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Brit Jones
2021-11-10
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3 Ultra-High-Yield Dividend Stocks With 42% to 50% Upside, According to Wall Street
Brit Jones
2021-11-10
Ok
GE Breakup Spurs Questions About Conglomerate Model’s Future
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Historically low lending rates and an accommodative Federal Reserve have paved the way for fast-paced companies to borrow cheaply in order to hire, acquire, and innovate.</p>\n<p>But look out over many decades and you'll find that dividend stocks have been the superior play. A report from J.P. Morgan Asset Management, a division of <b>JPMorgan Chase</b>, found the average annual return for companies that initiated and grew their payouts between 1972 and 2012 completely trounced the average annual return of companies that didn't pay a dividend over the same four-decade span (9.5% vs. 1.6%).</p>\n<p>While all eyes remain on growth stocks, some analysts on Wall Street foresee big upside for a handful of ultra-high-yield dividend stocks (i.e., companies arbitrarily defined as having yields of 7% or higher). Based on the high-water price targets from analysts, the following three ultra-high-yield stocks could rise 42% to as much as 50% over the next 12 months.</p>\n<h2>Enterprise Products Partners: 7.97% yield with 42% implied upside</h2>\n<p>First up is oil stock <b>Enterprise Products Partners</b> (NYSE:EPD), which <a href=\"https://laohu8.com/S/AONE.U\">one</a> Wall Street investment bank believes could reach $32 a share over the coming year. If this lofty price target proves accurate, investors would net 42% share price upside while also collecting an 8% yield.</p>\n<p>Although investors might be leery of putting their money to work in oil stocks given the historic demand drawdown witnessed in 2020 for crude oil, Enterprise Products doesn't come with these same concerns. That's because it's a midstream operator, with approximately 50,000 miles of pipeline, 14 billion cubic feet of natural gas storage, and 19 natural gas processing facilities. Whereas drillers are directly affected by the vacillations in crude oil and natural gas prices, midstream operators are usually insulated by the structure of their contracts. This is the case with Enterprise Products Partners.</p>\n<p>On the flipside, higher fossil fuel prices certainly won't hurt. With crude oil recently hitting a seven-year high, drillers are incented to boost production. Since Enterprise Products Partners regularly allots capital for infrastructure projects, higher crude oil and natural gas prices should lead to steady cash flow expansion.</p>\n<p>It's also worth mentioning how sturdy this payout has become. Even during the worst of the pandemic in 2020, the company's distribution coverage ratio never fell below 1.6 (anything below 1 would suggest an unsustainable payout). The distribution coverage ratio describes the amount of distributable cash flow for the company relative to the cash paid to shareholders.</p>\n<p>Enterprise Products Partners is riding a 22-year streak of increasing its base annual distribution and I see no reason why it won't hit 23 years in 2022.</p>\n<h2>AT&T: 8.29% yield with 47% implied upside</h2>\n<p>Another ultra-high-yield dividend stock with serious upside potential is telecom giant <b>AT&T </b>(NYSE:T). The highest price target on Wall Street of $37 suggests that this telco stalwart could appreciate up to 47% in the coming 12 months. Take note that while AT&T is currently yielding 8.3%, this payout is expected to decline to closer to 4.5% to 5% in 2022 following the spinoff of WarnerMedia into a separate entity.</p>\n<p>Arguably the biggest catalyst for AT&T is this expected combination of WarnerMedia with <b>Discovery</b> (NASDAQ:DISCA)(NASDAQ:DISCK) in the upcoming year. The new media entity, known as WarnerMedia-Discovery, will be better positioned to compete in a rapidly growing but competitive streaming landscape. In particular, original content and sporting events should help differentiate the new media entity from its key rivals. WarnerMedia-Discovery also expects to recognize at least $3 billion in annual cost synergies.</p>\n<p>As of September, this pro forma combination had a little over 85 million streaming subscribers. That's less than half of <b>Netflix</b> and it trails <b>Walt Disney</b>'s Disney+ streaming service. But according to current Discovery CEO David Zaslav, who'll be taking the helm at WarnerMedia-Discovery, hitting 400 million global streaming subscribers isn't out of the question.