I am thrilled to review a popular dividend stock, one that I believe could be a dividend yield trap. (At least, that's my standpoint as a "hold forever" dividend growth investor.) I'm talking about L Brands (ticker LB), the company behind Victoria's Secret and Bath and Body Works. Get ready for a really fun dividend stock analysis video.
I start out with the reason everyone is looking at this stock pick right now. It's down 66% and is yielding 7.32% (on a starting yield basis).
Next, I go through my personal Pink bag. You'll get to find out what I have inside, including some really fun surprises. This part of the video sets the context, the background, for my dividend stock analysis.
It's now time to discuss the history of this company. Learn about Victoria's Secret and the high level challenges they are facing. Learn about Bath and Body works and why I'm not excited about the company. Learn about The Limited (the namesake of the company), and how it was sold and later went bankrupt (that's not good).
Overall, fashion is a fickle category. While I enjoy shopping and wearing the latest fashions, I avoid investing in this sector. Trends change too quickly. Today's investing video shares a few such examples including Under Armour and Abercrombie & Fitch.
Of course, today's stock analysis would not be complete without a deep dive into L Brands' numbers. I discuss the following:
* Their attractive PE Ratio (although not attractive enough, in my opinion)
* Their 7.32% starting dividend yield (not bad at all)
* Their high payout ratio and why the dividend may be a "dividend yield trap". I am concerned their dividend may be cut at some point.
* Their increasing stream of revenue (at the expense of profits)
* Their gross profit, operating profit, and net income
* Long term debt
* Number of stores
* So much more!
Overall, at a PE ratio of 7 or 8, this stock may make sense if I were a turnaround investor. That said, I am not. I am a long term dividend growth investor, so it just does not fit my investing persona.
That said, I do wish anyone who chooses to invest in L Brands all the success in the world!
Following are some other videos I mention in my L Brands stock analysis.
Here's why I love Procter & Gamble (PG) in 2018:
I recently reached 10,000 subscribers! Learn more in this video about my position in Unilever (UL):
Dividend investors need to be strong. Learn here even more about my position in Unilever (UL):
In the world of investing, I secretly care about capital appreciation. Here is why:
McDonald's is my #3 favorite stock pick of all time. Learn why:
I'm a huge fan of Starbucks, another restaurant (retail) stock:
Disclosure: I am long Procter & Gamble (PG), Unilever (UL), McDonald's (MCD), and Starbucks (SBUX). I own all of these stocks in my stock portfolio.
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