Josh Kohn-Lindquist's avatar
$24.5m follower assets
10/10/10 Screener
I ran a screener for fun on my Dividends 500 portfolio, trying to find "undeniable" types of stocks for fighting the market's weirdness right now.

A stock needs to have three things to make it into Dividends 500:
  • be an S&P 500 member (mainly to keep the size of the portfolio under control for me)
  • an increasing dividend YoY
  • a payout ratio below 50%

Using this group of roughly 200 stocks, I added another filter for the following:
  • 10%+ revenue growth YoY -- both forward and trailing
  • 10%+ net income and free cash flow (FCF) margin
  • 10%+ return on equity (ROE) and return on invested capital (ROIC)

I chose to use net income margin and FCF margin to avoid getting pencil whipped by stocks boosting FCF through stock-based compensation. If a company's ROE was negative from share buybacks, I looked to ROIC to see if they qualified.

Here is the list of what remained:

It increased my interest in Hershey and Waste Management as steady-Eddie picks as they might be the safest on this list. I also lined up KLAC, ACN, MPWR, MSCI, and FDS for more research, as it feels like I keep seeing their names everywhere.

Did any of these stocks surprise you or stand out in any way?
Would a basket of these 10/10/10 stocks beat the S&P 500 over the next decade?
13 VotesPoll ends on: 09/27/22
Could Zelle replace Venmo and Cash App? How about Mastercard and Visa?
I'm noticing that both the political and investment arena of the US are getting concerned about the excess payment processing fees that $MA and $V have been taking advantage of for many years.

As Mastercard and Visa see their shares hit a 52-week low, Wall St. is expecting that antitrust scrutiny could hinder the pricing power that these payment processing companies have over merchants.

While some might think that $PYPL or $SQ could capitalize on the growing antitrust concerns with their payment processing devices, there are some things to think about.

First, how much does each firm charge merchants for transactions?

Square charges 2.6% + $0.10
PayPal charges from 1.9% to 3.5% and $0.05 to $0.49 depending on the PayPal product that the merchant is using.
Visa charges 1.15% + $0.05 to 2.4% + $0.10
Mastercard charges 1.15% + $0.05 to 2.50% + $0.10

Meanwhile, Zelle charges banks $0.45 to $0.90 per transaction. It's free for users in the meantime, and the network moves more money than Venom and Cash App combined. However, Zelle users are limited to sending up to $15,000 per month. Meanwhile, users of Venmo can send up to $60,000 per month, and users of Cash App can send up to $30,000 per month.

Zelle was made to replace the need for paper checks for doing transactions. Smaller service-oriented businesses have been using Zelle because of the lack of payment processing fees and instant settlement.

Sure, most businesses don't normally take checks. But, I do think that with the lack of fees and the resources that the big banks have, Zelle can be made to provide merchants with a payment processor that has lower fees. Many product-based businesses accept PayPal, Venmo, and Cash App. I wouldn't be surprised if they stop using those services and start using Zelle. Nearly all Americans have a bank account with the big banks, which means that they have access to Zelle.

If the banks decide to pass down the processing fees to the merchants, I do wonder how the flat payment processing fee system would work. Would they charge a flat $0.45 transaction fee as a way to make Zelle a more competitive payment processor?

Since interchange fees are high because the costs are made to cover the costs associated with accepting, processing and authorizing card transactions, by removing the third parties (i.e. Mastercard, Visa, PayPal, etc.), payment processing fees can be less. Since the Big Banks own Zelle, Zelle can replace those payment processors.

In the meantime, merchants will have to hope that government regulators can impose a cap on payment processing fees. And I wouldn't be surprised if the US chooses to replicate the EU's regulations on payment processing fees by imposing caps on fees.

Here are the sources of the payment processing fees:

Thanks for the interesting info on transaction fees and the angle for merchants. Do you follow $ADYEY? Where would you put them in the midst of all this and what implications might regulated caps on processing fees have for them?
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Visa and Mastercard bill nothingburger 🍔
Every now and then, there is a temporary scare about $V and $MA. This time it’s a proposed bill about credit card swipe fees. However, the bill has absolutely no chance of passing anytime soon, if ever.

Time to take advantage of Mr. Market and get a few shares while they are down.
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Steve Matt's avatar
$18.7m follower assets
1 of 6
My $AMT $SBUX $V non-trades
These aren't sales, just transfers from one Fidelity account to another. I still hold.
Love the clarification for the $SBUX "trade". I was getting ready to pick your brain on why you're selling lol. I hold $SBUX and will be for the long run. Solid company, palatable dividend.
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Could antitrust regulators go after $MA and $V
The Economist notes that America is home to the highest interchange fees of any major economy because of the duopoly between Mastercard and Visa.

When I look on the internet for articles about Mastercard and Visa antitrust issues, I've found many of them. These issues have been going on for years, and this is only the first time I've heard of these issues.

Mastercard can spend money all of the antitrust lobbying it wants, but in April of this year, a judge opened an antitrust case against $V for debit cards. And Mastercard is also a duopoly with Visa in regards to debit cards.

Investors should be cautious about "buying the dip" or "buying the channels" present in these credit card stocks because, under the Biden Administration, antitrust issues are becoming a bigger concern. According to the American Bar Association, President Biden has stepped up antitrust enforcement. Essentially, he has reversed a 40-year trend of reduced antitrust enforcement.

Actions like these are making $META investors nervous. And while the media puts Meta in the spotlight, the media seems quiet about Visa and Mastercard despite reporting stories on them.

My Portfolio: 08/02/22 -- A Battle for 2nd
With $SHW (of all stocks) bombing after earnings and $PINS (of all stocks) jumping, my 2-4 spots are jostling around.

Pinterest, $TDOC, and $ME scare me allocation-wise, but not enough to sell any yet.

  1. $KNSL - Firing on all cylinders, 30%+, profitable growth in insurance is bananas.
  2. $PINS - All about ARPU and shoppable content -- doing what it needs to for now.
  3. $ABNB - Reporting earnings tonight -- curious to see any new product ideas/tweaks.
  4. $SHW - Dreaded supply chain issues -- will be safe long term.
  5. $BTC.X - Just holding 🤷‍♂️
  6. $U - This may sound dramatic, but the $IS deal could be make-or-break -- need more time.
  7. $NDAQ - SaaS and ARR operations continue expanding -- AntiFin crime investment for me.
  8. $V - Steady as ever, as dull of dividend growth play as I had hoped so far.
  9. $TTD - Looking pretty interesting at today's prices, especially with the $DIS deal.
  10. $ZTS - Another boring pick seeming to execute well -- animal wellness play.
  11. $TDOC - Oh boy. Not adding to the position currently. Not dead, but not worth any new money. The thesis is intact for the most part but not nearly as bright.
  12. $ME - Probably over-allocated to this one, but still an exciting idea when looking decades out. It needs to manage its cash burn better, though. What will happen post $GSK?
Which allocation scares you the most?
18 VotesPoll ended on: 08/05/22
I hold $U also and it definitely isn't too dramatic to say the $IS acquisition will only bolster or break the thesis. If management can't pull this off, it'll be major dilution with nothing to show for it. A massive setback and a loss of trust in the executives in my book. However, a successful integration could cement Unity's place as an industry-leader.
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Leandro's avatar
$131.5m follower assets
$V buybacks
Ideally, you would like to see a stock buyback chart that looks opposite to the price chart, not exactly the same...
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classic mgmt commentary when stock is trading at relative highs: “we’re accelerating our buyback because we think our stock is trading below its fair value”
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