</p>\n<p>Beyond just gaining access to what should be a top-notch streaming company, AT&T should benefit from the ongoing rollout of 5G wireless infrastructure. It's been a decade since wireless download speeds were meaningfully improved, which means the upgrade to 5G should encourage a multiyear consumer and enterprise device upgrade cycle. Since data is what drives the bulk of AT&T's wireless margins, the company is well-positioned for sustainable organic growth through mid-decade.</p>\n<h2>Altria Group: 7.96% yield with 50% implied upside</h2>\n<p>But the crème de la crème of upside opportunity on this list is none other U.S. tobacco stock <b>Altria Group</b> (NYSE:MO). With a high-water price target on Wall Street of $68, the implication is shares of this 8%-yielding company could head higher by 50% over the next year.</p>\n<p>Altria, the company behind the premium Marlboro brand of cigarettes, has been challenged for decades by declining adult smoking rates in the United States. As the dangers of long-term tobacco use have come to light, the percentage of adults smoking tobacco cigarettes has declined from by two-thirds since the mid-1960s.</p>\n<p>However, this decline in adult smokers hasn't stopped the company from growing. One reason for that is Altria's superb pricing power. Tobacco contains nicotine, which is an addictive chemical. This addictive quality has allowed Altria to pass along steep price hikes, especially for its Marlboro brand, which more than outweigh any decline in cigarette shipment volumes.</p>\n<p>The company is also actively looking at new revenue channels that'll leave it less reliant on tobacco cigarettes. An example would be Altria's $1.8 billion equity investment in Canadian licensed cannabis producer <b>Cronos Group</b> (NASDAQ:CRON), which closed in March 2019. If and when the U.S. federal government legalizes marijuana, Cronos would be free to enter the U.S. market. The expectation is Altria will work with Cronos to develop, market, and distribute cannabis vape products, and perhaps other high-margin derivatives.</p>\n<p>It's worth pointing out that Altria owns a stake in vaping company Juul, as well.</p>\n<p>Though its days as a high-growth company are long gone, Altria continues to deliver for its shareholders. While 50% upside in 12 months is probably asking a bit much, long-term investors could certainly grow their wealth with Altria Group.</p>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>3 Ultra-High-Yield Dividend Stocks With 42% to 50% Upside, According to Wall Street</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n3 Ultra-High-Yield Dividend Stocks With 42% to 50% Upside, According to Wall Street\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-10 22:05 GMT+8 <a href=https://www.fool.com/investing/2021/11/10/3-ultra-high-yield-dividend-stocks-42-to-50-upside/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Since the Great Recession ended more than 12 years ago, growth stocks have been the talk of Wall Street. Historically low lending rates and an accommodative Federal Reserve have paved the way for fast...</p>\n\n<a href=\"https://www.fool.com/investing/2021/11/10/3-ultra-high-yield-dividend-stocks-42-to-50-upside/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"MO":"奥驰亚","T":"美国电话电报","EPD":"Enterprise Products Partners L.P"},"source_url":"https://www.fool.com/investing/2021/11/10/3-ultra-high-yield-dividend-stocks-42-to-50-upside/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2182036772","content_text":"Since the Great Recession ended more than 12 years ago, growth stocks have been the talk of Wall Street. Historically low lending rates and an accommodative Federal Reserve have paved the way for fast-paced companies to borrow cheaply in order to hire, acquire, and innovate.\nBut look out over many decades and you'll find that dividend stocks have been the superior play. A report from J.P. Morgan Asset Management, a division of JPMorgan Chase, found the average annual return for companies that initiated and grew their payouts between 1972 and 2012 completely trounced the average annual return of companies that didn't pay a dividend over the same four-decade span (9.5% vs. 1.6%).\nWhile all eyes remain on growth stocks, some analysts on Wall Street foresee big upside for a handful of ultra-high-yield dividend stocks (i.e., companies arbitrarily defined as having yields of 7% or higher). Based on the high-water price targets from analysts, the following three ultra-high-yield stocks could rise 42% to as much as 50% over the next 12 months.\nEnterprise Products Partners: 7.97% yield with 42% implied upside\nFirst up is oil stock Enterprise Products Partners (NYSE:EPD), which one Wall Street investment bank believes could reach $32 a share over the coming year. If this lofty price target proves accurate, investors would net 42% share price upside while also collecting an 8% yield.