Dividends Don't (Usually) Lie

Investment Strategy - Geraldine Weiss advocated for investing in stocks with a dividend yield above their historical average, based on the belief that a temporarily depressed stock price can lead to higher dividend yields [1] - The strategy is contrarian, focusing on companies that may be undervalued due to short-term issues [1] Stock Recommendations - U.S. Bancorp: A major regional bank with a current dividend yield of 4.3%, which is significantly above its historical average. The stock price has decreased from a high of $63 to around $45 due to the Federal Reserve's interest rate hikes, but the outlook for 2025 and 2026 is positive as rates are expected to stabilize [2][3] - Magna International: A leading auto parts manufacturer with a dividend yield of 4.4%, nearly double its 10-year median, despite a 28% drop in stock price this year. Revenue and earnings have increased, indicating potential resilience [4][5] - Walgreens Boots Alliance: Currently has a high dividend yield of 13.6%, but the stock has plummeted from over $96 to just above $9. The company faces significant challenges, including high debt levels and industry competition, yet the low price-to-earnings ratio suggests potential for recovery [5][6] - UGI Corp.: A utility company with a dividend yield of 6.0%, more than double its typical yield over the past decade. The company distributes natural gas and propane, and has a strong market presence in the U.S. and abroad [7][8] - Greif Inc.: Specializes in industrial packaging with a dividend yield of 4.5%, above its 10-year median of 3.3%. The company has shown strong profitability with a return on equity of 15% or better in five of the last six years [9] Market Context - The banking industry is expected to recover as the Federal Reserve shifts its monetary policy, which may benefit banks like U.S. Bancorp in the coming years [3] - The auto parts sector, represented by Magna International, is facing stock price declines despite operational growth, indicating potential market mispricing [5] - The drugstore industry, exemplified by Walgreens, is grappling with reimbursement issues and competition, but the current stock valuation may present a buying opportunity [6] - Utility companies like UGI are benefiting from stable demand for essential services, reflected in their robust dividend yields [8]