Question:
What is your current opinion of Vodafone? It has a nice dividend. However, there have been many changes over the past number of months. Should I hold, or sell?
Answer:
We owned Vodafone Group Plc (NASDAQ: VOD) in our income portfolio and our traditional recommended portfolio years ago. The stock was a tremendous growth story, growing by acquisition. The biggest news recently is that they sold their 45% stake in Verizon Wireless to Verizon. That was a big cash windfall for the company. It also makes Vodafone’s dividend more stable. They currently pay about 5.60% in dividend. However, the wireless segment was a big source of Vodafone’s income.
While the company currently looks good because of the cash inflow, going forward, the company might come under pressure. We believe a company like Vodafone that needs more growth opportunities might lower their dividend in the future, even if it isn’t a result of a cash strain. We do not recommend holding the company when that happens.
It’s a low growth company at -4% earnings growth; therefore, it should be considered a utility. If you own it, we recommend skeptically holding it for income purposes, but we also recommend watching out for the dividend.
Question:
We wanted to know if we should buy shares of Axiall Corp. Our grandson is working his way up in management at the company.
Answer:
Axiall Corp, NYSE: AXLL is formerly Georgia Gulf Corporation, a manufacturer and marketer of chemicals and manufacture of vinyl-based building and home improvement products. It’s a good company, headquartered in Atlanta.
Axiall recently bought PPG Industries, Inc. (NYSE: PPG) commodity business in 2013. This was a huge acquisition. We are a little skeptical of the takeover. Because PPG is a well-run company, we wonder if Axiall can run the commodity business better than PPG. Axiall’s beta is 2.6, which means if the market is up 10%, Axiall is up 26%. Likewise, if the market is down 10%, Axiall will likely be down 26%. It is a highly volatile stock. Additionally, the earnings predictability is around 5% according to Valueline. The price-to-earnings ratio is around 13, which is in line with the sector.
If you intend to hold, we recommend you have a long-term view of this stock in addition to nerves of steel. We would avoid it. We prefer to invest in commodities through an exchange-traded fund or a commodities index fund.
Question:
I’m a long-time listener and I’ve owned Procter & Gamble for many years. I bought it around $65, so I’ve made some profits. Is this one I should look to selling, or do I keep for the dividend?
Answer:
The Procter & Gamble Company (NYSE: PG) is a mature company, with earnings expected to grow at about 8% in the next three to five years. The dividend is about 3%. Their P/E ratio is in line with the market. The company is a good global conglomerate. They have exposure to areas of the world many companies want to gain.
If you want higher growth in Consumer Staples, you may consider Church & Dwight Co. Inc., (NYSE: CHD). However we believe Procter & Gamble is a safe play. We think this is worthy of holding.
At Henssler Financial we believe you should Live Ready, and that includes knowing the fundamentals of the companies you are invested in. If you have questions regarding your holdings, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
