Out Fox The $treet

Boeing has an order issue that most manufacturing firms would gladly accept. The massive backlog over rides any concerns regarding short-term order issues. The large capital returns suggest the stock remains undervalued. Any manufacturing firm lives off of orders so obsessing over monthly and quarterly numbers has some validity. A problem though occurs when investors don't view the big picture of the magnitude of the backlog. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

The New Dogs of the Dow had a solid Q1 gain that surpassed the benchmark Dow. The average stock in the Net Payout Yields based list had a yield of 9.2% to start Q2. Due to a large buyback, United Technologies overtook the lead with the highest yield at 13.1%. This article will focus on the quarterly returns and changes in the new "Dogs of the Dow" strategy originally introduced (see  The New Dogs Of The Dow - 2015 ) last January. The goal of the series is to highlight that the old theory of buying the Dow stocks with the highest dividend yields is outdated. The more modern version involves using the Net Payout Yield (NPY) that adds the net stock buyback yield to the dividend yield. This yield more accurately reflects the modern corporate structure that utilizes a large amount of stock buybacks. Read the full article on Seeking Alpha.  Disclosure: Long AAPL, CAT, IBM, TRV. Please read the disclaimer page for more details.

Delta Air Lines continues to tell anybody that will listen the purchase prices for used 777s.  Along with a downgrade, Boeing is down sharply on the news.  The recommendation is for investors to continue focusing on the order book for narrow-body planes and ignore the noise generated by a customer looking for cheaper planes.  In an interesting news twist, Asia's largest carrier agreed to purchase 110 Boeing (NYSE: BA ) airplanes, yet the market appeared more interested in the cost of one used plane. The news bits continued a spate over the last several months regarding a glut in the airplane market and specifically the wide-body jets. See my original research on the issue here . Read the full article on Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details. 

The New Dogs of the Dow had substantial Q3 losses similar to the benchmark Dow. The average stock in the Net Payout Yields based list has a yield of 9.1% to start Q4. Even after a small gain in Q3, Travelers continues to top the list with a 12.1% yield. This article will focus on the quarterly returns and changes in the new "Dogs of the Dow" strategy originally introduced (see The New Dogs Of The Dow - 2015 ) back in January. The goal of the series is to highlight that the old theory of buying the Dow stocks with the highest dividend yields is outdated. The more modern version involves using the Net Payout Yield (NPY) that adds the net stock buyback yield to the dividend yield. This yield more accurately reflects the modern corporate structure that utilizes a large amount of stock buybacks. Read the full article on Seeking Alpha. Disclosure: Long AAPL, CAT, IBM, TRV. Please review the disclosure page for more details....

Summary The New Dogs of the Dow had Q2 returns that exceeded the gains of the DJIA, but it failed to match the rebound of the Dogs of Dow theory. The average stock in the Net Payout Yields based list has a yield of 8.3% starting Q3. After a large loss in Q2, Travelers tops the list with a 12.3% yield.    This article will focus on the quarterly returns and changes in the new "Dogs of the Dow" strategy originally introduced (see The New Dogs Of The Dow - 2015 ) back in January. The goal of the series is to highlight that the old theory of buying the Dow stocks with the highest dividend yields is outdated. The more modern version involves using the Net Payout Yield (NPY) that adds the net stock buyback yield to the dividend yield. This yield more accurately reflects the modern corporate structure that utilizes a large amount of stock buybacks. Read the full article on Seeking Alpha .   Disclosure: Long AAPL, CAT, IBM, T...

In the business of buying, leasing, and eventually selling multimillion-dollar machines, the ability to buy and sell at the right time can be as crucial as leasing the machine for a profit during the holding period. In the case of AerCap Holdings ( NYSE: AER     ) , the management team has consistently done an excellent job of acquiring planes through alternative methods rather than paying high prices directly to airplane manufactures and selling the planes at profits before they become outdated and difficult to unload. Due to key mergers and acquisitions over the years, AerCap Holdings has built itself up to one of the largest airplane leasing firms in the world. The company currently owns or manages 368 aircraft with an average age of 5.3 years and a lease term of 6.6 years. Not only has management been successful at plane trading, but it also was successful in buying debt at a discount and repurchasing shares substantially below book value. Read the full ...