\nAlthough investors might be leery of putting their money to work in oil stocks given the historic demand drawdown witnessed in 2020 for crude oil, Enterprise Products doesn't come with these same concerns. That's because it's a midstream operator, with approximately 50,000 miles of pipeline, 14 billion cubic feet of natural gas storage, and 19 natural gas processing facilities. Whereas drillers are directly affected by the vacillations in crude oil and natural gas prices, midstream operators are usually insulated by the structure of their contracts. This is the case with Enterprise Products Partners.\nOn the flipside, higher fossil fuel prices certainly won't hurt. With crude oil recently hitting a seven-year high, drillers are incented to boost production. Since Enterprise Products Partners regularly allots capital for infrastructure projects, higher crude oil and natural gas prices should lead to steady cash flow expansion.\nIt's also worth mentioning how sturdy this payout has become. Even during the worst of the pandemic in 2020, the company's distribution coverage ratio never fell below 1.6 (anything below 1 would suggest an unsustainable payout). The distribution coverage ratio describes the amount of distributable cash flow for the company relative to the cash paid to shareholders.\nEnterprise Products Partners is riding a 22-year streak of increasing its base annual distribution and I see no reason why it won't hit 23 years in 2022.\nAT&T: 8.29% yield with 47% implied upside\nAnother ultra-high-yield dividend stock with serious upside potential is telecom giant AT&T (NYSE:T). The highest price target on Wall Street of $37 suggests that this telco stalwart could appreciate up to 47% in the coming 12 months. Take note that while AT&T is currently yielding 8.3%, this payout is expected to decline to closer to 4.5% to 5% in 2022 following the spinoff of WarnerMedia into a separate entity.\nArguably the biggest catalyst for AT&T is this expected combination of WarnerMedia with Discovery (NASDAQ:DISCA)(NASDAQ:DISCK) in the upcoming year. The new media entity, known as WarnerMedia-Discovery, will be better positioned to compete in a rapidly growing but competitive streaming landscape. In particular, original content and sporting events should help differentiate the new media entity from its key rivals. WarnerMedia-Discovery also expects to recognize at least $3 billion in annual cost synergies.\nAs of September, this pro forma combination had a little over 85 million streaming subscribers. That's less than half of Netflix and it trails Walt Disney's Disney+ streaming service. But according to current Discovery CEO David Zaslav, who'll be taking the helm at WarnerMedia-Discovery, hitting 400 million global streaming subscribers isn't out of the question.\nBeyond just gaining access to what should be a top-notch streaming company, AT&T should benefit from the ongoing rollout of 5G wireless infrastructure. It's been a decade since wireless download speeds were meaningfully improved, which means the upgrade to 5G should encourage a multiyear consumer and enterprise device upgrade cycle. Since data is what drives the bulk of AT&T's wireless margins, the company is well-positioned for sustainable organic growth through mid-decade.\nAltria Group: 7.96% yield with 50% implied upside\nBut the crème de la crème of upside opportunity on this list is none other U.S. tobacco stock Altria Group (NYSE:MO). With a high-water price target on Wall Street of $68, the implication is shares of this 8%-yielding company could head higher by 50% over the next year.\nAltria, the company behind the premium Marlboro brand of cigarettes, has been challenged for decades by declining adult smoking rates in the United States. As the dangers of long-term tobacco use have come to light, the percentage of adults smoking tobacco cigarettes has declined from by two-thirds since the mid-1960s.\nHowever, this decline in adult smokers hasn't stopped the company from growing. One reason for that is Altria's superb pricing power. Tobacco contains nicotine, which is an addictive chemical. This addictive quality has allowed Altria to pass along steep price hikes, especially for its Marlboro brand, which more than outweigh any decline in cigarette shipment volumes.\nThe company is also actively looking at new revenue channels that'll leave it less reliant on tobacco cigarettes. An example would be Altria's $1.8 billion equity investment in Canadian licensed cannabis producer Cronos Group (NASDAQ:CRON), which closed in March 2019. If and when the U.S. federal government legalizes marijuana, Cronos would be free to enter the U.S. market. The expectation is Altria will work with Cronos to develop, market, and distribute cannabis vape products, and perhaps other high-margin derivatives.