• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Energy

Baker's Dozen Plus One Make Up My New Buyback/Dividend Growth Portfolio

Companies as diverse as Wendy's and Boeing are among the names big into stock buybacks and raising their payouts.
By JONATHAN HELLER
Apr 19, 2017 | 12:00 PM EDT
Stocks quotes in this article: WEN, EAT, TRV, BA, VLO, GLW, AMP, MSI, HOG, WYN, KSS, AIZ, LM, TKR

A tax-day celebratory trip through Wendy's drive-thru yesterday (yes, pathetically, that's how some value investors celebrate) was both eye-opening and a reminder of the past. It was eye-opening because the double with cheese I bought cost six bucks; as good as it was, that's a hefty price and displays some major burger inflation, but I'll save that topic for another day. The trip also was a reminder of the past because Wendy's (WEN) is a former holding that I finally gave up on several years after the merger between Wendy's and Triarc (parent of Arby's) merger bore no fruit. I pulled the plug too early, and it wasn't the first time.

Fast forward, and Wendy's shares not only have had a decent run -- more than tripling since 2013 -- bit the company also meets the criteria for inclusion in my new Buyback/Dividend Growth tracking portfolio, pursuant to last week's column on the potential of combining growing dividends with stock buybacks. 

Criteria for inclusion include the following: 

  • Minimum market cap: $2 billion
  • Minimum dividend yield: 2%
  • Reduction in shares outstanding 3-year average of 5% or more
  • Minimum 5-year dividend growth of 5% or more

Fourteen stocks made the cut. The thing that is most remarkable about Wendy's is that the company has slashed shares outstanding from 426 million in 2011 to 252 million as of the latest quarter, for a 41% reduction. During the same period, it has quadrupled the annual dividend from 7 cents to 28 cents. 

Now, I am not making a call on where Wendy's shares head from here, as WEN trades at 24x next year's consensus earnings estimates, and I've made it clear that I believe the restaurant sector is overpriced. However, it is an interesting example of a company that aggressively has bought back shares and raised the dividend. Plus, I've been dead wrong on this stock in the past. 

One other restaurant name, Brinker International (EAT) , parent of Chili's and Maggiano's, also met the inclusion criteria. Brinker has cut its shares outstanding in half and tripled the dividend since 2010. Currently yielding 3.2%, EAT trades for about 13x next year's consensus earnings estimates. 

The other companies making the cut include Boeing (BA) , Travelers (TRV) , Valero Energy (VLO) , Corning (GLW) , Ameriprise Financial (AMP) , Motorola Solutions (MSI) , Harley-Davidson (HOG) , Wyndham Worldwide (WYN) , Kohl's (KSS) , Assurant (AIZ) , Legg Mason (LM)  and Timken (TKR) . 

It's a fairly well-diversified group with an average market cap of $19 billion and average dividend yield of 2.8%. It will be interesting to see if these companies can continue to put money back in shareholders' pockets at the same pace as in the past, and whether investors will be rewarded.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.


At the time of publication, Heller was long GLW.

TAGS: Investing | U.S. Equity | Transportation | Technology | Energy | Financial Services | Consumer Staples | Consumer Discretionary | Basic Materials | Dividends | How-to | Stocks

More from Energy

Solar Firm Sunrun Continues to Run on the Upside

Bruce Kamich
Aug 8, 2022 1:24 PM EDT

Here's what the longer-term picture looks like.

July Jobs Data, Tesla's Ambitions, Boring Big Board, Nasdaq Shines, Oil Slips

Stephen Guilfoyle
Aug 5, 2022 7:06 AM EDT

We'll be focused in particular on the underemployment numbers.

Oil Is Out, Tech Is In, but You Knew That Already, Right?

Helene Meisler
Aug 5, 2022 6:00 AM EDT

As energy is drained, someone told me this week how tech is now the long trade. Where have I heard that before? Also, let's look at the risks of the tech comeback.

No, I'm Not Selling Exxon and Chevron Here

Jim Collins
Aug 4, 2022 2:15 PM EDT

Be careful about drawing a comparison with dry bulk shippers and hydrocarbon names. They're two completely different undertakings.

National Fuel Gas Sends Bullish Signals Ahead of Earnings

Bruce Kamich
Aug 4, 2022 7:54 AM EDT

The charts of the diversified energy company tell a positive tale in advance of its fiscal third-quarter results.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:24 AM EDT PETER TCHIR

    Jobs Report Reaction: Incredibly Strong, But Questions to Ask

    An incredibly strong July jobs report. Not only d...
  • 08:54 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The Secret to Dealing With FOMO
  • 03:51 PM EDT REAL MONEY

    AMD Second-Quarter Earnings Live Blog

    Real Money's Eric Jhonsa covers 's second-quarte...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login