8 Gene Therapy and Genetics Startups to Watch in 2018

The FDA just approved the first drug, Luxterna, to cure a rare form of genetic blindness by changing DNA. It’s not the first gene therapy ever approved (it’s third), but it is the first time the FDA has ever approved an injected drug that changes the inherited DNA of a person’s cells to effect a cure.

FDA Commissioner Scott Gottlieb recently remarked, regarding gene therapy, “we’re at the early stages of a transformation in medical treatment as a consequence of this new technology. And the benefits are likely to accelerate quickly.”

Earlier this year was the first time a hospital biohacked a patient to try to cure a genetic disease. While it takes time for gene therapies to be tested, trialed, and possibly approved by the FDA, genetics startups like Spark, AveXis, Caribou Biosciences, Editas, and Audentes have been on the road a while. MIT estimates over 40 new therapies would be approved by FDA in the near future.

New breed of startup tackles genetics 

new breed of software company is developing for the genetics industry. Just this year, over 50 U.S. genetics and gene therapy startups raised at least $1 million to support genetics-based treatments, including speeding trails, improving accuracy of tests, and providing better platforms. Collectively, this new kind of startup can help drive down the cost of gene therapy discovery for patients.

Here are some of the startups to watch in 2018 that back discoveries in genetics and gene therapy.

Synthego, founded by former SpaceX engineers, aims to be the ‘AutoCad of gene editing.’ This month, it just released its first gene knock out kit, an application it has been developing with major research institutions like Salk Institute and St. Judes. 

“A constant challenge for our research is trying to reduce the number of clones we need to screen to find a desired targeted modification. In our tests, the Gene Knockout Kit gave us greater than 80 percent knock-out rates for seven targets,” shares Shondra Miller, Ph.D., Director, Center for Advanced Genome Engineering at St. Jude Children’s Research Hospital, on Synthego’s web site. The company offers researchers a money-back guarantee you’ll get 50 percent or better editing in any human cell type for research use.

Paul Dabrowski, CEO and co-founder of Synthego, shared with me in email that, “It’s possible to imagine a day when gene therapies are safe, effective, easy and affordable for anyone who needs them. Right now, the first CRISPR gene therapies are in development, but they are not built on a ‘standard stack’ and require a lot of custom work for each indication – these therapies will be coming into the clinic and hopefully get approved the coming couple years, and after that there could be significantly more investment into standard tools.”

Edico, Backed by investors like Dell, Qualcomm and others, San Diego-based Edico is the backend for bioinformatics. Their DRAGEN data platform offers a dedicated processing environment tuned to the massive data analysis needed for gene research. According to the company, “DNA sequencing technology is advancing at an even more rapid pace than the cell phone revolution. By increasing the speed and accuracy for NGS data analysis like whole genome sequencing (WGS), our computing platform makes it easier to discover links between DNA sequence variations and human disease.”

Trace Genomics, founded in 2015 by Diane Wu and Poornima Parameswaran in San Francisco, has been discussed as the 23&Me of dirt. The agtech startup has raised $4 million in one round to test farm soil for its microbiome. An initial screening cost of only $199 allows farmers to have their soil samples analyzed by Trace, which applies machine learning to uncover not just what’s in there, but what it means for crop yield and productivity.

Paradigm Diagnostics of Pheonix, AZ offers a gene-specific cancer test that helps physicians pinpoint the best cancer therapies for their patients based on DNA analysis. It just raised a $7 million Series B.

There are a number of software startups focused on improving cancer treatment with better analysis, like early stage CureMatch, based in San Diego. “Nothing could be more important than precisely identifying DNA code alterations that drive the cancers’ growth and use that information to decide on treatment plan,” Dr. Stephane Richard, CEO, shared with me in email.

Celmatix. Based in New York, Celmatix just earned $4.5 million dollar grant from the New York Economic Development Council for expanding in Manhattan. The company has developed a software-driven testing platform that helps families and physicians make fertility choices faster and more accurately for individuals. “Women can now make potentially life-defining decisions about how to proactively plan for the family they want to build and be more efficient in overcoming fertility difficulties they are experiencing using better, more personal, information than age,” founder Piraye Beim shared earlier this year in TechCrunch.

Genoox, an Israeli startup now based in Palo Alto, is a cloud research platform for sifting massive medical trial data quickly and accurately. Their website says, “Simplify complex sequencing data and make impactful discoveries using the most advanced genetic analysis tools and applications.”

Insilico Medicine, originally a Latvian startup now based in Baltimore, develops custom AI learning platforms that uncover insights based on biology. Their latest product is Chemistry.AI.

23&Me. No list of major gene therapy movers would be complete without 23&Me. At one time blocked by the FDA, 23&Me is now a smash hit with both consumers and pharma companies. Its kit was one of the top 10 sellers on Amazon’s Prime Day this year. Plus, its treasure trove of DNA sample data from millions of customers is just the kind of testing data many of the next generation of gene therapies need.

