After reviewing our portfolios last week and as Q3 earnings roll in, we’re reviewing some standout reports. This quarter gives a snapshot before the annual reports, and for us, it’s a mix of personal favourites, solid dividend stocks, and some surprises.
Timestamps and Tickers: Unilever (12:15), Starbucks (10:45), Snap-on (26:05), Assa Abloy (30:10), IBM (34:30)
Key News This Week (00:01:30)
Interactive Brokers’ Interest in Saxo Bank
European Dividend Growth Investor noted that Interactive Brokers, along with partners, might be eyeing a move to acquire Saxo Bank. This could impact investors who use low-fee brokers, as history shows fees often rise once smaller companies get bought out. For those of us who use Interactive Brokers, it’s worth watching how this acquisition unfolds.
Q3 Dividend Hikes: Iberdrola and Starbucks (00:10:00)
Iberdrola (IBE)
Our Spanish utility favourite announced a 14% dividend hike, up to €0.58 per share. With a yield approaching 4%, Iberdrola shows us they’re playing the long game in wind energy and climate-focused investments.
Starbucks (SBUX)
Starbucks surprised us with a 7% increase, now boasting 14 years of consecutive dividend growth. European Dividend Growth Investor picked up shares in the $80 range, and while the company’s recent restructuring under a new CEO brings hope for more growth, he’s holding out to buy more under $80 if it dips again.
Diving into Earnings: Unilever and Snap-on (00:15:00)
Unilever (UL)
Unilever’s report marked its third consecutive quarter of volume growth, particularly in its North American ice cream division, which they plan to spin off early next year. European Dividend Growth Investor’s early skepticism about Unilever’s strategic direction was addressed by their new CEO, Hein Schumacher, whose focus seems refreshingly grounded. Even though growth is moderate, Unilever may finally be turning the corner.
Snap-on (SNA)
Our old “underdog” Snap-on proved its resilience again this quarter. Revenue dipped slightly due to lower consumer demand, but EPS held steady thanks to cost-cutting measures, which led to a notable uptick in the share price. Snap-on’s steady approach to operational efficiency makes it a solid, if not thrilling, dividend pick.
Genuine Parts Company Takes a Hit (00:20:00)
Genuine Parts Company (GPC)
Despite being a dividend aristocrat with a 3.5% yield, Genuine Parts had a challenging quarter. Sales were up slightly, but rising costs and weaker demand dragged down margins, sending EPS down 24% year over year. With over six decades of dividend hikes, GPC remains a powerhouse, but we’ll be watching how management tackles these cost pressures moving forward.
Assa Abloy’s Q3 Gains with a Twist (00:30:00)
Assa Abloy (ASAZY)
A quiet giant, Assa Abloy brought a steady quarter, with sales up just 1%. However, thanks to a margin increase, EPS jumped by about 10%. European Dividend Growth Investor pointed out their recent Boston Dynamics partnership, which brings a futuristic angle to security solutions. Though sales growth hasn’t been organic, their acquisitions, especially of HHI, have helped them maintain growth and profitability. For dividend investors looking for stability, Assa Abloy is a solid play.
IBM: Financial Engineering or Genuine Growth? (00:34:30)
IBM (IBM)
IBM’s Q3 report showed a headline loss, largely due to a massive one-off charge tied to pension obligations. Yet, non-GAAP earnings hit $2.30 per share. European Dividend Growth Investor remains skeptical, noting IBM’s consistent “financial engineering” over the years with recurring one-offs that paint a rosier-than-actual picture. While Amazon and Microsoft continue to lead the cloud sector with 20%-plus growth, IBM’s cloud-related revenue barely grew by 5%. IBM remains divisive, with some seeing potential, but it’s not a pick for us just yet.
Listener Questions (00:40:00)
We always appreciate the questions from our community, and this week we got some thought-provoking ones.
Time Management Tips (from Hussein)
Hussein asked how we manage to keep up with the news, quarterly reports, and still have time to create the podcast and newsletter. European Dividend Growth Investor shared that our dedicated Facebook group and Fintwit feed keep the latest updates front and center. For both of us, passion keeps it from feeling like “work.”
The Ideal Yield for a New Investor (from Sebastian)
Sebastian, in his late 20s, wondered if he should aim for a 2.75% yield on dividend growth stocks. European Dividend Growth Investor mentioned that yield depends on your timeline for financial independence. If you’re aiming to retire earlier, consider companies with higher yields balanced by stable growth.
AI in Fund Management (from Philippe)
Philippe asked if AI could replace fund managers and potentially affect market analysis. We agreed that while AI brings impressive efficiency, emotion and human judgement play huge roles in investing. AI could streamline analysis, but fully replacing human fund managers would bring a level of “mechanical” efficiency that might affect the market’s character.
Is the Stock Market Overvalued? (from David)
David’s question hit home for us, as we hear concerns about valuations all the time. While valuations are high, timing the market is tough—missing just a few of the biggest gain days in a year can hurt long-term returns. For us, staying in the market and focusing on undervalued opportunities is our approach.
Thoughts on Sustainable Investing (from Thomas)
Thomas raised a point about investing sustainably, given that early retirement often means relying on income from corporations. We touched on the importance of finding companies that balance profit with responsible practices, avoiding those that overly prioritize short-term gain at the expense of sustainability. Companies like Iberdrola, with a focus on renewable energy, strike a good balance in our portfolios..
Timestamps:
- 00:00 Quick Welcome!
- 00:10 News of the Week: Interactive Brokers and Saxo Bank
- 10:45 Big Dividend Hikes: Iberdrola (IBDRY) & Starbucks (SBUX)
- 12:15 Unilever (UL): New CEO, New Moves
- 26:05 Snap-on (SNA) Quarter Review
- 30:10 Assa Abloy (ASAZY) Updates & Partnerships
- 34:30 IBM (IBM) Numbers Explained
- 40:00 Listener Q&A: Time, AI, and Sustainable Investing
Tickers Mentioned: IBE.MC, SBUX, UL, SNA, ASAZY, IBM
That’s it from us.
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