{"id":23519,"date":"2023-06-16T12:46:36","date_gmt":"2023-06-16T16:46:36","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/analyzing-matsons-dividend-growth-potential\/"},"modified":"2023-06-16T12:46:38","modified_gmt":"2023-06-16T16:46:38","slug":"analyzing-matsons-dividend-growth-potential","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=23519","title":{"rendered":"Analyzing Matson\u2019s Dividend Growth Potential"},"content":{"rendered":"
\n

Recap from April\u2019s Picks<\/strong><\/h3>\n

On a price return basis, the Dividend Growth Stocks Model Portfolio (-2.3%) underperformed the S&P 500 (+0.4%) by 2.7% from April 27, 2023 through May 23, 2023. On a total return basis, the Model Portfolio (-2.1%) underperformed the S&P 500 (+0.4%) by 2.5% over the same time. The best performing stock was up 8%. Overall, eleven out of 30 Dividend Growth stocks outperformed their respective benchmarks (S&P 500 and Russell 2000) from April 27, 2023 through May 23, 2023.<\/p>\n

The methodology for this model portfolio mimics an \u201cAll Cap Blend\u201d style with a focus on dividend growth. Selected stocks earn an attractive or very attractive rating, generate positive free cash flow (FCF) and economic earnings, offer a current dividend yield >1%, and have a 5+ year track record of consecutive dividend growth. This model portfolio is designed for investors who are more focused on long-term capital appreciation than current income, but still appreciate the power of dividends, especially growing dividends.<\/p>\n

Featured Stock for May: Matson Inc.<\/strong><\/h3>\n

Matson Inc. (MATX) is the featured stock in May\u2019s Dividend Growth Stocks Model Portfolio.<\/p>\n

Matson has grown revenue by 13% compounded annually and net operating profit after tax (NOPAT) by 43% compounded annually since 2017. Longer term, the company has grown NOPAT by 26% compounded annually since 2012. The company\u2019s NOPAT margin increased from 6% in 2017 to 20% over the trailing twelve months (TTM), and invested capital turns remained unchanged at 1.0 over the same time. Higher NOPAT margins drive return on invested capital (ROIC) from 6% in 2017 to 20% over the TTM.<\/p>\n

<\/fbs-ad><\/p>\n

Figure 1: Matson\u2019s Revenue & NOPAT Since 2012<\/strong><\/p>\n

Free Cash Flow Supports Regular Dividend Payments<\/strong><\/h3>\n

Matson has increased its regular dividend from $0.82\/share in 2018 to $1.22\/share in 2022, or 10% compounded annually. The current quarterly dividend, when annualized, equals $1.24\/share and provides a 1.8% dividend yield.<\/p>\n

More importantly, Matson\u2019s free cash flow (FCF) easily exceeds its regular dividend payments. From 2019 through 1Q23, Matson generated $906 million (23% of current enterprise value) in FCF while paying $181 million in dividends. See Figure 2.<\/p>\n

Figure 2: Matson\u2019s<\/strong> FCF vs. Regular Dividends Since 2019<\/strong><\/p>\n

Companies with FCF well above dividend payments provide higher-quality dividend growth opportunities. On the other hand, dividends that exceed FCF cannot be trusted to grow or even be maintained.<\/p>\n

MATX Is Undervalued<\/strong><\/h3>\n

At its current price of $70\/share, Matson has a price-to-economic book value (PEBV) ratio of 0.3. This ratio means the market expects Matson\u2019s NOPAT to permanently fall 70% from TTM levels. This expectation seems overly pessimistic given that Matson has grown NOPAT by 26% compounded annually since 2012 and 14% compounded annually since 2002.<\/p>\n

Even if Matson\u2019s NOPAT margin falls to 13% (compared to 20% over the TTM) and the company\u2019s revenue falls 3% compounded annually over the next decade, the stock would be worth $98\/share today \u2013 a 40% upside. See the math behind this reverse DCF scenario. In this scenario, Matson\u2019s NOPAT would fall 9% compounded annually through 2032. Should the company\u2019s NOPAT grow more in line with historical growth rates, the stock has even more upside.<\/p>\n

Add in Matson\u2019s 1.8% dividend yield and a history of dividend growth, and it\u2019s clear why this stock is in May\u2019s Dividend Growth Stocks Model Portfolio.<\/p>\n

Critical Details Found in Financial Filings by My Firm<\/strong>\u2019s Robo-Analyst Technology<\/strong><\/p>\n

Below are specifics on the adjustments I make based on Robo-Analyst findings in Matson\u2019s 10-K:<\/p>\n

Income Statement: I made $64 million in adjustments with a net effect of removing $8 million in non-operating expenses (1% of revenue).<\/p>\n

Balance Sheet: I made $623 million in adjustments to calculate invested capital with a net decrease of $312 million. The most notable adjustment was $72 million (2% of reported net assets) in asset write-downs.<\/p>\n

Valuation: I made $1.4 billion in adjustments, with a net decrease in shareholder value of $1.4 billion. One of the most notable adjustments to shareholder value was $646 million in net deferred tax liabilities. This adjustment represents 26% of Matson\u2019s market value.<\/p>\n

