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Wall Street Priced These Two Companies Backwards |
Company A: Almost no revenue. Zero operating plants. Valued near $10 BILLION. |
Company B: 60 years in business. Nearly $1 BILLION in annual revenue. 20 straight years of dividends. A 15-year Google deal. |
Yet Company B is still priced like an ordinary utility. |
One got the hype. The other may be badly mispriced. |
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🧩 One utility, one ETF, or one name at a time |
Three ways to build an income sleeve — and why it’s rarely a choice. |
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Somewhere between the second and the tenth income holding, every serious retiree runs into the same question: is the sleeve built out of one utility that you know like the back of your hand, one dividend ETF that owns a hundred of them for you, or a handful of names you picked one at a time and follow the way you used to follow companies at work. NextEra Energy going ex today at 62.32 cents makes the question concrete. The check arrives September 15 either way — but the way you got to it looks very different depending on which of those three routes you took. |
The one-name route trades diversification for a level of familiarity that a fund cannot give you. You know when NextEra’s next filing is due; you know the payout ratio the board is defending; you have a view on the regulated rate base and can tell yourself, honestly, whether that view is a real one or a habit. The trade is concentration — a single accounting change, a single regulatory decision, a single storm season, and the anchor of your income sleeve is what it is. The ETF route inverts the problem. SCHD closed most of last week around a 3.00% forward yield across roughly a hundred holdings and reinvestment is one click. What you give up is the specific relationship — you own everything and know none of it particularly well. |
The third route — picking a handful of names one at a time — is what most long-term income investors actually do, whether or not they call it that. It is neither the utility nor the ETF; it is a working portfolio of six or eight positions with a total yield that lands somewhere near the ETF’s and a per-name relationship that lands nearer the utility’s. The practical question is not which of the three routes is correct. The practical question is what proportion of the sleeve sits in each, and whether that proportion still matches the reason you built it. Most of us drift — a few positions grow, a few shrink, one or two get added out of curiosity — and once a year is not too often to look at the shape of the whole thing and decide whether it still looks like you. |
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ADVERTISEMENT · BROWNSTONE RESEARCH |
A tool that watches the biggest funds buy quietly |
Bodner spent two decades placing large trades at institutional desks, and built a screener that flags when the same style of accumulation shows up in the tape. Backtested results are hypothetical and do not represent actual trading. Past performance is not indicative of future results. All investing involves risk of loss including total loss of principal. Not investment advice. |
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💵 INCOME WATCH |
Declared. Quiet day on the declarations front — no watchlist name declared yesterday or today. |
Ex-dates ahead.
• NEE · Fri Aug 28 · $0.6232 · declared Jul 30, payable Sep 15
• O · Mon Aug 31 · $0.271 monthly · declared Aug 18, payable Sep 15
• PEP · Fri Sep 4 · $1.48 · declared Jul 17, payable Sep 30 |
Yield check. 10-year Treasury 4.67% at Thursday’s close (FRED). Schwab US Dividend Equity ETF (SCHD) running a forward yield near 3.00% at recent prices. |
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One name in this readership deserves a paragraph of its own tonight. |
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🧾 THE STEADY · JNJ |
Johnson & Johnson has raised its dividend every year for more than six consecutive decades — a Dividend King in the truest sense. The four most recent annual raises took the quarterly payment from $1.19 to $1.24 to $1.30 to $1.34, a low-single-digit cadence held through three CEOs. |
The company’s filed forward rate is $5.36 a share — a dollar figure that does not move — which at recent prices has been running near a 2% yield. Thursday’s close of $265.77 sits inside a 52-week range of $173.33 to $276.47. The last ex-date was August 25, at $1.34, payable September 8. Payout ratio 61%. |
Not a growth story anymore; the anchor of an income sleeve for a lot of people, and the record shows why. |
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And here is the day calendar for tomorrow — and the trading week that begins on Monday. |
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📅 TOMORROW’S CALENDAR |
• Mon Aug 31 · Realty Income ex-dividend · 27.1¢ for holders of record; the price adjustment is bookkeeping, not a verdict.
• Tue Sep 1 · ISM Manufacturing PMI (August), 10:00 AM ET · the input side of the inflation story, and worth reading against the July print.
• Wed Sep 2 · JOLTS (July), 10:00 AM ET · labor demand is the Fed’s other eye, and this is the number that shows it.
• Fri Sep 4 · August jobs report, 8:30 AM ET · the number that shapes September’s rate path; PEP goes ex the same morning. |
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What matters more to you — one big position, or a few smaller ones? Hit reply and let me know — I read every note. |
— Randy Cole, Editor |
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P.S. Most of what moves a session is on a public calendar before the open. Good Morning Alerts sends the schedule, plus the overnight moves, early enough to be useful — free, two to three notes a week, opt out anytime. Get tomorrow’s brief. (From Good Morning Alerts) |
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