Founder Anne Wojcicki recently expressed her sense of hope in the future of genetics to the New York Times, “Genetics is like your cholesterol test. So your cholesterol test is going to tell you if you have high cholesterol, which is a risk factor for heart disease. But it’s not saying you’re going to die immediately from heart disease or even die at all from heart disease. It’s just saying you have a risk factor. And so genetics is similar. It’s saying you have a risk factor. So the beauty to me of genetics is, it’s always a story of hope.”

Time for Tech Firms to Take Responsibility for the Havoc They Wrought in 2017

?As one of the earliest, and first, female investors in Twitter, I had great hopes for its potential to improve human connectedness and relationships. Today, it’s become clear it’s done the opposite—by becoming a thunderously divisive tool weaponized by the leader of the free world.



Susan Wu (@sw) is an entrepreneur, engineer, and angel investor. Susan is cofounder of a new educational movement focused on empowering children to thrive in the world of the future. She is also part of the founding team of Project Include.

Consider other harm caused by today’s major technology companies: The immense power wielded by Facebook in the 2016 presidential election and its complicity in stoking genocidal violence against the Rohingya people of Myanmar. The pervasive ethical shortcomings surrounding Uber’s business practices, and Airbnb’s sometimes devastating influence on neighborhoods. Not to mention revelations about workplace harassment and discrimination that occur in many corners of Silicon Valley (and beyond).

Our industry hardly needs more evidence that what constitutes success in the digital age urgently needs to be redefined.

Technology has recently played a positive role as well, with the long-awaited revelations of long-standing abuse by men amplified by #metoo, and in galvanizing a movement around longstanding racial inequities with #blacklivesmatter.

It’s crystal clear that Silicon Valley’s chief executives are no longer merely startup founders, product creators, and business executives. They’re societal leaders too, oligarchs shaping the very nature of our identities, communications, and relationships.

In a world where software and algorithms run most every part of our lives—where Google and Facebook control close to 70 percent of all digital advertising, and smartphone penetration is nearing 80 percent—creating innovative software and launching indispensable apps is no longer enough.

As basic social contracts across nearly every aspect of Americans’ lives are being dismantled by a voracious, so-called free market system and gluttonous political administration, citizens each have an even more urgent need to acknowledge our responsibility to one another. Today, racking up a stratospheric market valuation without significant consideration of the product or company’s broader societal impact is reckless and irresponsible.

Urgently, innovators must consider the massive ripple effects of their creations as part of their imperative. Being an innovation leader isn’t just about delivering quarterly shareholder results or hitting product launch dates. Genuine innovation isn’t just about making technological advances, but also about reimagining and understanding structural issues underlying society.

The tech industry can either design for and build positive externalities, or we can inflict many negative ones—job displacement, fracturing of neighborhoods, addictive behaviors, compounding isolation, fortifying tribalism, and widening income equality, to name a few.

As a veteran angel investor, engineer, and technology entrepreneur, I worked to popularize and commercialize the World Wide Web 20 years ago. The hope then was to revolutionize power structures, increase access to opportunity, and construct a level playing field for all.   The tomorrow I hoped for has not yet arrived: one grounded in engaged empathy and equality, where humanity and technology are synthesized and integrated in a new force, one that empowers people to thrive as whole human beings.

Achieving this requires a commitment to the belief that true progress and discovery is only possible by addressing the fundamental human needs of many, not just those fortunate to have a voice and a presence at the table. Though stratospheric income inequality may insulate the most privileged from the real-world impact of many of their decisions, there are some global crises that are inescapable, like climate change.

Harnessing the perspectives of women, people of color, and underrepresented communities, including the 80 percent of the world who lives on less than $10 a day, would offer a diversity of lived experiences that could propel genuine, structural innovation this coming decade. Imagine the types of platforms, products, and inventions that can be created when we expand the pool of entrepreneurs to welcome entirely new viewpoints.

Without thoughtful consideration of how technology interacts with structural and systemic issues in society, would-be innovators are inadvertently rehashing history, by moving around the same pieces on the same game board over and over.

Look, for instance, at the most likely probability that men hold well over 90 percent of the asset value of today’s techno-darling bitcoin, the latest example of merely shifting power from one group of privileged men to another.

Perhaps it’s time for an updated version of Maslow’s hierarchy of needs, one that underscores what’s essential not just for individuals to flourish, but for the greater good of society. Startups and management executives universally invoke this theory as an accepted canon for framing the human problems they’re trying to solve.

The problem is that Maslow’s framework pertains to individual, not societal, well-being. The reality is that individual needs cannot be met without the social cohesion of belonging, connectedness, and symbiotic networks. A revised design focused on a thriving civilization would have at its root empathy and ethics, and acknowledge that if inequality continues to grow at its current pace, societal well-being becomes impossible to achieve.

The very idea of what it means to be human is changing—and we who are leaders in technology are aiding and abetting that change. Let’s acknowledge and embrace the magnitude of that power—and our responsibility to put it to good use.

We must never forget that the innovations of today set the standards for the future: how we learn, socialize, enjoy, work, shop, mate, and navigate this tiny rock we call planet Earth. Great leaders in innovation understand that they’re continually earning the right to be leaders, effectively representing the needs of all communities, and empowering all of humanity to live ever better lives.

