DividendoIogy @PratsAnne

HOW TO LIVE OFF DIVIDENDS: The Truthful Math Behind the Ultimate Form of Financial Freedom: (And why many will never achieve it) A Step by Step Guide (Thread) 👇

Despite outperforming in 2026, REITs are still trading at one of their lowest valuations in decades. The vast majority of investors are not positioned to take advantage of this historic opportunity. 🧵Here's a 'Mini Masterclass' on how to take advantage:

The majority of retail investors still have no idea what to look for when it comes to dividend sustainability, and this is evident when looking at comments surrounding $PEP. This ultimately stems from not understanding capital allocation. As a reminder, management generally has five options for allocating free cash flow: 1. Reinvest in the existing business 2. Complete mergers and acquisitions 3. Pay down debt 4. Repurchase shares 5. Pay dividends In other words, if a stock has a free cash flow payout ratio of 100%, then it’s using all of its capital to pay out dividends, leaving no capital to reinvest, buyback shares, or pay down debt. So how has Pepsi’s FCF payout ratio evolved over the last few years? (see pic) Pepsi is using all of it’s free cash flow to payout dividends. There’s a few obvious issues with this. For one, the company completed last year a nearly $2B acquisition of the Poppi brand. The only way this type of move could have been made was through a weakening balance sheet, since the company could not use free cash flow to make this move. Secondly, the company recently issued their 2026 guidance. Here’s what they said to expect: 1. Organic revenue to increase between 2 and 4 percent 2. A free cash flow conversion ratio of at least 80 percent 3. Total cash returns to shareholders of approximately $8.9 billion, comprised of dividends of $7.9 billion and share repurchases of $1.0 billion. Let’s dissect this a bit further. Revenue growth is not likely to be above the rate of inflation, and will most likely not come in at 4%, which is the rate they just increased their dividend. This lack of revenue growth can be made up for if margins are expanding, but Pepsi has guided towards a free cash flow conversion ratio of 80%. This is down from 93% the previous year. So revenue is stagnating, while margins are declining. Despite this, they are paying out $7.9 billion in dividends in 2026, despite the fact free cash flow will very likely not cover this. This type of capital allocation is simply not sustainable at current levels. Pepsi’s balance sheet will continue to suffer as they take on more debt to fund their capital allocation priorities. This is a very similar road that 3M went down. This doesn’t mean dividend cut in 2026, or even in the next few years. It does mean if something doesn’t change, the company will continue to get fundamentally weaker, which over time leads to a dividend cut.

Dividendology @dividendology

3 weeks ago

$PEP Pepsi hit another new 52 week low yesterday- And is trading right at their 5 year low as well. This is a capital allocation nightmare. The dividend is at risk over the next 3 to 5 years if things don't change dramatically.

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Reminder: Over diversification can harm your long term results. When you're overly diversified, you end up putting money into your 50th, or 100th best idea- Rather than concentrating that money on your top investment choice. Research tells us that beyond around 30 holdings, adding more holdings to your portfolio does very little in terms of diversification.

This is funny. What if you invested in the S&P 500 every time CNBC had a "Markets in Turmoil" special? Well... your average return after one year would be 40%, with a 100% success rate.

SpaceX is one of the most undervalued companies in the world, in my opinion. If you truly understand what the company is building, red days stop feeling like something to fear and start looking like opportunities. That’s why so few people become SpaceXnaires. Everyone loves talking about investing after the stock has already gone up. And in hindsight, buying looks easy. But almost nobody talks about what it actually feels like when prices are falling, headlines are negative, and everyone around you is questioning the investment. The biggest returns often come from having the conviction to buy when others are afraid, NOT when everyone is celebrating new highs. People naturally feel more comfortable buying after prices have already risen, even though lower prices can represent better value if the long-term fundamentals remain intact. Of course, a lower stock price doesn’t automatically mean something is a bargain. Every investment carries risk, and you should always do your own research. But if your long-term thesis hasn’t changed, temporary weakness is an opportunity rather than a reason to panic. That’s how true long-term wealth is built… by staying patient and taking advantage when you’re in the eye of the storm.

🚨 TARIFFS ARE COMING BACK AGAIN And this could be a disaster for the markets. Today, it was reported that President Trump is preparing a new round of tariffs on several countries this week. For some countries it'll be at 10%, while for others, it could be much higher. But why is this bad? 1) April crash No one can forget the April tariffs crash. $10 Trillion was wiped out from the US stock market in a week. Bitcoin dropped almost 30% in a few months, while ETH dropped to $1,400. Almost every global stock index dropped 15%-20% in a few days, and it was an absolute bloodbath. Now, the market is more prepared this time, but even a fraction of that impact will be massive. 2) Inflation Tariffs mean businesses will raise costs, and it'll be passed down to consumers. This will result in high inflation, which is already a major concern due to rising oil prices. High inflation means a hawkish Fed, and the market can't afford it. 3) More uncertainty During April 2025, tariffs pushed the global uncertainty to its highest level in 30+ years. With a US-Iran war, yen crisis, bond crisis, credit market crisis, and AI bubble already present, tariffs could even push the global economy into a recession similar to 2008. I know all this doesn't sound good, but if tariffs really hit the market at a big scale, be prepared for some real downside volatility.

Katie Porter says she’s done with politics. Perhaps more accurate to say politics is done with her! She actually challenged the status quo - so the corrupt machine fought back and installed its puppet Becerra. Now it’s a clear choice for California: real change or more of the same cost, corruption, failure and incompetence.

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