.9%

4. W. P. Carey Inc. (WPC) - 5.6%

5. Public Storage (PSA) - 3.8%

6. Ventas Inc. (VTR) - 5%

7. Realty Income Corp. (O) - 4.1%

8. HCP Inc. (HCP) - 4.8%

9. Welltower Inc. (WELL) - 4.6%

F-Ranked Dividend Risk 1. Senior Housing Properties Trust (SNH) - 11.6%

2. Brookfield Property Partners LP (BPY) - 7.2%

3. Summit Hotel Properties Inc. (INN) - 6.6%

4. New Residential Inv. Corp. (NRZ) - 11.9%

5. Apollo Comml. Real Estate Finance Inc. (ARI) -

10.3%

6. Crown Castle Intl. Corp. (CCI) - 3.9%

7. Macerich Co. (MAC) - 6.5%

8. Taubman Centers, Inc. (TCO) - 5.3%

9. OUTFRONT Media Inc. (OUT) - 6.9%

10. Lamar Advertising Co. (LAMR) - 5%

11. STAG Industrial Inc. (STAG) - 5.2%

12. Kimco Realty Corp. (KIM) - 6.5%

13. Orchid Island Capital Inc. (ORC) - 13.6%

14. Starwood Property Trust Inc. (STWD) - 8.9%

15. National Retail Properties Inc. (NNN) - 3.8%

Technology A-Ranked Dividend Risk 1. NVIDIA Corp. (NVDA) - 0.5%

2. Western Digital Corp. (WDC) - 4.7%

3. Infosys Ltd (INFY) - 3.1%

4. Computer Services Inc. (CSVI) - 2.6%%

B-Ranked Dividend Risk 1. Apple Inc. (AAPL) - 1.9%

74


2. Intel Corp. (INTC) - 2.7%

3. Cognizant Technology Solutions Corp. (CTSH) -

1.2%

4. International Business Machines Corp. (IBM) - 4.7%

5. SAP SE (SAP) - 1.7%

6. HP Inc. (HPQ) - 2.9%

7. Microsoft Corp. (MSFT) - 1.8%

8. Oracle Corp. (ORCL) - 1.5%

9. Corning Inc. (GLW) - 2.1%

10. Badger Meter Inc. (BMI) - 1.2%

C-Ranked Dividend Risk 1. QUALCOMM Inc. (QCOM) - 5%

2. Texas Instruments Inc. (TXN) - 3%

3. Sony Corp. (SNE) - 0.5%

4. NetApp Inc. (NTAP) - 2.6%

5. Taiwan Semiconductor Mfg. Co. Ltd (TSM) - 3.7%

6. Cisco Systems Inc. (CSCO) - 2.9%%

D-Ranked Dividend Risk 1. Micro Focus Intl. plc (MFGP) - 6%

2. Applied Materials Inc. (AMAT) - 2.1%

3. Seagate Technology plc (STX) - 5.9%

4. Broadcom Inc. (AVGO) - 4%

5. Xerox Corp. (XRX) - 3.7%

6. KLA-Tencor Corp. (KLAC) - 3%

7. Logitech Intl. SA (LOGI) - 1.9%

8. Accenture plc (ACN) - 1.9%

9. Telefonaktiebolaget LM Ericsson (ERIC) - 1.4%

10. Kulicke & Soffa Industries Inc. (KLIC) - 2.3%

F-Ranked Dividend Risk 1. Garmin Ltd (GRMN) - 3.1%

2. Nokia Corp. (NOK) - 3.6%

Utilities A-Ranked Dividend Risk

1. Black Hills Corp. (BKH) - 3.1%

2. SJW Grp. (SJW) - 1.9%

3. UGI Corp. (UGI) - 1.9%

4. Atmos Energy Corp. (ATO) - 2.2%

5. Vectron Corp. (VVC) - 2.7%

6. Connecticut Water Service Inc. (CTWS) - 1.9%

7. California Water Service Grp. (CWT) - 1.6%

8. Middlesex Water Co. (MSEX) - 1.8%

9. American States Water Co. (AWR) - 1.7%

B-Ranked Dividend Risk 1. Fortis Inc. (FTS.TO) - 3.9%

2. Entergy Corp. (ETR) - 4.2%

3. Consolidated Edison Inc. (ED) - 3.9%

4. NextEra Energy Inc. (NEE) - 2.6%

5. Northwest Natural Holding Co. (NWN) - 3.1%

6. MGE Energy Inc. (MGEE) - 2.2%

C-Ranked Dividend Risk 1. AmeriGas Partners LP (APU) - 12.7%

2. Edison International (EIX) - 4.4%

3. Aqua America Inc. (WTR) - 2.6%

D-Ranked Dividend Risk 1. Dominion Energy Inc. (D) - 5%

2. The Southern Co. (SO) - 5%

3. Duke Energy Corp. (DUK) - 4.3%

4. Otter Tail Corp. (OTTR) - 2.8%

5. PPL Corp. (PPL) - 5.4%

F-Ranked Dividend Risk 1. Suburban Propane Partners LP (SPH) - 10.4%

2. Spark Energy Inc. (SPKE) - 8.9%

3. Brookfield Infra. Partners LP (BIP) - 4.9%

4. Brookfield Renewable Partners LP (BEP) - 6.8%

5. Consolidated Water Co. Ltd (CWCO) - 2.7%%

sure dividend · 2019-10-13 · 5 sell recommendation: ecolab (ecl) we first recommended ecolab in...

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