\nIt's worth pointing out that Altria owns a stake in vaping company Juul, as well.\nThough its days as a high-growth company are long gone, Altria continues to deliver for its shareholders. While 50% upside in 12 months is probably asking a bit much, long-term investors could certainly grow their wealth with Altria Group.","news_type":1},"isVote":1,"tweetType":1,"viewCount":459,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":847711023,"gmtCreate":1636553768136,"gmtModify":1636556046910,"author":{"id":"4099654327872700","authorId":"4099654327872700","name":"Brit Jones","avatar":"https://static.tigerbbs.com/3c198a660893eabda86d883a3f261f72","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4099654327872700","authorIdStr":"4099654327872700"},"themes":[],"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/847711023","repostId":"1115157487","repostType":4,"repost":{"id":"1115157487","pubTimestamp":1636553544,"share":"https://www.laohu8.com/m/news/1115157487?lang=&edition=full","pubTime":"2021-11-10 22:12","market":"us","language":"en","title":"GE Breakup Spurs Questions About Conglomerate Model’s Future","url":"https://stock-news.laohu8.com/highlight/detail?id=1115157487","media":"Bloomberg","summary":"(Bloomberg) -- General Electric Co.’s breakup raises the question of how many remaining conglomerate","content":"<p>(Bloomberg) -- General Electric Co.’s breakup raises the question of how many remaining conglomerates will be able to avoid the same fate.</p>\n<p>GE, an iconic business built over decades by executives such as Jack Welch, is set to be dismantled in Chief Executive Officer Larry Culp’s most dramatic move. The debate over the conglomerate structure casts a spotlight on businesses such as Warren Buffett’s Berkshire Hathaway Inc., which has spent years arguing why its particular brand of conglomerate works.</p>\n<p>Conglomerates, once considered a way to bring multiple companies together to reap the benefits of synergies, size and breadth, have fallen out of favor. Buffett himself has conceded that conglomerates have “earned their terrible reputation” over the years, and GE’s Culp said Tuesday that focus is more beneficial than the often “illusory” benefit of synergies. The days of the traditional industrial conglomerate could be numbered even as technology behemoths increasingly adopt a somewhat similar complex model.</p>\n<p>“I don’t know how many fundamentally industrial companies are going to continue to use this particular kind of structure,” said Kathryn Rudie Harrigan, Columbia Business School’s Henry R. Kravis professor of business leadership. “Because it sort of begs the question of what, if anything, is added by putting them all in the same corporate family.”</p>\n<p>Over the past five years, investors have been less enthusiastic about some conglomerates than the broader market. GE, notably, has lost 51% in that timespan, while Berkshire has risen 90%, holding company Loews Corp. has gained 34% and industrial and consumer-goods giant 3M Co. has increased just 6.4%. The S&P 500, meanwhile, has soared 117%.</p>\n<p>Some breakups have benefited the remaining businesses. Famously, Culp’s alma mater, Danaher Corp., has split off businesses in recent years. Its stock has outperformed the broader market over the past five years, climbing 273%.</p>\n<p>“We believe the pendulum is still swinging towards the ‘urge to demerge’ trend,” RBC Capital Markets’ Deane Dray said in a note to clients Tuesday. “GE’s announcement today could embolden the boards of several other multi-industry companies to move ahead on more aggressive portfolio simplification moves, including Emerson, Roper Technologies and 3M.”</p>\n<p>GE rose 2.7% Tuesday after the breakup plans were announced. Its shares gained 29% this year through Tuesday.</p>\n<p>Some conglomerate heads have staunchly defended their companies’ complex setups. Buffett wrote in an annual letter earlier this year that conglomerates have received a bad reputation because they’ve overpaid for mediocre businesses, with some businesses even using “imaginative” accounting maneuvers. Still, Berkshire’s 91-year-old CEO argued that his Omaha, Nebraska-based business differs from the “prototype” conglomerate, partly because it controls some businesses and owns non-controlling stakes in others.</p>\n<p>Loews CEO James Tisch, who has called his company -- which owns hotels, an insurer and even some energy operations -- “unabashedly a conglomerate,” has argued that he thinks the business can create the most value by being in multiple industries.