Latest news with #freecashflow
Globe and Mail
2 days ago
- Business
- Globe and Mail
1 Incredible Reason to Buy UPS Stock Before July 29
Key Points Based on the company's existing guidance (pre-tariff announcements), its free cash flow in 2025 will barely cover its dividend payment. The market appears to be implying considerable doubt about the sustainability of the dividend. Cutting the dividend could be a catalyst for stock outperformance. 10 stocks we like better than United Parcel Service › Should you buy stock in a company with a good chance of missing its full-year guidance and one that could cut its much-admired dividend (currently yielding 6.6%)? Usually, that's the last thing investors should want to do. But in the case of UPS (NYSE: UPS) and its upcoming second-quarter earnings announcement on July 29, it makes sense. Here's why. The market doesn't believe UPS will sustain the dividend UPS's dividend yield is 6.6%, and the 10-Year Treasury yield is about 4.5%. Outside of the COVID-19-led crash in 2020, there's never been a period when the spread between UPS yield and the risk-free rate was this high. Data by YCharts This is the market's way of indicating that it believes the dividend is at risk and may well be cut. A silver lining But here's the thing: A dividend cut might just be what the company needs. As previously articulated, UPS has excellent underlying growth prospects from investing in its healthcare, and small and medium-sized business revenue. In addition, the plan to reduce low or even negative margin deliveries for Amazon by 50% from the start of 2025 to mid-2026 makes perfect sense for a company focused on maximizing profitability in its network. It would free up cash for investment in these activities, as well as ongoing investments in technology to improve its network -- they could even be accelerated. It would also reduce the uncertainty surrounding the stock and encourage investors to focus on its growth opportunities, rather than stressing about the sustainability of its dividend. As counterintuitive as it may sound, if UPS is forced to cut its full-year guidance over concerns about raised tariffs and trade conflicts, then reducing the dividend could be a positive move; and investors should, at the least, monitor events closely even if they don't plan on buying in before the earnings report. Should you invest $1,000 in United Parcel Service right now? Before you buy stock in United Parcel Service, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and United Parcel Service wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025
Yahoo
2 days ago
- Business
- Yahoo
1 Incredible Reason to Buy UPS Stock Before July 29
Key Points Based on the company's existing guidance (pre-tariff announcements), its free cash flow in 2025 will barely cover its dividend payment. The market appears to be implying considerable doubt about the sustainability of the dividend. Cutting the dividend could be a catalyst for stock outperformance. 10 stocks we like better than United Parcel Service › Should you buy stock in a company with a good chance of missing its full-year guidance and one that could cut its much-admired dividend (currently yielding 6.6%)? Usually, that's the last thing investors should want to do. But in the case of UPS (NYSE: UPS) and its upcoming second-quarter earnings announcement on July 29, it makes sense. Here's why. The market doesn't believe UPS will sustain the dividend UPS's dividend yield is 6.6%, and the 10-Year Treasury yield is about 4.5%. Outside of the COVID-19-led crash in 2020, there's never been a period when the spread between UPS yield and the risk-free rate was this high. This is the market's way of indicating that it believes the dividend is at risk and may well be cut. A silver lining But here's the thing: A dividend cut might just be what the company needs. As previously articulated, UPS has excellent underlying growth prospects from investing in its healthcare, and small and medium-sized business revenue. In addition, the plan to reduce low or even negative margin deliveries for by 50% from the start of 2025 to mid-2026 makes perfect sense for a company focused on maximizing profitability in its network. It would free up cash for investment in these activities, as well as ongoing investments in technology to improve its network -- they could even be accelerated. It would also reduce the uncertainty surrounding the stock and encourage investors to focus on its growth opportunities, rather than stressing about the sustainability of its dividend. As counterintuitive as it may sound, if UPS is forced to cut its full-year guidance over concerns about raised tariffs and trade conflicts, then reducing the dividend could be a positive move; and investors should, at the least, monitor events closely even if they don't plan on buying in before the earnings report. Should you buy stock in United Parcel Service right now? Before you buy stock in United Parcel Service, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and United Parcel Service wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool has a disclosure policy. 1 Incredible Reason to Buy UPS Stock Before July 29 was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
Johnson & Johnson's Healthy 3.3%-Yielding Dividend Is a Very Safe Way to Make Passive Income
Key Points Johnson & Johnson continues to generate plenty of free cash flow to cover its dividend. The healthcare giant also maintains an elite balance sheet. With more growth ahead, it should have no trouble continuing to increase its high-yielding payout. 10 stocks we like better than Johnson & Johnson › Johnson & Johnson (NYSE: JNJ) has been an extremely reliable dividend stock for decades. The healthcare behemoth has raised its payment for 63 straight years, including by 4.8% earlier this year. That places it in the elite group of Dividend Kings -- companies with 50 or more consecutive years of increasing their dividend payouts. The healthcare company's payout currently yields 3.3%, more than double the S&P 500's (SNPINDEX: ^GSPC) dividend yield (near a record low at around 1.2%). That high-yielding payout is very healthy, making Johnson & Johnson a very safe way to collect dividend income. A financial fortress Johnson & Johnson recently reported its second-quarter financial results, which once again showcased the safety of its dividend payment. The healthcare company reported that it generated approximately $6.2 billion in free cash flow through the first half of this year, following investments of $6.7 billion in research and development (R&D). That was enough cash to cover its dividend payment, which has cost $6.1 billion year to date. While that might seem like a tight payout ratio, investors need not be concerned. Its free cash flow is only down slightly compared to the year-ago period, when it produced $7.5 billion through the first half of the year. Johnson & Johnson generated $20 billion in total free cash flow last year, easily covering its $11.8 billion dividend outlay. Meanwhile, Johnson & Johnson has one of the best balance sheets in the world. The company has a pristine AAA bond rating (one of only two companies in the world with elite credit). It ended the first quarter with $19 billion of