The market’s rebound final yr led me to faucet the brakes on new investments to start out build up additional cash in case the market took a breather. I bought just a few dropping positions whereas permitting my dividends and money transfers to build up in order that my money place is now greater than 5% of my portfolio’s worth.
I plan to place a few of that money stockpile to work within the coming weeks now that the market has cooled off to start out 2024. Chevron (NYSE: CVX), Kenvue (NYSE: KVUE), and VICI Properties (NYSE: VICI) are among the many first three shares I plan to purchase. This is why they’re on the high of my purchase listing.
The gas to develop
Chevron is coming off a down yr. The oil large’s inventory has fallen about 20% over the past 12 months, weighed down by oil costs and its pending acquisition of rival Hess. Nonetheless, that sell-off has Chevron buying and selling at a sexy dividend yield (4.2%) and worth (given the expansion it may ship at decrease oil costs).
Chevron has been laser-focused on bettering its funding returns by concentrating capital spending on its highest-return alternatives. That positions the oil firm to develop its money move at a wholesome fee over the approaching years, even in a draw back state of affairs the place oil costs common $60 a barrel by means of 2027 (and fall to $50 within the latter years of its forecast). Even in that occasion, Chevron can ship greater than 10% annual free money move development over the following a number of years. That helps the corporate’s view that it may proceed rising its dividend whereas repurchasing shares on the low finish of its $10 billion to $20 billion annual goal vary.
In the meantime, Chevron has important upside potential if oil costs common $70 a barrel (across the present worth level) and it completes its needle-moving acquisition of Hess. These elements would give Chevron the gas to greater than double its free money move by 2027 whereas extending its manufacturing development outlook into the 2030s. That might provide the oil large additional cash to return to shareholders and put money into rising its lower-carbon power companies. It might additionally give it the gas to provide robust whole returns.
A wholesome future
Kenvue’s inventory has stumbled following its IPO and separation from healthcare large Johnson & Johnson. Shares are down greater than 20% because it got here public, driving its dividend yield as much as 3.8%. That is largely on account of turnover amongst shareholders.
The corporate has in any other case gotten off to a wholesome begin as an impartial public firm. Within the third quarter, it reported $3.9 billion in gross sales, a 3.3% year-over-year enhance. It additionally posted robust profitability. The corporate expects gross sales to rise by 4% to 4.5% for the yr.
Kenvue is producing wholesome money move, which allowed it to provoke a dividend and launch a share repurchase program. The corporate’s rising gross sales, earnings, and money move ought to allow it to observe within the footsteps of its former guardian and steadily enhance its dividend sooner or later. That development ought to assist drive the inventory worth greater over the long run, which ought to allow Kenvue to ship wholesome whole returns.
A quick-growing REIT
VICI Properties’ inventory worth has slumped about 7% over the previous yr. That decline has pushed the actual property funding belief’s (REIT) dividend yield as much as 5.4%.
Whereas its share worth is down, the experiential property proprietor is rising briskly. Its income surged 20% year-over-year within the third quarter, whereas its adjusted funds from operations (FFO) have been up by almost 11% per share. VICI is benefiting from rising rental charges and an ever-expanding portfolio. With earnings rising whereas its inventory worth has fallen, VICI has gotten loads cheaper over the previous yr.
The REIT continues to make new investments to drive development. Over the previous few months, VICI has acquired 38 bowling leisure facilities from Bowlero in a $432.9 million sale-leaseback transaction, agreed to offer as much as $212 million in development financing to Kalahari for an indoor waterpark resort improvement, and has expanded its investments with Chelsea Piers and Cabot to just about $550 million. These investments will develop its earnings sooner or later, giving the REIT additional cash move to extend its dividend. That mixture of development and earnings ought to allow it to provide thrilling whole returns within the coming years.
Looking for to money in on their robust whole return potential
Chevron, Kenvue, and VICI Properties have underperformed in latest months. Nonetheless, they need to generate engaging and rising dividend earnings sooner or later with the potential to provide robust whole returns over the long run as they enhance their earnings and their inventory costs recuperate. They appear like very engaging locations to start out deploying my money stockpile.
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Matthew DiLallo has positions in Chevron, Johnson & Johnson, Kenvue, and Vici Properties. The Motley Idiot has positions in and recommends Kenvue. The Motley Idiot recommends Chevron, Johnson & Johnson, and Vici Properties and recommends the next choices: lengthy January 2026 $13 calls on Kenvue. The Motley Idiot has a disclosure policy.
I’m Putting My Cash Stockpile to Work on These 3 Stocks was initially printed by The Motley Idiot