</p>\n<p>Berkshire, for its part, has been somewhat insulated from activist calls for a breakup partly because Buffett remains at the helm. But he disclosed earlier this year that his successor would likely be a key deputy, Greg Abel, if and when he steps down -- a reminder to investors that he’ll one day have to pass the reins. Part of the key to Berkshire’s ability to remain a conglomerate has been its decentralized management style, said David Kass of the University of Maryland.</p>\n<p>“The managers at Berkshire have almost complete independence in running their businesses. They don’t have to go through the red tape of corporate headquarters as GE has and most companies do,” said Kass, a professor of finance at the university’s Robert H. Smith School of Business. “As long as Buffett is there, the structure will stay the same. And after Warren Buffett is no longer there, it will probably be Greg Abel running the company, they’ve already pledged to maintain the culture.”</p>\n<p>Many companies have naturally drifted toward wanting to integrate operations as they seek to gain scale and efficiency, said Omar Aguilar, a senior managing director and co-leader of the enterprise transformation practice at FTI Consulting Inc. But one of the keys to a conglomerate’s survival is whether they can keep increasing their earnings, he said. “If they continue growing,” Aguilar said, “I think they’re OK.”</p>\n<p>Even if some industrial conglomerates continue to break up, there’s also a trend of tech giants expanding into various but distinct industries, and thus developing a conglomerate-like model, said Harrigan of Columbia University. Amazon.com Inc., for example, has moved beyond e-commerce into health care and grocery stores. The company benefits because it’s often targeting the same customer in its variety of businesses, she said.</p>\n<p>“For internet-enabled companies, those that are successful will probably end up becoming very complex by diversification,” she said. “They can get terrific customer-based synergies.”</p>","source":"lsy1612507957220","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>GE Breakup Spurs Questions About Conglomerate Model’s Future</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGE Breakup Spurs Questions About Conglomerate Model’s Future\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-10 22:12 GMT+8 <a href=https://finance.yahoo.com/news/ge-breakup-raises-questions-future-222816177.html><strong>Bloomberg</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>(Bloomberg) -- General Electric Co.’s breakup raises the question of how many remaining conglomerates will be able to avoid the same fate.\nGE, an iconic business built over decades by executives such ...</p>\n\n<a href=\"https://finance.yahoo.com/news/ge-breakup-raises-questions-future-222816177.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{},"source_url":"https://finance.yahoo.com/news/ge-breakup-raises-questions-future-222816177.html","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1115157487","content_text":"(Bloomberg) -- General Electric Co.’s breakup raises the question of how many remaining conglomerates will be able to avoid the same fate.\nGE, an iconic business built over decades by executives such as Jack Welch, is set to be dismantled in Chief Executive Officer Larry Culp’s most dramatic move. The debate over the conglomerate structure casts a spotlight on businesses such as Warren Buffett’s Berkshire Hathaway Inc., which has spent years arguing why its particular brand of conglomerate works.\nConglomerates, once considered a way to bring multiple companies together to reap the benefits of synergies, size and breadth, have fallen out of favor. Buffett himself has conceded that conglomerates have “earned their terrible reputation” over the years, and GE’s Culp said Tuesday that focus is more beneficial than the often “illusory” benefit of synergies. The days of the traditional industrial conglomerate could be numbered even as technology behemoths increasingly adopt a somewhat similar complex model.\n“I don’t know how many fundamentally industrial companies are going to continue to use this particular kind of structure,” said Kathryn Rudie Harrigan, Columbia Business School’s Henry R. Kravis professor of business leadership. “Because it sort of begs the question of what, if anything, is added by putting them all in the same corporate family.”\nOver the past five years, investors have been less enthusiastic about some conglomerates than the broader market. GE, notably, has lost 51% in that timespan, while Berkshire has risen 90%, holding company Loews Corp. has gained 34% and industrial and consumer-goods giant 3M Co. has increased just 6.4%. The S&P 500, meanwhile, has soared 117%.