cash and marketable securities on its balance sheet (nearly two years of dividend payments) against only $51 billion of debt. The $32 billion in net debt is a relatively small amount for a company with a roughly $375 billion market capitalization. Johnson & Johnson has maintained a strong balance sheet, even as it has deployed $15 billion in strategic inorganic growth opportunities over the past year, and more than $30 billion over the last two years. Investing heavily to grow Johnson & Johnson's robust financial profile enables it to invest heavily in R&D and M&A, driving growth of its innovative medicine and MedTech platforms. Last year, the company spent more than $17 billion in R&D (19.4% of its total sales). That made it one of the top R&D investors across all industries. Adding acquisitions and other inorganic investments, the company invested a whopping $50 billion in growth initiatives last year. Those growth investments are starting to pay off. "Our portfolio and pipeline position us for elevated growth in the second half of the year," commented CEO Joaquin Duato in the second-quarter earnings press release. As a result, the company boosted its annual revenue guidance by $2 billion (implying 5.4% growth for the full year) and tacked $0.25 per share to its adjusted earnings per share outlook, increasing the midpoint to $10.68. The company anticipates it will continue growing at a healthy pace over the next few years. By 2027, Johnson & Johnson expects that one-third of its MedTech sales will come from new products. Meanwhile, the company expects to launch more than 10 innovative medicine assets by 2030, with the potential to deliver over $5 billion in peak-year sales. The growth from these products will help to more than replace the lost sales from expiring patents, enabling the company to continue increasing revenue and free cash flow at healthy rates. It can also continue utilizing its fortress balance sheet to supplement its R&D efforts with strategic M&A opportunities as they arise. A very safe dividend stock Johnson & Johnson continues to showcase its elite ability to pay dividends. The healthcare company's high-yielding payout remains on rock-solid ground, even though its free cash flow is down through the first half of this year. With a fortress balance sheet and visible growth ahead, the company should have no problem continuing to increase its dividend at a healthy pace. As a result, it remains an extremely safe way to generate passive dividend income. Do the experts think Johnson & Johnson is a buy right now? The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Johnson & Johnson make the list? When our Stock Advisor analyst team has a stock recommendation, it can pay to listen. After all, Stock Advisor's total average return is up 1,060% vs. just 179% for the S&P — that is beating the market by 881.02%!* Imagine if you were a Stock Advisor member when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $679,653!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,046,308!* The 10 stocks that made the cut could produce monster returns in the coming years. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Matt DiLallo has positions in Johnson & Johnson. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy. Johnson & Johnson's Healthy 3.3%-Yielding Dividend Is a Very Safe Way to Make Passive Income was originally published by The Motley Fool
Yahoo
5 days ago
- Business
- Yahoo
3 Reasons OPEN is Risky and 1 Stock to Buy Instead
Shareholders of Opendoor would probably like to forget the past six months even happened. The stock dropped 42.9% and now trades at $0.78. This may have investors wondering how to approach the situation. Is there a buying opportunity in Opendoor, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it's free. Despite the more favorable entry price, we don't have much confidence in Opendoor. Here are three reasons why you should be careful with OPEN and a stock we'd rather own. Revenue growth can be broken down into changes in price and volume (for companies like Opendoor, our preferred volume metric is homes sold). While both are important, the latter is the most critical to analyze because prices have a ceiling. Opendoor's homes sold came in at 2,946 in the latest quarter, and over the last two years, averaged 27.9% year-on-year declines. This performance was underwhelming and implies there may be increasing competition or market saturation. It also suggests Opendoor might have to lower prices or invest in product improvements to grow, factors that can hinder near-term profitability. If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Over the last two years, Opendoor's demanding reinvestments to stay relevant have drained its resources, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 7.4%, meaning it lit $7.40 of cash on fire for every $100 in revenue. As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by. Opendoor burned through $717 million of cash over the last year, and its $2.52 billion of debt exceeds the $559 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble. Unless the Opendoor's fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns. We remain cautious of Opendoor until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet. We cheer for all companies serving everyday consumers, but in the case of Opendoor, we'll be cheering from the sidelines. Following the recent decline, the stock trades at $0.78 per share (or a forward price-to-sales ratio of 0.1×). The market typically values companies like Opendoor based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn't great compared to the potential downside here - there are more exciting stocks to buy. We'd suggest looking at one of our top digital advertising picks. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today. StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
Yahoo
6 days ago
- Business
- Yahoo
Dover: A Lesser-Known Industrial Dividend Gem
Dover Corporation (NYSE:DOV) is included among the 13 Best Industrial Dividend Stocks to Buy Right Now. A modern industrial equipment assembly line in motion. The company holds one of the longest dividend streaks in the industry, spanning 68 years, which makes it a reliable investment option for income investors. Currently, it pays a quarterly dividend of $0.515 per share and has a dividend yield of 1.09%, as of July 13. Dover Corporation (NYSE:DOV) produces equipment and components, including consumables, aftermarket parts, and digital solutions. The company is known for consistently generating strong free cash flow. In the first quarter of 2025, Dover Corporation (NYSE:DOV) reported an operating cash flow of $157.4 million, up from $146.6 million in the same period last year. The operating cash flow represented 8.4% of the revenue. The company's free cash flow also grew to $109.3 million, from $106.4 million in the prior-year period. It delivered a strong first-quarter performance, with a positive book-to-bill ratio in all five segments and building momentum throughout the quarter, reinforcing confidence in its short-term outlook. While we acknowledge the potential of DOV as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and . Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
