Group 1: Market Overview - Market uncertainty is high due to economic and geopolitical issues, with the S&P 500 index falling around 8% since the start of the year, having previously dropped by approximately 15% [1] - Consumer staples stocks have generally risen a couple of percentage points on average, but specific companies like PepsiCo have seen declines [1][2] Group 2: PepsiCo's Performance - PepsiCo's stock is down 7% this year and over 25% from its peak in 2023, facing challenges such as slowed revenue growth and investor perception issues [4][5] - The company is experiencing a slowdown in its salty snack business and is affected by a societal shift towards healthier eating habits [5] Group 3: Future Outlook - PepsiCo's guidance for 2025 includes low-single-digit organic sales growth and mid-single-digit core earnings-per-share growth, along with a 5% increase in dividends, marking the 53rd increase for the company [7] - The stock's dividend yield has risen to around 3.8%, indicating that it may be undervalued compared to historical levels, even higher than during the Great Recession [8][10] Group 4: Valuation Metrics - Traditional valuation metrics show that PepsiCo's price-to-sales, price-to-earnings, and price-to-book value ratios are all below their five-year averages, suggesting the stock is currently cheap [10] - The company is actively using acquisitions to reshape its portfolio, laying the groundwork for a potential rebound despite current challenges [11]

Core Viewpoint - Altria remains an attractive investment for income investors due to its long history of dividend increases and its current high dividend yield of 7% [1][14] Company Strategy - Altria has faced challenges over the past decade due to declining smoking rates and strategic missteps, including a $12 billion investment in Juul and a failed investment in Cronos Group [5] - The company has shifted focus to smoke-free products, selling the rights to market Iqos back to Philip Morris International and investing in Njoy, which has received FDA marketing authorization for its pod-based e-vapor product [6][8] - Altria's next-gen portfolio includes on!, an oral nicotine pouch, and a new heated tobacco product called Ploom, developed in partnership with JT Group [7] Market Performance - Njoy's consumables saw a 15.3% increase to 12.8 million units, and device shipments rose 22.2% to 1.1 million, with retail market share nearly doubling to 6.4% [8] - Despite Njoy's growth, cigarettes still account for the majority of Altria's revenue, with volume sales declining from 76.4 million in 2023 to 68.6 million in 2024, while smokeable products represented 88% of revenue in 2024 [9] Future Goals - Altria aims for a mid-single digits adjusted earnings per share (EPS) compound annual growth rate (CAGR) off $4.84 in 2022, with adjusted EPS rising 3.4% to $5.12 in 2024, resulting in a 2.9% CAGR over the last two years [10] - The company plans to increase its dividend by mid-single digits annually, following a 4.1% increase in 2024, and targets a debt-to-EBITDA ratio of 2, currently at 2.1 [11] - Altria expects to maintain an adjusted operating margin of at least 60% through 2028, although it has struggled to meet growth targets and has adjusted its expectations for Njoy's cash flow contributions [12] Investment Outlook - Altria's stock trades at a price-to-earnings ratio of 12, with a 7% dividend yield, indicating potential for success even if not all 2028 goals are met [13] - In the current economic climate, Altria is positioned to potentially outperform the S&P 500, benefiting from its status in the consumer staples sector and the consistent demand for its products [14] - Overall, despite declining cigarette consumption, Altria is expected to be in a better position three years from now [15]

Core Viewpoint - Walmart remains a strong investment opportunity due to its consistent growth, resilient margins, and commitment to returning value to shareholders, despite macroeconomic challenges [1]. Group 1: Growth Metrics - Walmart's comparable-store sales have consistently increased over the past decade, driven by store renovations, private label brands, competitive pricing, and enhanced e-commerce capabilities [3]. - The company expects net sales growth of 3% to 4% on a constant-currency basis for fiscal 2026 [6]. - Walmart's total revenue growth is projected to be 6% for fiscal 2024 and 5.1% for fiscal 2025 [5]. Group 2: Store Expansion - The total number of Walmart stores worldwide decreased from 11,501 at the end of fiscal 2020 to 10,593 at the end of fiscal 2022, primarily due to overseas divestments [7]. - By the end of fiscal 2025, Walmart had expanded its physical locations to 10,711, indicating a stable pace of expansion [7]. Group 3: Financial Resilience - Walmart's gross and operating margins have shown resilience, recovering in the second half of 2023 and into 2024 after being squeezed by inflation [8]. - The company is well-positioned to manage the impact of tariffs, leveraging its scale to negotiate better prices and potentially passing costs onto consumers if necessary [10]. Group 4: Shareholder Returns - Walmart has a forward dividend yield of 1% and has raised its dividend for 52 consecutive years, indicating strong capacity for future hikes [11]. - The company has repurchased 6% of its outstanding shares over the past five years, demonstrating a commitment to returning free cash flow to investors [12]. Group 5: Valuation - Analysts expect Walmart's revenue to grow at a compound annual rate of 4% from fiscal 2025 to fiscal 2028, with EPS increasing at a compound annual rate of 11% [13]. - Walmart's forward price-to-earnings ratio of 36 is considered justified given its resilience in the market, especially compared to Costco's ratio of 54 [14].

Federal Realty (FRT 0.15%) stands alone among real estate investment trusts (REITs) as a Dividend King. This highly elite group of companies has increased their dividends for at least 50 years. Add in a well-above-market dividend yield of 4.9%, and income investors should be very interested in this high-yield REIT.But the real story is how Federal Realty managed the feat of becoming a Dividend King. Here's one key aspect of the company's approach you need to understand before you buy it.What does Federal Re ...