If you're looking for further signs of maturity in the airline industry, consider Delta Air Lines '   ( NYSE: DAL     )   plans to lower costs by $300 million a year via a mix of old and new planes. That savings might not seem significant to an airline with a revenue base of around $37 billion, but investors need to remember that Delta only has a market cap of $20 billion, and annual profits approaching $2 billion. Read the full article here . Disclaimer: Long LCC. Please review the disclaimer page for more details. 

Prior to the open on Tuesday, Tesla Motors (TSLA) announced that Q3 revenues would not meet analyst estimates. The company is having significant problems ramping production and obtaining supplies on time. Did you catch that part about issues with suppliers? Seriously? Production was half the forecast and only 300 vehicles in Q3, yet suppliers couldn't keep up. That clearly can't be a good sign, as these suppliers must typically deal with thousands if not millions of parts for other automakers. This is starting to remind me of the Dreamliner plane built by Boeing (BA) : an innovative product that took much longer to produce due to the complexities of a new design and a diverse supplier network. The only difference is that Boeing lacks major competition while also having the capital to withstand any setbacks. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Nothing like taking a financially strong sector combined with fears of cutbacks to provide for some exciting yields. With major government budget cutbacks expected in the US, the defense sector went through a few rough quarters in 2011. Investors feared the worse. At the end of the day though, the companies remain strong and according to a Bloomberg report, most of the top dividend yielding stocks in the Capital Goods sector belong to the defense sector. Read the full article at Seeking Alpha. Disclosure: Long LMT and RTN. Please read the disclaimer page for more details. 

Boesing (BA) announced today its first firm order for the new 737 MAX fuel-efficient, narrowbody plane, from Southwest Airlines (LUV). BA claims this is the largest order ever which apparently passes a few other recent orders that I thought had the same claims. This industry appears ripe with orders, but deliveries remain a different story. LUV ordered 208 narrowbody planes for $19B (list price not actual price). This includes an order for 150 MAX aircraft that won't even start deliveries until 2017 (or '18 or '19 if the historical delay pattern continues). BA is reporting commitments for 948 MAX planes that could climb to 1,500 by the end of next year. This truly has to be the most interesting industry where customers order hundreds of planes at a time for delivery in 5-10 years. Makes me wonder if the industry won't eventually face stiff competition from a Brazil, China, or Russia made model that is able to make planes in a more timely manner. Until then ai...

July was a negative month for the Net Payout Yields model on a relative basis. The model underperformed the S&P 500 by 0.36%, with a loss of 2.5% versus the 2.15% loss for the benchmark (Covestor calculations). On a three month basis, the model has outperformed nicely during a very weak period in the market. It outperformed the S&P 500 by 1.45%, with a loss of 3.78% versus the 5.23% loss for the benchmark (Covestor calculations).  Trades The model sold Boeing (BA) and bought Travelers (TRV) and Campbell Soup (CPB). As always, the moves are triggered by the decreases or increases in the Net Payout Yield of each stock with a bias towards limiting trades so stocks are not immediately removed or added based on a top 20 yielding list.  BA has a decent 2.7% dividend yield, but recently has eliminated buybacks. With normal yields in the model consistently adding up to greater than 10%, BA no longer fits into the requirements.  TRV has a solid 3.2% dividend y...

