Portfolio Update
The FiveTwenty portfolio received $41.86 in dividends in the past week. TROW and MDU paid their quarterly dividend during the week.
| Past Week Dividend | $41.86 |
| Current Quarter Dividend (Q3 2021) | $595.99 |
| LifeTime Dividend | $1,101.33 |
| Estimated Annual Dividend | $2,936.33 |
The capital allocation for the week of 10/03/2021 to 10/09/2021 will be used to add to our position in Kellogg Co (NYSE: K)
K – Position Update
Since our last check-in on K in week 21 of 2021, the company reported Q2 2021 earnings on 08/05/2021. Additionally, the share prices decreased ~4% from $66.50 to $63.87 during that period.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 18 years | 18 years | |
| Yield | 3.60% | 3.43% | 3.07% |
| Payout Ratio | 57.21%1 | 55.34%2 | NA |
| P/E | 16.321 | 16.142 | NA |
1 computed using TTM adjusted EPS of $4.02 as of Q2 2021
2 computed using TTM adjusted EPS of $4.12 as of Q1 2021
Q1 2021 earnings report
Did K’s latest earnings report raise any warning flags?
For Q2 2021, K saw a slight increase in revenue over the same period a year ago due primarily to double digit growth in the emerging markets business. The revenue growth was occurred on top of an exceptionally strong quarter a year ago. Operating profits and EPS, however, impacted by higher costs and unfavorable comparison to the year ago quarter that benefited from unusually high operating leverage ware lower than in the previous quarter. Overall, revenues grew 2.6%, adjusted operating profits decreased 11.6%, and EPS were 8.1% lower compared to Q2 2020.
| Revenue (in millions) | Adj. Operating Profit (in millions) | Adj. EPS . | |
| Q2 2020 | $3,465 | $562 | $1.24 |
| Q2 2021 | $3,555 | $497 | $1.14 |
| % Change | 2.6% | (11.6%) | (8.1%) |
Looking ahead, K raised its full year revenue growth guidance to 0-1% from a previous guidance for flat revenue. This is the second quarter in a row the company has raised revenue guidance. At the same time EPS growth guidance remained unchanged at 1-2%.
Thesis
Why are we adding K to the FiveTwenty portfolio?
With an additional quarter in the books, our investment thesis remains the same as in the last update. K continues to steadily execute on its growth strategy and the share price continues to offer an attractive dividend yield at a reasonable valuation.
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