\nSome breakups have benefited the remaining businesses. Famously, Culp’s alma mater, Danaher Corp., has split off businesses in recent years. Its stock has outperformed the broader market over the past five years, climbing 273%.\n“We believe the pendulum is still swinging towards the ‘urge to demerge’ trend,” RBC Capital Markets’ Deane Dray said in a note to clients Tuesday. “GE’s announcement today could embolden the boards of several other multi-industry companies to move ahead on more aggressive portfolio simplification moves, including Emerson, Roper Technologies and 3M.”\nGE rose 2.7% Tuesday after the breakup plans were announced. Its shares gained 29% this year through Tuesday.\nSome conglomerate heads have staunchly defended their companies’ complex setups. Buffett wrote in an annual letter earlier this year that conglomerates have received a bad reputation because they’ve overpaid for mediocre businesses, with some businesses even using “imaginative” accounting maneuvers. Still, Berkshire’s 91-year-old CEO argued that his Omaha, Nebraska-based business differs from the “prototype” conglomerate, partly because it controls some businesses and owns non-controlling stakes in others.\nLoews CEO James Tisch, who has called his company -- which owns hotels, an insurer and even some energy operations -- “unabashedly a conglomerate,” has argued that he thinks the business can create the most value by being in multiple industries.\nBerkshire, for its part, has been somewhat insulated from activist calls for a breakup partly because Buffett remains at the helm. But he disclosed earlier this year that his successor would likely be a key deputy, Greg Abel, if and when he steps down -- a reminder to investors that he’ll one day have to pass the reins. Part of the key to Berkshire’s ability to remain a conglomerate has been its decentralized management style, said David Kass of the University of Maryland.\n“The managers at Berkshire have almost complete independence in running their businesses. They don’t have to go through the red tape of corporate headquarters as GE has and most companies do,” said Kass, a professor of finance at the university’s Robert H. Smith School of Business. “As long as Buffett is there, the structure will stay the same. And after Warren Buffett is no longer there, it will probably be Greg Abel running the company, they’ve already pledged to maintain the culture.”\nMany companies have naturally drifted toward wanting to integrate operations as they seek to gain scale and efficiency, said Omar Aguilar, a senior managing director and co-leader of the enterprise transformation practice at FTI Consulting Inc. But one of the keys to a conglomerate’s survival is whether they can keep increasing their earnings, he said. “If they continue growing,” Aguilar said, “I think they’re OK.”\nEven if some industrial conglomerates continue to break up, there’s also a trend of tech giants expanding into various but distinct industries, and thus developing a conglomerate-like model, said Harrigan of Columbia University. Amazon.com Inc., for example, has moved beyond e-commerce into health care and grocery stores. The company benefits because it’s often targeting the same customer in its variety of businesses, she said.\n“For internet-enabled companies, those that are successful will probably end up becoming very complex by diversification,” she said. “They can get terrific customer-based synergies.”","news_type":1},"isVote":1,"tweetType":1,"viewCount":421,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0}],"hots":[{"id":847718743,"gmtCreate":1636553860446,"gmtModify":1636556052374,"author":{"id":"4099654327872700","authorId":"4099654327872700","name":"Brit Jones","avatar":"https://static.tigerbbs.com/3c198a660893eabda86d883a3f261f72","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4099654327872700","authorIdStr":"4099654327872700"},"themes":[],"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/847718743","repostId":"2182036772","repostType":4,"isVote":1,"tweetType":1,"viewCount":459,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":847711023,"gmtCreate":1636553768136,"gmtModify":1636556046910,"author":{"id":"4099654327872700","authorId":"4099654327872700","name":"Brit Jones","avatar":"https://static.tigerbbs.com/3c198a660893eabda86d883a3f261f72","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4099654327872700","authorIdStr":"4099654327872700"},"themes":[],"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/847711023","repostId":"1115157487","repostType":4,"isVote":1,"tweetType":1,"viewCount":421,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0}],"lives":[]}