Disclosure: David Trainer, Kyle Guske II, and Italo Mendon\u00e7a receive no compensation to write about any specific stock, style, or theme.<\/em><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Recap from April\u2019s Picks On a price return basis, the Dividend Growth Stocks Model Portfolio (-2.3%) underperformed the S&P 500 (+0.4%) by 2.7% from April 27, 2023 through May 23, 2023. On a total return basis, the Model Portfolio (-2.1%) underperformed the S&P 500 (+0.4%) by 2.5% over the same time. The best performing stock […]<\/p>\n","protected":false},"author":1,"featured_media":23520,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-23519","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\nAnalyzing Matson\u2019s Dividend Growth Potential | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Recap from April\u2019s Picks On a price return basis, the Dividend Growth Stocks Model Portfolio (-2.3%) underperformed the S&P 500 (+0.4%) by 2.7% from\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=23519\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Analyzing Matson\u2019s Dividend Growth Potential | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"Recap from April\u2019s Picks On a price return basis, the Dividend Growth Stocks Model Portfolio (-2.3%) underperformed the S&P 500 (+0.4%) by 2.7% from\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=23519\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-06-16T16:46:36+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-06-16T16:46:38+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/06\/1686933997_0x0.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"675\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=23519#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=23519\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"Analyzing Matson\u2019s Dividend Growth Potential\",\"datePublished\":\"2023-06-16T16:46:36+00:00\",\"dateModified\":\"2023-06-16T16:46:38+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=23519\"},\"wordCount\":656,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"keywords\":[\"Featured\"],\"articleSection\":[\"Markets\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/ifintechworld.com\/?p=23519#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=23519\",\"url\":\"https:\/\/ifintechworld.com\/?p=23519\",\"name\":\"Analyzing Matson\u2019s Dividend Growth Potential | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-06-16T16:46:36+00:00\",\"dateModified\":\"2023-06-16T16:46:38+00:00\",\"description\":\"Recap from April\u2019s Picks On a price return basis, the Dividend Growth Stocks Model Portfolio (-2.3%) underperformed the S&P 500 (+0.4%) by 2.7% from\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=23519#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=23519\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=23519#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Analyzing Matson\u2019s Dividend Growth Potential\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ifintechworld.com\/#website\",\"url\":\"https:\/\/ifintechworld.com\/\",\"name\":\"Repay Down\",\"description\":\"Latest Personal Finance News, Tips and Updates\",\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ifintechworld.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/ifintechworld.com\/#organization\",\"name\":\"Repay Down\",\"url\":\"https:\/\/ifintechworld.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"width\":558,\"height\":90,\"caption\":\"Repay Down\"},\"image\":{\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/ifintechworld.com\"],\"url\":\"https:\/\/ifintechworld.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Analyzing Matson\u2019s Dividend Growth Potential | iFintechWorld","description":"Recap from April\u2019s Picks On a price return basis, the Dividend Growth Stocks Model Portfolio (-2.3%) underperformed the S&P 500 (+0.4%) by 2.7% from","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ifintechworld.com\/?p=23519","og_locale":"en_US","og_type":"article","og_title":"Analyzing Matson\u2019s Dividend Growth Potential | iFintechWorld","og_description":"Recap from April\u2019s Picks On a price return basis, the Dividend Growth Stocks Model Portfolio (-2.3%) underperformed the S&P 500 (+0.4%) by 2.7% from","og_url":"https:\/\/ifintechworld.com\/?p=23519","og_site_name":"iFintechWorld","article_published_time":"2023-06-16T16:46:36+00:00","article_modified_time":"2023-06-16T16:46:38+00:00","og_image":[{"width":1200,"height":675,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/06\/1686933997_0x0.jpg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=23519#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=23519"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"Analyzing Matson\u2019s Dividend Growth Potential","datePublished":"2023-06-16T16:46:36+00:00","dateModified":"2023-06-16T16:46:38+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=23519"},"wordCount":656,"commentCount":0,"publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"keywords":["Featured"],"articleSection":["Markets"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/ifintechworld.com\/?p=23519#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=23519","url":"https:\/\/ifintechworld.com\/?p=23519","name":"Analyzing Matson\u2019s Dividend Growth Potential | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-06-16T16:46:36+00:00","dateModified":"2023-06-16T16:46:38+00:00","description":"Recap from April\u2019s Picks On a price return basis, the Dividend Growth Stocks Model Portfolio (-2.3%) underperformed the S&P 500 (+0.4%) by 2.7% from","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=23519#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=23519"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=23519#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"Analyzing Matson\u2019s Dividend Growth Potential"}]},{"@type":"WebSite","@id":"https:\/\/ifintechworld.com\/#website","url":"https:\/\/ifintechworld.com\/","name":"Repay Down","description":"Latest Personal Finance News, Tips and Updates","publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ifintechworld.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ifintechworld.com\/#organization","name":"Repay Down","url":"https:\/\/ifintechworld.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","width":558,"height":90,"caption":"Repay Down"},"image":{"@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","caption":"News Room"},"sameAs":["https:\/\/ifintechworld.com"],"url":"https:\/\/ifintechworld.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/23519","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=23519"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/23519\/revisions"}],"predecessor-version":[{"id":23521,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/23519\/revisions\/23521"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/23520"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23519"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23519"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23519"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}