As the market recovered last year, I put the brakes on new investments and started building up more cash in case the market takes a breather. I sold some losing positions while accumulating dividends and cash transfers. As a result, my cash position was more than his 5% of the portfolio's value.
As the market calms heading into 2024, we intend to tap into some of that cash reserve in the coming weeks. chevron (NYSE:CVX), Kenview (NYSE:KVUE)and VICI properties (NYSE: VICI) is one of the first three stocks I plan to buy. This is why it's at the top of my purchase list.
fuel for growth
Chevron is coming off a down year. The oil giant's stock price has fallen about 20% in the past 12 months, weighed down by oil prices and pending acquisitions of rival companies. hess. However, due to this decline, Chevron trades at an attractive dividend yield (4.2%) and value (given the growth it can achieve even with lower oil prices).
Chevron is focused on increasing investment returns by focusing capital expenditures on the best return opportunities. This means that even in a downturn scenario where oil prices average $60 per barrel through 2027 (and fall to $50 in the second half of the forecast), oil companies will have a healthy cash flow in the coming years. It will be possible to expand at pace. Even in that case, Chevron could still achieve more than 10% annual free cash flow growth over the next few years. This supports the company's view that it can continue to increase dividends while implementing share buybacks at the lower end of its annual target of $10 billion to $20 billion.
Meanwhile, with oil prices averaging $70 a barrel (around current prices), Chevron has significant upside potential if it completes its big Hess acquisition. These factors should help Chevron more than double its free cash flow by 2027 and extend its production growth outlook into the 2030s. That would give the oil giant more cash to return to shareholders and invest in growing its low-carbon energy businesses. It also has the potential to be the driving force behind strong total returns.
healthy future
Kenview's Stock prices slumped after IPO and separation from healthcare giant johnson & johnson. The stock has fallen more than 20% since going public, and the dividend yield has increased to 3.8%. This is mainly due to changes in shareholders.
Otherwise, the company is off to a good start as an independent, publicly traded company. Sales for the third quarter amounted to $3.9 billion, an increase of 3.3% year-on-year. Profitability was also strong. The company expects sales to increase 4-4.5% this year.
Kenvue is generating healthy cash flow, which has allowed it to start paying dividends and begin a share buyback program. The company's growth in sales, profits, and cash flow should allow it to follow in the footsteps of its former parent and steadily increase its dividend in the future. This growth should drive the stock price higher in the future and help Kenvue achieve healthy total returns.
Fast-growing REITs
VICI Properties stock has fallen about 7% over the past year. This decline caused real estate investment trusts (REIT) The dividend yield is up to 5.4%.
Although the stock price is down, the experiential real estate owner is growing rapidly. Third-quarter revenue increased 20% year-over-year, but adjusted funds from operations (FFO) rose nearly 11% per share. VICI benefits from rising rental rates and an ever-expanding portfolio. VICI has become significantly cheaper over the past year, as its stock price has fallen while its earnings have increased.
REITs continue to make new investments to fuel growth. In the past few months, VICI has acquired 38 bowling entertainment centers from the United States. bowlero For $432.9 million Sale-leaseback transaction, agreed to provide up to $212 million in construction financing to the Kalahari for an indoor water park resort development, and expanded its investment with Chelsea Piers and Cabot to nearly $550 million. These investments will increase returns in the future, giving the REIT more cash flow to increase dividends. This combination of growth and income should be able to generate impressive total returns over the next few years.
Looking to capitalize on strong total return potential
Chevron, Kenview, and VICI Properties have underperformed in recent months. However, it should generate attractive and increasing dividend income in the future, and as earnings grow and the stock price recovers, it has the potential to generate high total returns over the long term. These look like very attractive places to start deploying my cash reserves.
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Matthew DiLallo has held positions at Chevron, Johnson & Johnson, Kenvue, and Vici Properties. The Motley Fool has a position in and recommends Kenvue. The Motley Fool recommends Chevron, Johnson & Johnson, and Vici Properties, and recommends the following options: His long January 2026 $13 call on Kenvue. The Motley Fool has a disclosure policy.
I'm Putting My Cash Stockpile to Work on These 3 Stocks was originally published by The Motley Fool
