BHP Billiton Reports Earnings, Posts Big Revenue Gains
just delivered a big quarter and the company gave an upbeat outlook on commodity prices, saying China's voracious appetite for raw materials can compensate for a global slowdown.
Management also contended that its $150 billion hostile bid for
offers tremendous value, as well as a great way to minimize cost pressures that would decline if the companies merged.
We had removed the company from our "Recommended" list on July 17 at a price of $71.55, based on a drop in commodity prices we felt would begin to accelerate. Our stance there hasn't changed, and despite BHP's positive outlook, we would still remain cautious and avoid the shares at this level. The company has a dividend yield of 1.78%, based on Friday's closing stock price of $65.22.
BHP is not a recommended dividend stock at this time, holding a Dividend.com rating of 3.0 out of 5 stars.
Lowe's Indicates Home Repair is Coming Back Slowly
is coming back to life, but it will take some time to fully rebound. The company just reported second-quarter sales that were up slightly, with revenue rising 2.4% to $14.5 billion.
The company cited tax rebates used for spring projects, and its sales performance for stores open at least a year was better than some analysts had expected. Next quarter may be a bit soft, as the company forecast a profit of 27 cents to 31 cents a share, below the consensus of 33 cents. For the year, the company sees earning $1.48 to $1.56 a share. The consensus estimate is $1.50.
We upgraded shares back on Aug. 8, a bit below $21, and think a pullback to levels near there would be a good entry point or an area to add to position. The housing sector will take a while to rebound, but both Lowe's and
are well-positioned when it does.
Lowe's is a "Recommended" dividend stock, holding a Dividend.com rating of 3.5 out of 5 stars.
Hershey's Warns That Commodity Costs Remain an Issue
was getting the heat from analysts after the company warned that the higher cost of ingredients such as cocoa, corn sweetener, sugar and peanuts would affect profits this year.
The company will be raising prices immediately to offset the costs they have been absorbing in the last year. Management is predicting 2008 earnings will be at the lower end of its previously forecast range of $1.85 to $1.90 a share.
Were the brand not as big and well-known, we would probably be advising investors to sell the stock and look elsewhere. Given the pervasiveness of the Hershey brand, however, we think the company could eventually become an acquisition target for a larger company. Hershey has a 2.86% dividend yield, based on Friday's closing stock price of $41.62. We think the stock is a keeper at these levels, even though the news isn't as optimistic as we'd like at the moment.
Hershey is a "Recommended" dividend stock, holding a Dividend.com rating of 3.5 out of 5 stars.
UnionBanCal Accepts a Higher Takeover Offer
Mitsubishi UFJ Financial Group increased its offer to buy the remaining portion of California-based
, and the target company agreed to the deal.
This past weekend, we had said we would take the profits from UnionBanCal's recent jump on its earlier acquisition offer. Today is a lucky day for UnionBanCal holders, and there is no question that locking in profits on today's jump is a no-brainer.
Dividend Stock Smackdown: Visa vs. Mastercard
Well, it looks like we've been on the wrong side of the battle of the two credit-card transaction giants, but maybe not for long.
We originally recommended
back on July 7 at a price of $246.10. At the time, we felt the name was under a key $250 level, which we thought would be a good starting point for investing in the shares. We did feel the stock would have additional downside possibilities to the $225 level, however, and the stock dropped there only days after the company reported earnings (which actually included decent numbers).
The problem was that some investors were just in it for the short-term earnings pop, which did not happen.
We think the shares are still very attractive at around 21 times 2009 estimates. The stock does not offer much of a dividend payout, with a tiny 0.25% yield, based on Friday's closing price of $238.95, but the bottom line is that we still like the stock.
is another story. We removed the name from our "Recommended" list at a price of $68.42 back on July 15, when our cautious thoughts on the stock garnered negative responses from some of the more passionate holders of the stock.
It's not that we don't think Visa was a name to own, we simply questioned its valuation, and we still do. Visa stock, which closed at $75.79 on Friday, is currently trading at 27 times next year's consensus estimates, making it a financial name trading with a tech-like multiple. We do understand the growth is the key for this stock, and we may be underestimating its potential. For now, however, we are going to stick to our guns.
Visa, like Mastercard, has a small dividend yield of 0.55%. Bottom line, we'd love to buy it in the low- to mid-$60s, if it ever gets there.
At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.