WIRED Opinion publishes pieces written by outside contributors and represents a wide range of viewpoints. Read more opinions here.

Edward Snowden’s New App Turns A Smartphone Into a Security System

Edward Snowden, who blew the whistle on NSA surveillance of U.S. citizens, knows a thing or two about spying. He’s now released an app, Haven, that makes it easier to defend yourself against the most aggressive kinds.

Haven, now in public beta, turns any Android smartphone into a sensitive security system. It’s primarily intended to be installed on a secondary phone — say, last year’s model — which then takes photos and records sound of any activity in a room where it’s placed. Haven will then send alerts of any intrusion to a user’s primary phone over encrypted channels.

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The announcement for the app says it’s designed “for investigative journalists, human rights defenders,” and others who might be targeted by powerful enemies. According to The Verge, Snowden was encouraged to develop the app by a lawyer who fought to bring down Chadian dictator Hissene Habre.

One commonly cited use case for Haven is protecting laptops holding sensitive information, which can be relatively easily compromised if someone gains physical access. Snowden, who lives in Russia because he faces espionage charges in the United States, has adopted extensive personal security measures himself, and reportedly doesn’t even carry a smartphone anymore.

Even A Cloudy Crystal Ball Comes Into Focus Twice A Year

Subscribers to “Retirement: One Dividend At A Time” got an early, in-depth look at this material via free instant text message trade alert and email alert.

Users of crystal balls are usually concerned with the ability to foretell the future. “Will I marry?” “Will I grow old?” “Will I be rich?” Most of us would admit having interest in the first two questions. All of us, as investors, would certainly have great interest in the third.

It is with this in mind, as an income investor, that I concern myself with discovering historical patterns that can be used in conjunction with important metrics like free cash flow, earnings growth, and especially dividend growth. When interpreted correctly, many ingredients can be combined in a way that will lead us to investments that help bring us closer to our goals, to reach retirement with a continuing stream of growing income that outstrips inflation.

It was just a few days ago that I postulated that our core holding, AT&T (T), was on the cusp of raising its dividend, by another penny per quarter. This, I said, would bring the annual dividend payment up from $1.96 to $2.00 per share.

Photo source

I readily admit it: This fortune teller is much easier on the eyes than my old puss. However, even my rusty crystal ball is on the money sometimes.

AT&T Declares An Increased Dividend

On Friday, December 15th, AT&T declared a $0.50/share quarterly dividend, which is a 2% increase from the prior dividend of $0.49.

Forward yield 5.24%.

Payable Feb. 1; for shareholders of record Jan. 10; ex-div Jan. 9.

34 Consecutive Years of Dividend Increases Reflects Strong Cash Flows

Not many companies can boast of such a long period of increasing their dividends to shareholders. A company that increases its dividend for 25 consecutive years is referred to as a dividend aristocrat. AT&T has superseded this designation by nine years, to date.

The board of directors of AT&T Inc., doing what it’s done for 34 consecutive years, approved yet another in a long series of increases in the company’s quarterly dividend.

The annual dividend will in fact increase from $1.96 to $2.00 per share.

Randall Stephenson, chairman and CEO, said:

Our strong cash flows and outlook for the business allow us to raise our dividend for the 34th consecutive year. We’re committed to returning value to our shareholders, and we’re pleased to deliver yet again.

Source: about.att.com

About AT&T

Photo source

AT&T Inc. is a holding company. It is the largest telecommunications company in the U.S. AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information about AT&T Inc. is available at about.att.com.

Source: Business Wire

Crystal Ball Prediction

That prediction of mine was based on the aforesaid history of 34 consecutive years of dividend increases. It was also based on the fact that free cash flows have been increasing, and that is what supports a growing dividend. It was also based on recent history indicating AT&T has been raising the dividend by this same amount the last several years – nine years in fact.

AT&T Recent Dividend History

Going back 9 years, penny a quarter increases have been the norm (4 cents per year).

Source: Yahoo Finance

Fed Having Difficulty Getting Inflation Off The Ground

Though the Fed just raised the fed funds rate another 1/4 point recently, and three more hikes are expected for 2018, the Fed continues having difficulty getting the economy to produce inflation above its target rate of 2%. In fact, it’s been running below this target range for quite some time, confounding many economists and the Fed chair herself.

This Is What Winning Is

As long as AT&T keeps delivering dividend increases to shareholders like this one, running at a 2.04% increase while inflation runs below 2%, stakeholders like us continue to run ahead of the game and preserve our purchasing power. For us, that’s the name of this game we call dividend growth investing.

We Are Not Unhappy With The Capital Gains, Either

Our recent purchases In AT&T to expand our core positions further, for both the RODAT Subscriber Portfolio and the Fill-The-Gap Portfolio, have paid off quickly and handsomely.

On November 6, while most investors were down on AT&T because of all the confusion surrounding the merger with Time Warner (TWX) and the worries about how much debt T would take on to accomplish the marriage, we stepped into the morass and bought more shares for both portfolios at $32.60 per share.