Wednesday morning, AMR Corp ( AMR ), the parent company of American Airlines,  announced  the greatly anticipated orders for 460 planes and options for 465 more. While the market focused on the shift of a US airline from a Boeing ( BA )-only focus to Airbus, everybody seems to have missed the announcement last week that American Airlines was going to sell/lease back up to 35 Boeing planes with AerCap Holdings ( AER ). Clearly it's justified to focus on not only the historical size of the order from American (some estimates are close to $40B) but also the shift in plane manufacturers. While the analysts call the order a split, the additional options clearly favor Airbus in a major way. If all the options are taken, Airbus will receive around 65% of the orders. Considering that fact, the media was generous to BA executives to only focus on a split of the orders instead of a major shift towards Airbus. Read the  full article at SeekingAlpha.com.  Disclosure: Long AE...

June was a good month for the Net Payout Yields model on a relative basis. The model outperformed the SP500 by 0.67% with a loss of 1.16% versus the 1.83% loss for the benchmark. Naturally on a absolute basis the model had a disappointing month, but it performed as expected by being less volatile than the benchmark and holding up better during the worse parts of the big drop mid month. The model remains fully invested with an average weight of only 2% cash for June. The goal of the model is to let the companies themselves buyback stock at lower to take advantage of any market weakness rather then trying to time the market. Trades Only one trade was made during the month. Wells Fargo (WFC) was sold as the stock failed to keep the Net Payout Yield at acceptable levels. The stock was replaced in July with Travelers (TRV) that has an extremely high NPY of around 20% given its consistent large stock buybacks. Top Performers Even considering the nearly 2% loss in the SP500 for June, ...

Boeing (BA) reported solid Q3 results and upped guidance. Unfortunately though Boeing has done nothing to improve its Net Payout Yield. The dividend yield has now slumped to 2.4% which isn't shabby but by no means impressive considering they lack a buyback component. For now, BA is a core holding of the Net Payout Yield Portfolio (coming to Covestor soon). Without a higher yield though, we'll likely trim the position on any advances in the stock price. Management did pay down $500M in debt during the quarter which is positive, but without any moves on the stock it suggests they are complacent with the current price. At a current price of $72, BA trades at roughly 17x the high end of the 2010 guidance of around $3.80 to $4 making the stock on the expensive side. Analysts place the 5 year growth rate around 10% so BA clearly trades expensive compared to growth potential as well. While the airplane industry is on the verge of a multi year cycle, BA management hasn't made an ...

Anybody just focusing on domestic US traffic would miss how the rest of the world is seeing explosive growth in airplane traffic. For airplane lessors it's mostly about international growth and with Boeing continuing to struggle to get their new plane out it just makes the planes owned by lessors like AerCap (AER) and Genesis Lease (GLS) more valuable. Below is a couple of examples of the explosive growth seen outside the US and in places other then China and India. LAN Airlines (IFL) is one of the leading airlines in Latin America with a dominant position in Chile and Peru plus operations in Argentina and Ecuador. They reported a huge 11.9% increase in system traffic for September. System passenger traffic for September increased 11.9% as capacity rose 9.3%. As a result, the Company's load factor increased 1.8 points to 78.8%. International passenger traffic accounted for approximately 71% of total passenger traffic. Domestic passenger traffic in Chile, Argentina, Peru and Ec...

Another day, another drubbing for Boeing ( BA ). BA is now down 47% from its 52 week high due to plane delays, machinist strike, and a weak overall market. All of this is good news for somebody wanting a high yielding stock. BA has been buying back stock at a rampant pace of late. Over the last 12 months, BA has bought back nearly $4B of stock with a current market cap of just over $42B. This gives BA a buyback yield of nearly 9%. Add on the 2.7% dividend and you get a net payout yield of nearly 12%. This yield is incredible considering the market position and financial strength that BA claims. It's possible the strike goes on longer than expected and causes huge financial disruptions to BA, or maybe the global growth story will continue to erode and plane order will be canceled and pushed out. Regardless, BA has the financial strength to outlast the issues and will continue to buyback stock at these lower levels and issue a nice dividend. The longer the stock remains this low, the...