About the Editor

David Harrell is the editor of Morningstar DividendInvestor, a monthly newsletter that focuses on dividend income investment strategy. For illustration purposes, issues highlight activities pertaining to a Morningstar, Inc. portfolio invested in accordance with a current income and income growth from stocks strategy.

David served in several senior research and product development roles and was part of the editorial team that created and launched Morningstar.com. He was the co-inventor of Morningstar's first investment advice software. David joined Morningstar in 1994. He holds a bachelor's degree in biology from Skidmore College and a master's degree in biology from the University of Illinois at Springfield.

Our Portfolio Manager

George Metrou is an equity portfolio manager for Mornigstar Investment Management. Metrou joined the team as a portfolio manager in August 2018. Before joining Morningstar Investment Management, he was an equity portfolio manager with Perritt Capital, and as a portoflio manager with Perritt Capital Management. Prior to that he served as Director of Research and as an equity analyst at Perritt Capital, and as a portfolio manager with Windgate Wealth Management. He holds a Bachelor's degree in finance form DePaul University, and he also holds the Chartered Financial Analyst® designation.

 
Investment Strategy

Dividends are for everyone regardless of age. The outcome of owning dividend-yielding stocks is the key variable-higher-yielding stocks with safe payouts being less risky while affording investors who don't need current income the ability to reinvest/reallocate the capital.

The goal of the Dividend Select Portfolios is to earn annual returns of 8% - 10% over any three-to-five year rolling time horizon. We further seek to minimize risk, as defined by the probability of a permanent loss of capital. For our portfolio as a whole, this goal is composed of:

3% - 5% current yield
4% - 6% annual income growth

 
About Josh Editor's Photo
David Harrell
Editor, Morningstar DividendInvestor
David Harrell is the editor of Morningstar DividendInvestor, a monthly newsletter that focuses on dividend income investment strategy. For illustration purposes, issues highlight activities pertaining to a Morningstar, Inc. portfolio invested in accordance with a current income and income growth from stocks strategy.
Featured Posts
Production Improvements for Compass and Strong Wireless Numbers for Verizon -- The Week in Dividends 2019-01-11
DividendInvestorâ„  focuses on the activities of portfolios of Morningstar, Inc. that are invested in accordance with the Dividend Select strategy. These portfolios are managed by Morningstar Investment Management LLC, a registered investment adviser, who manages other client portfolios using these strategies.

From the DividendInvestor news file this week:

On Tuesday, Procter & Gamble PG declared a quarterly dividend that was unchanged from its previous payout.

Please see new analyst notes below from Morningstar Research Services for Compass Minerals CMP, Verizon VZ, and Wells Fargo WFC.

Best wishes,

David Harrell
Editor, Morningstar DividendInvestor



News and Research for Dividend Select Portfolio Holdings

Compass Minerals Announces Production Improvements at Goderich; Shares Remain Materially Undervalued
by Seth Goldstein, CFA | Morningstar Research Services LLC | 01-09-19

Compass Minerals announced 2018 fourth-quarter snow data and provided general guidance on fourth-quarter salt sales volumes. However, our key takeaway from the update was management's commentary that the company was able to improve production at the low-cost Goderich mine. This news is in line with our thesis that the company will be able to fully ramp up production at Goderich and implement the new continuous miners throughout the mine to restore profitability. While management only provided directional commentary, we are encouraged by the announcement and expect more details during the company's fourth-quarter earnings call that is scheduled for Feb. 12.

With our long-term outlook intact, we maintain our $81 per share fair value estimate for Compass Minerals. Our wide moat rating based on the company's cost advantaged salt production is also unchanged. At current prices around $44 per share, we see over 80% upside relative to our $81 per share fair value estimate.

We think the market is taking an overly pessimistic view of Compass' long-term profitability, likely stemming from the company's recent operational issues that have limited production at the Goderich mine due to the implementation of continuous mining equipment. We continue to liken this transition to starting up a new mine, where Compass faces a temporary learning curve while making the full transition to continuous mining. However, we ultimately expect the Goderich mine operation will be fully restored and forecast unit production expenses will fall nearly 10% by 2020 from 2017 levels.

Verizon Posts Strong Initial 4Q Wireless Numbers
by Michael Hodel, CFA | Morningstar Research Services LLC | 01-08-19

Speaking at an investor conference Jan. 8, Verizon disclosed that it added 1.2 million net new postpaid wireless customers during the fourth quarter, including 650,000 postpaid phone net additions with monthly postpaid phone customer churn of 0.82%. That phone figure is the strongest in four years, despite a continued gradual increase in the pace of customer defections seen throughout 2018. Verizon shares are up nearly 3% on this announcement; we don't plan to change our fair value estimate, leaving the stock roughly fairly valued. We continue to view Verizon as a narrow-moat firm thanks to the scale and strength of its wireless business.