We based our analysis, among other data, on the fact that T’s dividend yield normally flies in the 4.5% to 5% range, as discussed in “AT&T’s Downward Spiral: What, Me Worry?”. We secured a 6.01% dividend yield at that $32.60 price. As soon as the $2.00 annual increase takes effect on February 1st, our effective yield will rise to 6.13%. This amounts to capturing 36% more income from our shares than investors who bought at much higher prices and obtained the much lower 4.5% yield.

If you translated this type of extra income to a total portfolio, you could easily visualize the difference in income produced by making well-timed investments like this:

$100,000 portfolio yielding 4.5% generates $4500 in annual income.

$100,000 portfolio yielding 6.13% generates $6130 in annual income.

For investors fortunate to have accumulated a higher portfolio amount:

$500,000 portfolio yielding 4.5% generates $22,500 in annual income.

$500,000 portfolio yielding 6.13% generates $30,650 in annual income.

The $64,421.38 Question

Here’s a rhetorical question for you: Which of the above annual dividend supplemental incomes would you choose for your retirement to supplement your Social Security benefit, $22,500.00 or $30,650.00?

There’s Always A Sale, Somewhere

Waiting for your watch list candidates to suffer undeserved beat-downs can lead to much higher income in retirement. If you make your watch-list bench deep enough, you’ll find there’s always a sale, somewhere in the markets that you can take advantage of.

With shares selling for $38.50 as I write this, we have bought ourselves, our followers, and subscribers an early Christmas present: capital appreciation of 18.1%. We can buy a whole lot of Xmas presents with that, not to mention those hefty dividend payments.

Photo source

Our Payoff

The Fill-The-Gap Portfolio holds 1,530 shares of AT&T. Our annual income from this name has now climbed to $3060.00 and $765.00 will flow to our accounts on February 1, 2018.

Please adjust your digital tracking tools to reflect this new dividend amount of $2.00 per year.

New Net Neutrality Rules

The changes in the rules will have various outcomes to all parties concerned, including consumers of internet services, the providers of those services, and the investors who look to profit from ownership in those providers. Included among them are these:

Consumer Impact:

The FCC’s recent decision to free up internet service providers, allowing them to charge higher prices to whomever they choose and to slow down speeds for sites they desire, or speed up others, or charge for faster speeds may harm some of us as consumers.

ISP Impact

As an internet service provider, or ISP, this change in rules will certainly benefit companies like AT&T which provide the pipes and now will have more control over how the internet flows through those pipes.

Investor Impact

As investors, higher charges should flow through to higher free cash flow, thereby enabling a sustaining of the dividend at a minimum, and a faster dividend growth rate at the maximum.

By this time next year, the results of this rule change and the ultimate decision as to whether the merger with Time Warner is allowed to proceed should come further into focus, and we will see if the thesis for a higher dividend growth rate pans out as I believe it will.

Free Cash Flow Picture Brightening

The company has projected free cash flow of $18 billion for the full year.

Because of a decrease in investment activity, free cash flow was substantially higher year to date than was expected. Thus, the $18 billion target seems attainable.

Because the $18 billion is achievable, this casts even better light on the payout ratio.

The last five years, the payout ratio (dividends/free cash flow per share) has ranged from about 65% to 75%. This year, the company is on track to sport a dividend/free cash flow payout ratio near 50%.

What does this mean? For one, it means that AT&T will have no difficulty paying its dividend obligations to shareholders. For another, it means that the dividend is covered by a factor of two. The dividend is not only safe and sustainable, but also a dividend increase is to be expected for shareholders again next February 2019. If they conform to the pattern of the last several years, investors should expect another penny per quarter increase going forward, or greater if free cash flow is positively impacted by the new net neutrality rules and the proposed TWX merger.

The Fill-The-Gap Portfolio

The FTG Portfolio contains a good helping of dividend growth stocks, like AT&T. It was built with the express purpose of benefiting from this and other strategies.

Two and a half years ago, I began writing a series of articles on December 24, 2014, to demonstrate the real-life construction and management of a portfolio dedicated to growing income to close a yawning gap that so many millions of seniors and near-retirees face today between their Social Security benefit and retirement expenses.

The beginning article was entitled, “This Is Not Your Father’s Retirement Plan.” This project began with $411,600 in capital that was deployed in such a way that each of the portfolio constituents yielded approximately equal amounts of yearly income.

The FTG Portfolio Constituents

Constructed beginning on 12/24/14, this portfolio now consists of 21 companies, including AT&T Inc., Altria Group, Inc. (MO), Consolidated Edison, Inc. (ED), Verizon Communications (NYSE:VZ), CenturyLink, Inc. (NYSE:CTL), Main Street Capital (MAIN), Ares Capital (ARCC), British American Tobacco (BTI), Vector Group Ltd. (VGR), EPR Properties (EPR), Realty Income Corporation (O), Sun Communities, Inc. (SUI), Omega Healthcare Investors (OHI), W.P. Carey, Inc. (WPC), Government Properties Income Trust (GOV), The GEO Group (GEO), The RMR Group (RMR), Southern Company (SO), Chatham Lodging Trust (CLDT), DineEquity (DIN), and Iron Mountain, Inc. (IRM).

