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Monthly Stock Special

The $20 Special is *Yum! Brands, Inc. (YUM).... (You must log-in as a subscriber to get this price. The non-subscirber reduced-price is $40.)

Comparison YUM (stock of the month) vs SP500 (by Vanguard SP500 Index Fund) in the last 10 years.

 

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Here is a capsule review of our featured stock, provided by Mario Medina.

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Company Information:

Created in May 30th, 1997 and based in Louisville, Kentucky, YUM! Brands Inc. (YUM) is one of the world's largest fast food restaurant companies, which develops, operates and franchises the licensed brands Taco Bell, KFC, Pizza Hut and WingStreet worldwide. As of February 21, 2017, it operated approximately 43,500 restaurants in 135 countries and territories. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in May 2002. Its current total market capitalization of $22.8 billion makes YUM a large cap stock (large capitalization) with a history of consistent revenues and earnings growth. It is considered a solid and well diversified business with wide economic moat and sustainable competitive advantage over rivals, which also enjoys a solid corporate culture. According to Yahoo! Finance, consensus estimates call for the company to earn about $2.72 per share the current year, and to go to net about $3.13 next year. YUM! Brands Inc. has paid dividends to investors since 2004, and has increased its payments for 12 consecutive years. During the past five years it has increased its dividends at an average rate of 10.2%, and its quarterly payment of $0.30 currently provides a yield of 2.70%.

The value of dividends reinvestment: A hypothetical investment in YUM! Brands has grown cumulatively (including dividends reinvested) 1,424.20% since September 1997. However, if you remove dividend reinvestment from the equation, the same hypothetical investment would have grown only 1,080.14% during the same period of time. The stock exhibits a healthy Dividend Payout Ratio (DPR is the proportion of earnings paid out as dividends to shareholders) of 46%, which means the company is paying out 46% of all its net income in dividends, and is retaining a large percentage of earnings to reinvest or grow the business. Its Price to Earnings ratio (a measure of valuation) of 25.8 is slightly below its industry average and according to Morningstar, the stock is trading 11.1% below its Fair Value Estimate, making it attractive for investors with a long-term investment horizon. Technically (from the chart’s perspective) YUM also looks attractive, trading 7.2% below its all-time high, while it is forming a long price consolidation pattern between $69 and $46 approximately, in which $46.4 is acting as a strong technical support level.

The actively managed no-load mutual funds T. Rowe Price Capital Appreciation (PRWCX) and T. Rowe Price Blue Chip Growth (TRBCX) are major shareholders of YUM, holding 0.83% and 0.62% of its shares respectively. The stock is also one of the 63 holdings of the mutual fund managed my Moneypaper Advisors, the MP 63 Fund (DRIPX). YUM’s main competitors in the world are McDonald's Corp. (MCD), Starbucks Corp. (SBUX) and Compass Group PLC ADR (CMPGY). Its dividend re-investment plan charges some fees for cash investing and dividend reinvesting ($2.50, plus 10 cents per share). To illustrate those fees: for example, a $100 investment at YUM’s current price would cost a fee of $2.65 or 2.65% of the investment), while a $500 investment would cost about $3.28 or 0.66% of the investment. To minimize the effect of such fees, you may want to invest a larger amount even if that means that you can invest less frequently. With the stock being fundamental and technically attractive, this company offers long-term investors the opportunity to own a leading business with a strong record of delivering shareholder returns and solid strategic execution.

 

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Mario Medina Bio:

Born in Cuba and graduated in Architecture from the University of Havana, Mario Medina is editor and writer of the weekly online investment newsletter El Boletín, and senior analyst for Julie Stav, Inc. Through seminars and conferences live and online, articles in his blog, videos and Podcasts, Mario teaches people inside and outside the United States. The point that differentiates Mario in his teachings, is the simplicity and softness of the language, teaching beginners, the same way he wanted to be educated when starting in the world of personal finances and investments.

Mario provides investment guidance in financial segments of Hispanic television and radio, and has had his own space on those topics at Univision Radio Network, also participating in Tu Dinero, Julie Stav’s financial shows. Analyzing the status of the market and its indexes, examining leading companies, sectors and industries, and evaluating the performance of Julie Stav’s Platinum List of Companies, his popular online Daily Market Report allows thousands of people from across the country to follow the situation of the financial world and get the essential information they need to make the best decisions about their own investments.

Today, Mario provides independent fundamental and technical analysis for the mutual fund MoneyPaper 63 (DRIPX), which is the only fund that focuses solely in companies that offer small investors Dividend Re-investment Plans. He is also a regular contributor to directinvesting.com.

Today, those who read the articles written by Mario Medina, or those who daily follow his Market Report, listen to his segments, watch his videos, or attend his seminars, could not imagine that a little over a decade ago its author knew nothing about investments or the stock market. It has been a long, arduous road for the young man newly arrived to the US with empty pockets, a suitcase full of dreams, and whose first savings came from collecting empty soda cans and recycling scrap yard. After discovering the world of finance through books and radio programs, and after years of study and sacrifice, Mario Medina now advises thousands of Hispanics on how and when to buy or sell in the stock market in order to obtain the best returns and minimize their losses. He himself is a successful shareholder in some of those same companies whose refuse he previously collected...

What was the secret that allowed Mario to develop those early, small investments? "I think the key is to save and invest on a regular basis, with clearly defined long-term, diversified goals," he says. "To do so, each person must determine his o her risk tolerance level ... I do not feel comfortable risking as much as other people, and in turn many risk more than me. It is essential to know how far one can get without trying to beat the stock market every day.”

Through his regular segments, articles and analysis, Mario wants to offer everyone his successful strategies so that anyone can make the most of their work, their savings and their investments, and realize their dreams of economic prosperity. Mario Medina’s own dream is to help those interested in managing their money by knowing the risks and investing directly in the very best, teaching them the necessary steps to succeed in the stock market and other investments, participating in it directly and without brokers, so they can manage their money more efficiently and get better returns without paying more fees.

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