MAJOR DIVIDEND STOCK GAINS ACHIEVED (Time To Sell?) [Video]

I want to discuss three dividend stocks that I own which have absolutely surged in share price. Should I hold these stocks or sell them (and re-deploy the capital into higher-value, higher-yield investments)? I also dive into cash flows analysis, and some thoughts on the port strike.
#dividend #stock #investing

Timestamps:
0:00 INTRODUCTION
0:31 PepsiCo (PEP) is purchasing Siete for $1.2 billion. This is a great acquisition.
1:07 Investing is like a bar of soap. The more you handle it, the smaller it gets.
1:58 Question from Patreon. (Check out my pinned comment for a link to my Patreon.)
2:05 QUESTION ABOUT SELLING: Do I sell stocks that have rallied (a bit too much).
2:23 IBM, WMT, and CAT have all run-up quite a bit. Should I sell?
3:43 COMPARISON OF IBM TO ALPHABET (GOOGL) – They have a similar valuation on a PE basis.
4:27 ANALYSIS
4:54 IBM is trading at $219.35. I started buying at $151 and change in 2016. I’m up 44.4% on my 1st tranche.
5:17 Both IBM and GOOGL are trading at forward PE ratios around 21 (for 2024).
6:15 Despite the rally, IBM is still yielding 3%. (Lower than my portfolio average dividend yield.) Although, I do like the tech exposure.
7:06 IBM is only growing the dividend by 0.61% per year. Basically, no growth.
7:31 GOOGL is 10x the size of IBM.
7:37 What I’m doing in my personal situation.
9:31 FREE CASH FLOW ANALYSIS (They’re not really trading at the same level.)
9:59 IBM expects $12 billion free cash flow in 2024.
10:25 IBM trades at 16.84x 2024 FCF.
10:37 GOOGL appears to trade at about 34x 2024 expected FCF.
11:20 Even if I increase FCF to last year’s level, I get 29x multiple on FCF.
11:27 On a free cash flow basis, GOOGL is very different than IBM.
12:17 ALPHABET (GOOGL) STATEMENT OF CASH FLOW (2023)
12:55 $32.2 billion in CapEx
13:19 I think that FCF is a flawed metric. It doesn’t include interest expense, tax expense, stock-based compensation.
13:40 Alphabet is spending about $10 billion per year in stock-based awards!
14:13 I invented a new metric called Free Cash Flow ++ (FCF++)
14:50 I re-filmed this segment! I made an error in my original spreadsheet. Dividend investing and stock analysis is an iterative process.
15:29 I came up with FCF++ due to shortcomings with traditional free cash flow.
15:51 GOOGL has a massive $32 billion CapEx.
16:45 Stock-based compensation needs to be factored in (it’s a major expense).
17:17 GOOGL is paying about $10 billion per year on stock-based comp.
17:43 Debt service is a real expense.
18:20 Balance sheets don’t even compare. GOOGL crushes IBM on balance sheet. I factor in debt service into my FCF++.
19:28 IBM has $10,175 FCF++. GOOGL has $59,350 FCF++.
22:49 GOOGL is a play on several decades out. It’s a yield-on-cost play. I don’t see IBM growing too much from here.
23:20 IBM still has some value there, that’s not readily apparent in the PE. It’s a cash flow machine right now.
25:03 SUMMARY OF TAKEAWAYS
25:57 THOUGHTS ON OUR WORLD (PORT STRIKE AND INFLATION)
27:03 Supply chain shocks are possible. Inflation.
27:40 Asset prices are increasing. We could be headed for inflationary times.
27:55 Are the stock prices really increasing in real times (with the value of the dollar going down)?
29:00 Is IBM really up? Adjusted for purchasing power?
30:25 DISCLOSURE AND DISCLAIMER

DISCLOSURE: I am long IBM (IBM), Walmart (WMT), Caterpillar (CAT), Starbucks (SBUX), and SCHD. I own these stocks and ETF in my personal dividend stock portfolio.

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