Because we bought most of these equities at cheaper prices since the inception of the portfolio and because most of our stocks have increased their dividends regularly, the yield on cost that we have achieved is 7.67% since launch on December 24, 2014. Current portfolio income, including recent dividend raises by AT&T and Realty Income, and our newest addition of AT&T shares, now totals $31,573.30, which is $505.36 more annual income than the previous month. This represents a 1.64% annual income increase for the portfolio.

When added to the average couple’s Social Security benefit of $32,848.08, this $31,573.30 of additional supplemental income brings this couple annual income of $64,421.38. This far surpasses the original goal set to achieve a total of $50,000.00, which is accepted as a fairly comfortable retirement income in many parts of the country. That being said, this average couple now has the means to splurge now and then on vacation travel, dinners out, travel to see the kids and grandkids and whatever else they deem interesting.

Taken all together, this is how the FTG Portfolio generates its annual income.

FTG Annual Dividend Income

Chart source: the author

Your Takeaway

An investor could get whiplash watching the stock price gyrations of some stocks. The sentiment on AT&T has turned from decidedly negative to positively positive the last five weeks. Dividend investors who initially abandoned the stock have rushed back with a vengeance, pushing down its yield from 6.01% to just 5.09% today. This dividend aristocrat that has come through for dividend investors for decades has once again returned to favor.

We can’t normally predict with much accuracy what a stock’s price will be from one day to the next, no matter how clear our crystal ball might be. However, if we use history as a guide and take present data like free cash flow growth into account, we can sometimes come to a decent projection of where the dividend is headed.

In this instance, my crystal ball, cloudy though it may be, was just clear enough to make a prognostication of AT&T’s dividend growth that was right on the money. I don’t doubt that some other investors may have come to the same conclusion, and they joined the march back with me to this solid stalwart that provides dependable and reliable dividend income to retirees and others for decades.

In fact, it is my contention that a steady decline in stock price lopping off 22% of market value is right about the time investors should start contemplating adding to their current stakes or starting a new position. Opportunities like this to enhance yield and income do not come along often. But when they do, the opportunities usually evaporate almost as quickly as they appear. In this case, it took only 5 weeks for the dividend yield to revert back close to the mean.

If you missed this opportunity that I presented weeks ago, don’t fret. There will always be others. There’s always a sale somewhere in the market.

Holiday Wishes

Over the past five weeks, these recent gains in both capital appreciation and dividend growth couldn’t be more timely and beneficial.

Total portfolio dividend income has now risen to $31,573.30, providing plenty of manna with which to share our bounty this Chanukah, Christmas, and Kwanzaa.

From our family to yours, we wish you the best of the holiday season.

As always, I look forward to your comments, discussion, and questions. Did you view AT&T’s price deterioration in real time as a loss or an opportunity? do you still harbor doubts whether the dividend from this name is sustainable? Are contemplating taking a quick profit or will you hold for continued, future dividend growth? Please let me know how you approach these situations in your own portfolio and how you arrive at your decisions.

Author’s note: Should you be interested in reading any of my other articles detailing various strategies to enhance your returns on a dividend growth portfolio, you will find them here.

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Disclaimer: This article is intended to provide information to interested parties. As I have no knowledge of individual investor circumstances, goals, and/or portfolio concentration or diversification, readers are expected to complete their own due diligence before purchasing any stocks mentioned or recommended.

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Have a prosperous day!


George Schneider

Disclosure: I am/we are long ALL FTG PORTFOLIO STOCKS.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Does Your Company Have a New Year's Resolution?

Two days ago the US Patent and Trademark Office (USPTO) published the very first Apple patent related to autonomous vehicle technology.  One might ponder whether or not that was a critical goal or milestone for the corporation in 2017.  We could learn a lesson from this tech giant, not when it comes to slowing down old devices, but rather, the importance of audacious goal setting in a climate where the fixation around quarterly profits sometimes gets in the way of innovation. 

Another example is the Apple watch, which may soon be transforming from a luxury fashion accessory into a serious medical device.  As you think about your business, what are your New Year’s Resolutions for 2018?  We’re not just talking about industry-changing tech devices here.  You may opt to start with the basics and getting those right, so treat yourself to some self reflection and goal setting time over your holiday break.  Then kick of the new year right with a team meeting on January 2 to relay and orient the troops to your vision. 

Here are three thought starters to get you started:

Big Data

What is the role of data in your organization and do you need a Chief Digital Officer, Chief Data Officer or both?  By 2019, 90 percent of large global companies will have an appointed CDO, Gartner predicts.

If you are based in Europe, or have business operations there, how will General Data Protection Regulation impact you? GDPR will go into effect May 2018, and will strengthen data protection rules for all organizations that touch personal data for EU residents.

For a trend report on other 2018 data predictions and insights download the Top Data Trends for 2018.