The wireless industry has seen the pace of postpaid phone customer growth accelerate, a trend that Verizon Wireless CEO Ronan Dunne ascribed to increased engagement through things like wearable technology, migration from prepaid plans, and increasing penetration at both ends of the customer age spectrum. Offsetting this trend, however, both Comcast and Charter are now marketing their wireless services and are taking retail market share. Dunne indicated that Verizon is losing less than its fair share of customers to these entrants, who also use the Verizon network to serve their customers. We suspect Verizon's phone customer additions roughly matched T-Mobile's during the quarter, with Sprint and AT&T struggling to expand their respective customer bases.

Verizon also provided an update on its 5G trials, claiming that customers are receiving nearly 1 gigabit-per-second speeds (versus promised 300 megabits per second) using only 40% of the firm's available millimeter wave spectrum. While interesting, we're hesitant to draw any conclusions given the early stage of this effort. It will take time for the networks to fill with customers and truly be put to the test.

More Positives, Less Negatives Likely for Wells Fargo in 2019
by Eric Compton | Morningstar Research Services LLC | 01-09-19

Wells Fargo is one of our top banking picks entering 2019, as the bank is currently trading at one of the highest risk adjusted discounts to our fair value estimate among the U.S. money center and regional banks. We believe shares are worth $67, which is 13.5 times our 2019 earnings estimate and 2.1 times tangible book value as of September 2018.

Wells recently came to a settlement with the Attorneys General of all 50 states (as well as the District of Columbia) in regards to many of the already disclosed issues the bank is facing. This settlement covered the fake accounts sales practices, the unnecessary auto insurance issues, and the mortgage rate lock issues. The bank agreed to pay a total of $575 million to resolve the civil claims related to these. Wells had already accrued $400 million for these items, meaning an additional $175 million would be needed in its fourth-quarter earnings. We note that Wells had already been fined by regulators for these issues, therefore we would expect much, if not all of the liabilities resulting from these specific items to be closed.

Overall, we believe this is how 2019 will play out for Wells Fargo, as the bank settles outstanding items and puts much of the last three years in the rear view mirror. As the news cycle runs out of new negative items to report, the bank increasingly puts old issues behind it, and more normal levels of profitability return to the bank, we would not be surprised to see sentiment change over time. The next big item we expect an update on would be progress on getting the asset cap lifted.

Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and governed by the U.S. Securities and Exchange Commission. Analyst ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst ratings are based on Morningstar’s analysts’ current expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst ratings are not guarantees nor should they be viewed as an assessment of a stock's creditworthiness. Ratings, analysis, and other analyst thoughts are provided for informational purposes only; references to securities should not be considered an offer or solicitation to buy or sell the securities.

©2019 Morningstar, Inc. All rights reserved. The Morningstar name and logo are registered marks of Morningstar, Inc. The information contained in this document is the proprietary material of Morningstar, Inc. Reproduction, transcription, or other use, by any means, in whole or in part, without the prior written consent of Morningstar, Inc., is prohibited. All data presented is based on the most recent information available to Morningstar, Inc. as of the release date and may or may not be an accurate reflection of current data.  There is no assurance that the data will remain the same.

Disclosure:
The commentary, analysis, references to, and performance information contained within Morningstar® DividendInvestorâ„ , except where explicitly noted, reflects that of portfolios owned by Morningstar, Inc. that are invested in accordance with the Dividend Select strategy managed by Morningstar Investment Management LLC, a registered investment adviser and subsidiary of Morningstar, Inc. References to "Morningstar" refer to Morningstar, Inc.

Opinions expressed are as of the current date and are subject to change without notice. Morningstar, Inc. and Morningstar Investment Management LLC shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions or their use. This commentary is for informational purposes only and has not been tailored to suit any individual. 

The information, data, analyses, and opinions presented herein do not constitute investment advice, are provided as of the date written, are provided solely for informational purposes and therefore are not an offer to buy or sell a security. Please note that references to specific securities or other investment options within this piece should not be considered an offer (as defined by the Securities and Exchange Act) to purchase or sell that specific investment.

This commentary contains certain forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially and/or substantially from any future results, performance or achievements expressed or implied by those projected in the forward-looking statements for any reason.

Investments in securities are subject to investment risk, including possible loss of principal. Prices of securities may fluctuate from time to time and may even become valueless. Securities in this report are not FDIC-insured, may lose value, and are not guaranteed by a bank or other financial institution. Before making any investment decision, investors should read and consider all the relevant investment product information. Investors should seriously consider if the investment is suitable for them by referencing their own financial position, investment objectives, and risk profile before making any investment decision. There can be no assurance that any financial strategy will be successful.

Common stocks are typically subject to greater fluctuations in market value than other asset classes as a result of factors such as a company's business performance, investor perceptions, stock market trends and general economic conditions.

All Morningstar Stock Analyst Notes were published by Morningstar, Inc. The Week in Dividends contains all Analyst Notes that relate to holdings in Morningstar, Inc.'s Dividend Select Portfolio. Morningstar’s analysts are employed by Morningstar, Inc. or its subsidiaries. In the United States, that subsidiary is Morningstar Research Services LLC, which is registered with and governed by the U.S. Securities and Exchange Commission.

David Harrell may own stocks from the Dividend Select and Dividend Select Deferred portfolios in his personal accounts.
 
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