22 Dividend Stock Picks Based on Forbes Most Valuable Brands
Dividend Yield: 2.65% | 5Y Performance: ▲70% | 5Y Growth of $100: +$170
|Jun 24|| 4|
Hello, dividend investors.
I am sharing my 3rd list that I actively started to invest in on May 20th, 2020.
Just to recap, I am a dividend growth investor sharing my journey to $10,000 in monthly income by 2050. I started with $100 on February 27, 2020. If you haven’t already, please sign up for the newsletter so you don’t miss out.
By proceeding to read further, you agree that you have read and accepted the disclaimer and understand it.
Forbes Most Valuable Brands
Founded in 1917, Forbes is a business magazine and an online publication covering diverse topics such as finance, investing, and technology, etc. In the business world and in general, the magazine is well known for its lists and rankings, such as the richest Americans, 30 Under 30, and the World’s Most Valuable Brands.
Tell me more.
Every year, Forbes publishes the list of World’s Most Valuable Brands. They started publishing this list back in 2010.
Here’s how it works:
Start with 200 global brands and then cut them down to the brands that have a strong U.S. presence.
Determine earnings before interest and income taxes (EBIT) for each brand.
Take the average EBIT over the past 3 years and then reduce the earnings by 8% of the brand’s capital employed.*
*Capital employed is the value of all the assets used by a company to generate earnings. In other words, Assets - Liabilities = Capital employed.
Multiply the corporate tax rate by the amount of EBIT (reduced by 8% of capital employed) to arrive at the number that is then allocated using a percentage to the brand based on the role the brand might play in being the sole driver of sales for that brand. They call this the “net brand earnings number.”
Take the net brand earnings number and multiply that to the 3-year average price-earnings ratio to arrive at the final brand value.
I know that’s a lot of Math but that’s how they do it.
Why I like this list.
A solid brand helps keep the demand constantly increasing and allows pricing power at scale. When leveraged well, a strong brand can produce a lot more value over a long period of time than, say, a brand no one knows about.
The main purpose of a brand is to maintain reputation, preserve loyal customers, and create awareness. Companies spend millions in maintaining a brand voice, engaging with customers, and standing true to their vision and ideals.
22 Dividend Stock Picks
There are 100 companies on the World’s Most Valuable Brands list. Not all the companies on this list are publicly traded companies in the U.S. Even if they are, they don’t all pay dividends. Out of all the companies that do pay dividends, I am investing in the following 22:
Link: M1 Finance Pie | Google Sheets
Number of Dividend Paying Stocks: 22
Dividend Yield: 2.65% (avg)
5Y Performance: 70%*
5Y Growth of $100: $170* (without dividend reinvestment)
*Returns from June 24, 2015, to June 17, 2020.
As you already know, I invest in lists (or pies) of stocks using M1 Finance. Since I started investing on February 27, 2020, I have created 3 lists (including the one above):
I would love your feedback about this list and the stock picks. Just reply to this email or comment on the post online.
Thank you so much for your time. I appreciate it. 🙏
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Until next week.
Disclaimer: Dividend.Fun is an informational publication and by reading it, you understand that you are not receiving investment advice. Unless otherwise noted, all data is as of the date the newsletter was published. M1 Finance link above is a referral link. I recommend using M1 Finance because I personally use it.