Net Neutrality Repeal

As a result of the 3-2 vote, on Dec. 14, consumers no longer have equal access to the Internet.  Online SMBs and startups with less revenue and consumer reach would be the first to feel the pain of deregulation. Do you have the budget to pay for prioritization if it comes to that?  What other risk mitigation strategies should you be thinking about to make your business more resilient in 2018. Maybe this is a way to put your corporate tax saving to work. 

Tax Bill

The corporate tax rate has been cut from 35 percent to 21 percent starting next year, and the new laws will first be applied to 2018 tax filing season. While AT&T, Comcast and Boeing promise bonuses, and Wells Fargo claims to increase its minimum wage for U.S. employees from $13.50 to $15, how will the new tax bill impact your fiscal decisions at home and in business?  Might be a good time to check in with your CPA although you will not be able to write off his/her services next year.  

Beyond these thought starters, give your business some real scrutiny and remember that pain points or obstacles can be transformed into opportunity. Here’s to a great 2018.

My Money Works Harder Than Me: Early Retirement Fund Income Update

I started a new experiment. Since poker, specifically No Limit Texas Hold’em, is one of my favorite hobbies, I decided to attend a weekly poker session at my local poker room every Tuesday night. The goal is to sit down at the $1-2 stakes table and play anywhere from 30 minutes to 3 hours to see how much I can profit during the last few months of 2017. I started this experiment in August and have done quite well for an above average cash game amateur player.

My hobby is an income source, but a minimal one with lots of volatility. Any poker player knows that you can’t win every time you play. But how well have I done since August? I am delighted to share that I have profited $1,051 at the poker table after playing 26.5 hours. These poker results calculate out to a $39.66 hourly rate. This rate is outstanding, the best I have achieved during my amateur poker career, and something I am very proud of, but there are drawbacks.

To achieve my coveted $39.66 rate, I have had to stay disciplined at the poker table, stay alert and energized at the table after working a 10-hour shift at my full-time job, deal with the stress involved in deciding to call/raise/fold in big time decision moments, and deal with the occasional large loss as the best hand in poker does not always win. Poker requires a lot of mental toughness that can take a toll on you physically if you are not disciplined and focused.

So why should you care about all the time I have spent playing in a weekly poker game? Well, it’s simple. It provides a perfect example; no matter how hard I work during my free time, my dividend stocks will always work harder without costing me time, stress, and sacrifice.

Before we can compare my hourly poker rate to my portfolio income, I first must show you what income my Early Retirement Fund [ERF] has generated over the last 4 months. After I prove that my money can work harder than me, I will share my 2018 goal.

August to November Portfolio Income

The table below shows the income I received from my ERF portfolio from August to November 2017:





GNC Holdings (GNC)

Option Premium


Kinder Morgan (KMI)



Lazard (LAZ)



Verizon Communications (VZ)



Waddell & Reed Financial (WDR)



August Subtotal



Aircastle (AYR)



Chevron (CVX)



Cummins (CMI)



Douglas Dynamics (PLOW)



Emclaire Financial (EMCF)



GameStop (GME)



Helmerich & Payne (HP)



International Business Machines (IBM)



LyondellBasell Industries (LYB)



Meredith (MDP)



National Oilwell Varco (NOV)




Option Premium


Old Republic (ORI)



Stage Stores (SSI)



Valero Energy (VLO)



Waste Management (WM)



September Subtotal



Bank of Nova Scotia (BNS)



Domtar (UFS)



Macy’s (M)



Maiden Holdings (MHLD)




Option Premium


New Residential (NRZ)



Steelcase (SCS)



October Subtotal



Arbor Realty Trust (ABR)










Option Premium








November Subtotal




Source: Author Calculations

The total income I received during the last 4 months was $1024.71 which is 2.2% higher than the income I received, $1002.93, during this same time in 2016. With one month left to go in 2017, I am averaging $237.22 a month in dividends and $55.43 a month in premiums. Comparatively, I averaged $175.27 a month in dividends and $134.84 a month in option premiums during the first 11 months of 2016. My dividends have increased 35.3% year over year, and my option premiums have decreased by 58.9%. I am very pleased with my dividend income growth and not too concerned about my option premium decrease. I only use options to move in or out of a position. It is not a consistent source of income like my dividends are.

I received premiums over this time frame for writing covered calls as I am attempting to completely sell out of my GNC and NOV positions due to both companies cutting their dividends. My September GNC option was called at an attractive price so I no longer own any GNC stock. I continue to own NOV and I am actively writing calls to pick up extra income and exit my position at a predetermined price. If covered calls are unfamiliar to you and you want to learn how you can benefit from them, please read my article here that explains them in detail.

Source: Author Calculations

During the 4 months, a few of my holdings raised their quarterly dividend payments. I had to do nothing to earn these raises. The table below shows the changes in my quarterly dividend payments for the following holdings:


2016 Quarterly Payment

2017 Quarterly Payment














Source: Author Calculations

It is evident that the cumulative dividend raises were greater than current US inflation rate of 2.2%. Dividend raises are one of my favorite benefits of dividend growth investing.

How Hard Does My Money Work?

