Portfolio Update
The FiveTwenty portfolio received no dividends in the past week.
| Past Week Dividend | $170.94 |
| Current Quarter Dividend (Q2 2023) | $253.53 |
| LifeTime Dividend | $10,427.11 |
| Estimated Annual Dividend | $8,842.06 |
The capital allocation for the weeks of 04/09/2023 to 04/15/2023 and 04/16/2023 to 04/22/2023 will be used to add to our position in Sonoco Products Company (NYSE: SON). This week is a double capital allocation week as we did not make any investments last week.
SON – Position Update
Since our last check-in on SON in week 5 of 2023, the company reported Q4 and FY 2022 earnings on 02/08/2023. In addition, the share price increased 0.5% from $60.26 to $60.55 during the period.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 40 years | 40 years | |
| Yield | 3.24% | 3.19% | 2.99% |
| Payout Ratio | 30.25%1 | 31.42%2 | |
| P/E | 9.341 | 9.862 |
1 computed using adjusted EPS of $6.48 as of Q4 2022
2 computed using adjusted EPS of $6.11 as of Q3 2022
FY 2022 earnings report
Did SON’s latest earnings report raise any warning flags?
For FY 2022, SON saw a significant increase in revenue, base net income and base EPS over FY 2021. The increase was primarily driven by the Metal Packaging acquisition. Another positive for the company was seeing base net income grow at a higher rate than revenue and base EPS in turn grow faster than base net income. Overall, revenue grew 30%, base net income increased 63%, and base EPS were 65% higher than for FY 2021.
| Revenue (in millions) | Base Net Income (in millions) | Base EPS . | |
| 2021 | $5,590 | $393 | $3.93 |
| 2022 | $7,251 | $639 | $6.48 |
| % Change | 30% | 63% | 65% |
Additional noteworthy financial facts:
- The company paid a total of $187 million in dividends in 2022, up from $179 million in 2021.
Looking ahead, SON provided base EPS guidance of $5.70 to $5.90 and free cash flow of $550 million to $650 million for FY 2023.
Thesis
Why are we adding to our position in SON?
The continued strong financial performance for 2022 has confirmed the benefits of the Metal Packaging acquisition to the companies top and bottom line. The boost to the base EPS has pushed the payout ratio to 30% and thereby made the dividend more sustainable and provided headroom for future increases.
We are adding to our position in SON with the expectation that the company will continue to increase its dividend payout for the foreseeable future.