Stock Of The Month: MSFT

Welcome to the second edition of the The Fourth Quarter Dividend. The first edition can be found here.

This month I will choose from the "5"s of my portfolio. (Meaning, each of these stocks are roughly target allocated for 5% of my total portfolio.) The candidate stocks are:

Alphabet (GOOGL)
Facebook (FB)
Microsoft (MSFT)

Of course, MSFT wins by default; the other two do not pay dividends. Just for fun though, let's compare all three by the same dividend-related metrics.

GOOGL: $123.9B revenue, 26% revenue growth, $41.9B operating cash flow, $21.7B free cash flow
MSFT: 1.7% dividend yield, 69% payout ratio, $110.4B revenue, 18% revenue growth, $43.9B operating cash flow, $25.1B free cash flow
FB: $48.5B revenue, 42% revenue growth, $28.0B operating cash flow, $11.3B free cash flow

Both GOOGL and FB could easily support dividends whenever they are ready. I expect GOOGL will declare a quarterly dividend in the next five years.

Here's my current portfolio (buy and hold). As always, I believe in all of these stocks - until I sell them.

Tesla (TSLA) 14.74%
Amazon (AMZN) 14.25%
Apple (AAPL) 14.11%
NVIDIA (NVDA) 13.07%
Alphabet (GOOGL) 6.27%
Intuitive Surgical (ISRG) 4.18%
Microsoft (MSFT) 4.06%
Facebook (FB) 3.86%
Adobe Systems (ADBE) 2.59%
Nike (NKE) 2.28%
Salesforce.com (CRM) 2.16%
Visa (V) 1.89%
UnitedHealth Group (UNH) 1.76%
Intel (INTC) 1.63%
Starbucks (SBUX) 1.54%
Waste Management (WM) 1.45%
Costco Wholesale (COST) 1.35%
Booking Holdings (BKNG) 1.27%
Chubb Limited (CB) 1.22%
BlackRock (BLK) 1.20%
Autodesk (ADSK) 0.91%
Comcast (CMCSA) 0.63%
Activision Blizzard (ATVI) 0.53%
American Water Works (AWK) 0.51%
Norfolk Southern (NSC) 0.49%
CSX (CSX) 0.48%
Union Pacific (UNP) 0.43%
Canadian National Railway (CNI) 0.42%
Aqua America (WTR) 0.39%
Kansas City Southern (KSU) 0.33%

Stock Of The Month: AAPL (The Fourth Quarter Dividend Edition)

Historically, I've thought of the last quarter of the year as the time to buy my favorite dividend stocks...though having searched back, I cannot find much formal evidence of this (a recurring - and not-so-reassuring - theme). So let's fix that.

Welcome to the first edition of the The Fourth Quarter Dividend.

This month I will choose from the "16"s of my portfolio. (Meaning, each of these stocks are roughly target allocated for 16% of my total portfolio.) The candidate stocks are:

Amazon (AMZN)
Apple (AAPL)
NVIDIA (NVDA)
Tesla (TSLA)

AMZN and TSLA can be eliminated from consideration right away: neither pays a dividend.

Now let's compare the remaining two candidates.

AAPL: 1.3% dividend yield, 24% payout ratio, $255.3B revenue, 17% revenue growth, $73.0B operating cash flow, $41.4B free cash flow
NVDA: 0.2% dividend yield, 9% payout ratio, $11.9B revenue, 40% revenue growth, $4.9B operating cash flow, $2.5B free cash flow

As you can see, this is not a particularly close contest. Apple is one of the safest, most well-funded dividend stocks in the market, perhaps ever. It will almost certainly increase payouts year-over-year for the foreseeable future.

Here's my current portfolio (buy and hold). As always, I believe in all of these stocks - until I sell them.

Amazon (AMZN) 15.22%
Apple (AAPL) 15.09%
NVIDIA (NVDA) 14.79%
Tesla (TSLA) 11.11%
Alphabet (GOOGL) 6.61%
Intuitive Surgical (ISRG) 4.26%
Facebook (FB) 4.07%
Microsoft (MSFT) 3.04%
Adobe Systems (ADBE) 2.67%
Nike (NKE) 2.29%
Salesforce.com (CRM) 2.27%
Visa (V) 1.87%
UnitedHealth Group (UNH) 1.80%
Intel (INTC) 1.59%
Waste Management (WM) 1.52%
Starbucks (SBUX) 1.35%
Costco Wholesale (COST) 1.34%
Chubb Limited (CB) 1.27%
BlackRock (BLK) 1.27%
Booking Holdings (BKNG) 1.25%
Autodesk (ADSK) 0.91%
Activision Blizzard (ATVI) 0.59%
Comcast (CMCSA) 0.58%
American Water Works (AWK) 0.53%
Norfolk Southern (NSC) 0.51%
CSX (CSX) 0.50%
Union Pacific (UNP) 0.46%
Aqua America (WTR) 0.44%
Canadian National Railway (CNI) 0.43%
Kansas City Southern (KSU) 0.34%

Stock Of The Month: NVDA

This month's choice is (once again) NVIDIA (NVDA), which reported earnings on August 16th...and the market actually did a better-than-usual job of absorbing another outstanding quarter:

NVDA since 8/17/18

Revisiting the catalysts for NVIDIA to outperform the market for the foreseeable future:

• NVIDIA is at the heart of technologies shaping our future:  deep learning, artificial intelligence, datacenters/cloud computing, and automated driving.  Note that cryptocurrency, which was (supposedly) responsible for the market's initial disappointment, was not and is not part of the story.
• NVIDIA's market cap is currently $172B, while Intel's (INTC) is $221B.  Within the semiconductor industry, Intel is the best-in-class manufacturer, while NVIDIA is the best-in-class designer.  If someone wants the most powerful chips in the world, they choose NVIDIA.  Therefore, I believe NVIDIA's market cap will eventually exceed that of fairly-valued Intel's - currently implying a minimum 28% upside.
• The market still cannot catch up to NVIDIA's earnings growth.  Q3 2017 to Q4 2017 earnings growth was over 40%, yet the market believes Q3 2018 to Q4 2018 earnings growth will be negative (from Yahoo! Finance):

Here's my current portfolio (buy and hold). As always, I believe in all of these stocks - until I sell them.

Amazon (AMZN) 16.27%
NVIDIA (NVDA) 16.08%
Apple (AAPL) 13.38%
Tesla (TSLA) 11.47%
Alphabet (GOOGL) 6.61%
Intuitive Surgical (ISRG) 4.20%
Facebook (FB) 4.10%
Microsoft (MSFT) 2.88%
Adobe Systems (ADBE) 2.69%
Salesforce.com (CRM) 2.25%
Nike (NKE) 2.21%
Visa (V) 1.86%
UnitedHealth Group (UNH) 1.69%
Intel (INTC) 1.55%
Waste Management (WM) 1.42%
BlackRock (BLK) 1.30%
Costco Wholesale (COST) 1.28%
Chubb Limited (CB) 1.23%
Booking Holdings (BKNG) 1.21%
Starbucks (SBUX) 1.19%
Autodesk (ADSK) 0.97%
Comcast (CMCSA) 0.57%
Activision Blizzard (ATVI) 0.52%
CSX (CSX) 0.49%
American Water Works (AWK) 0.48%
Norfolk Southern (NSC) 0.48%
Union Pacific (UNP) 0.41%
Aqua America (WTR) 0.41%
Canadian National Railway (CNI) 0.40%
Kansas City Southern (KSU) 0.34%