So now that we know my portfolio income from August to November, we can compare it with my poker income. The chart below shows why it is very difficult to work harder than your money:

Income Source



Hourly Rate

Poker Experiment




ERF Portfolio




Source: Author Calculations

I need to point out the 10 hours associated with my ERF portfolio. I only spend about 30 minutes a month of portfolio maintenance. These 30 minutes involve logging into my brokerage account at the end of every month to view my dividend transactions so I can enter them into a spreadsheet. I then use Seeking Alpha’s portfolio function to keep tabs on my holdings. The only headlines I really pay attention to are dividend announcements and earnings reports. I will read the occasional article about one of my stocks if the headline seems interesting to me. Since I am a long-term buy-and-hold investor, portfolio maintenance is very minimal. Writing a call option takes mere minutes when I decide to exit a position due to an unfortunate dividend cut.

I did initiate two new positions during this time frame; ABR and SCS. Because I keep my stock research and rating system simple, I spent only 8 hours analyzing and learning about the two stocks before I bought shares.

It’s easy to see the time-saving benefits of dividend investing evidenced by the table above. My poker experiment has been a giant success but when you compare the risk, time, efficiency, and stress involved to that of a passively managed dividend portfolio, I realize that maybe I would be better off spending more time increasing my dividend income stream than playing poker. No matter how hard I work playing my best game at the poker table, or even working hard at my full-time job, I am certain my ERF portfolio will always work harder.

New Year’s Resolution

After running the numbers, I am expected to surpass $3000 of dividend income in 2017 as December will prove to be a record-breaking month of dividend payments. I am ecstatic about reaching this milestone and look forward to achieving $4000 or more of dividend income in 2018. To reach this goal I will need to increase my dividend income by about 33%. This will be a lofty goal as I am only projected to increase my dividend income from 2016 to 2017 by about 30%. I am very proud of my 30% increase but love to challenge myself to accomplish bigger and bigger goals every year.

To reach the $4000 milestone, I will have to stay focused and remain disciplined. Life is always full of distractions so I plan on putting my investment savings on autopilot so I am not tempted to “forget” a portfolio contribution or two. I plan to set up a direct deposit to my brokerage account so that every month I am contributing a set amount to the ERF portfolio without effort and the temptation of spending that money elsewhere.


As 2017 comes to a close, my monthly portfolio income has grown year over year due to dividend payment increases, reinvestment of all portfolio income, and steady monthly contributions. I have spent very little time maintaining and managing my portfolio, yet it continues to provide record-breaking results. In the meantime, I have spent a lot of my free time honing my valuable poker playing skills. With the time, risk, and sacrifices I have made to manage this “alternative” investment, I have realized that no matter how talented I am at a game, my money is always going to work harder and sacrifice less than I ever could.

Disclosure: I am/we are long ABR, AYR, BNS, CMI, CVX, EMCF, GME, HP, IBM, KMI, LAZ, LYB, M, MDP, MHLD, NOV, NRZ, ORI, PLOW, SCS, SSI, UFS, VLO, VZ, WDR, WM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Honeywell: As Good As It Gets

On December 13, 2017, Honeywell’s (HON) management team held an investor meeting where it provided the company’s fiscal 2018 guidance to the financial community. The 2018 guidance and management’s commentary were well-received by the market. HON shares are up only ~1% since the investor meeting, but shares are outperforming the broader market by a wide margin on a YTD basis.

Source: Nasdaq

There was a lot to like about Honeywell’s 2018 guidance and, in my opinion, the bull case for this industrial conglomerate may be stronger now than it has ever been. Moreover, I believe that Honeywell is as good as it gets in the industrial space, so investors should not be worried about the company’s ‘premium’ valuation.

The 2018 Guidance – Good, Better, Best

Many people, including myself, were worried when Mr. Darius Adamczyk, CEO, took over for Mr. David Cote in April 2017 but this company has not missed a beat over the last seven-plus months. Mr. Adamczyk has actually done an impressive job winning over the market, as shown by the fact that HON shares are up over 20% since he took over as CEO. More importantly, however, Mr. Adamczyk and team have this company in a great position in a changing industrial environment and it appears that this narrative will likely also play out in 2018.

After initially going over the material from the investor meeting, I thought that Honeywell was going to have a lackluster fiscal 2018, but after further review, it appears that management was just trying to tone down expectations. Why do I think this? It’s simple. It is hard denying the fact that it appears more likely than not that the U.S. economy, including the industries that Honeywell operates in, will experience growth over the next 4 quarters. Plus, I believe that management was talking out of the other side of its mouth when it stated that several key business units were operating in very favorable environments.

For the aerospace division, management only projected for low single digit (1-3%) organic sales growth for 2018. Let’s remember that most companies operating in this space are actually calling for significant growth in the years ahead (more on this below). And yes, the tax bill passing (not signed by the President, as of December 21, 2017) will bode well for Honeywell and its business prospects. At the end of the day, I believe that the lackluster 2018 guidance was simply management trying to set the company up for success in the new year. Remember, the market is overly bullish on Honeywell so any type of setback (i.e., analyst estimate miss) will significantly impact sentiment.

There was way too much information shared to cover in just one article, so I will spend a few minutes on what I considered the 3 most important points that management made during investor meeting.

1) Good – A Strong Finish To 2017

The company guided for a strong finish to the current year. For Q4 2017, management expects to report organic sales growth in the high single-digit range and earnings per share to reach ~$1.84 (up from the $1.74 that was reported in Q4 2016).

As shown, management also expects to reach the high end of its earnings guidance for full-year 2017, which would translate into ~10% YoY growth for adjusted EPS. Furthermore, Honeywell’s improvements in generating cash have not been highlighted enough, as management guided for FCF to be in the range of 5%-7% for full-year 2017. Simply put, this company is projected to cap off a great year with a strong Q4 earnings report.

2) Better – A Great Outlook For 2018

Next year’s guidance is more important than the Q4 2017 results, in my opinion, so it is encouraging that management expects to keep the impressive momentum going through 2018. Management guided for both sales and earnings to grow over the next four quarters, in addition to a nice uptick in margins.

These estimates, including the only 2-4% sales growth, are impressive when you consider the backdrop. Fx and restructuring costs are likely to be headwinds over the next 12 months but these factors are not enough to derail the company. In my mind, it is encouraging that management anticipates for the prospects of oil and gas industry to improve in 2018, at least as it relates to the company’s operations, because Honeywell’s O&G division has been a major drag on the consolidated results. 2018 is shaping up to be a game-changing year for Honeywell. But, it gets better.

3) Best – A Promising Capital Return Story

The most important takeaway from Honeywell’s investor meeting, of course, in my opinion, was the capital return numbers that are being thrown around.

Honeywell recently announced that its board authorized a new $8B buyback program, which is on top of the already $1.5B that is remaining from a previous program. This is a material buyback announcement because it would allow for the company to repurchase almost 7% of the total shares outstanding. Let’s also remember that Honeywell recently increased its dividend by 12% a few months ago.

This company’s capital return story is not only about buybacks or dividend either, as management expects to also focus on finding strategic acquisitions. Plus, as management described, the tax bill passing will be a positive development for Honeywell’s capital deployment plans for 2018.

Putting It All Together

What’s not to like about a company that: (1) guided for a strong finish to 2017, (2) expects to report impressive top- and bottom-line growth over the next 12 months, and (3) has a capital return story that has legs? Honeywell has shown over and over again that its bull case is intact and, in my opinion, the company’s story actually keeps getting better.

To start, getting back to the Aerospace division, I believe that this operating unit will greatly contribute to Honeywell meeting analysts’ estimates in 2018. This division has several significant tailwinds that should allow for it to continue the substantial growth that it has reported in the recent past. Honeywell is a key supplier to many players in this industry so it will do well when others are doing well. For example, Boeing (NYSE:BA) (a major customer) is forecasting for significant growth for its business over the next few decades.

Source: Boeing’s Current Market Outlook 2017-2036

In addition to the commercial growth, Honeywell has a defense business that recently reported 7% YoY growth in its backlog. The defense businesses of Honeywell’s aerospace portfolio is not the only operations that are performing well, as the company is also building momentum in Commercial Aviation. While Honeywell is projecting for only a “modest pace for near-term orders due to an uncertain economic and political environment along with a very competitive used aircraft market” for the business jet aviation industry, current forecasts are for 8,300 new business jets worth $249B to be delivered from 2017 to 2027.

Source: Honeywell’s October 2017 Press Release

The improving prospects in almost all areas of the aerospace segments, including the digital space (i.e., Connected Aircraft), should allow for this operating unit to keep the substantial sales growth going through 2018 and beyond. Moreover, management has implemented several cost-cutting initiatives that are directly contributing to the increasing margin for the aerospace division.

Source: Aircraft Supplier Conference, September 2017

And it gets better because, in addition to the aerospace division, management has recently pulled two other levers that should create value in 2018. First, Honeywell has made several small tuck-in acquisitions that should add value to the company’s business offerings that are already in high demand. The two recent examples are: (1) the 25% stake taken in the Chinese supply chain software company Flux Information Tech, and (2) the acquisition of SCAME Sistemi to bolster its connected building solutions. Both of these acquisitions may not move the needle in 2018, but looking out, these are exactly the type of assets that will bode well for the company’s long-term business prospects.

Additionally, I believe that the previously announced spin-offs – the Transportation Systems & Homes And Global Distributions units – will likely turn out to be long-term catalysts for HON shares. As described in this article, the restructuring plan will allow management to unlock value, while at the same time streamline operations and focus on the company’s core operations (Aerospace, Building Technologies, Performance Material And Technologies, and Safety And Productivity Solutions).

The recent investor meeting simply re-affirmed my bullish thesis for this company and it actually caused me to rethink my 12-18 month price target. Lastly, if all of this was not enough, it is important to note that HON shares are also trading at what I consider a reasonable valuation.


Honeywell’s stock is trading at a reasonable valuation based on forward earnings estimates.

HON PE Ratio (Forward) data by YCharts

At 21x forward earnings estimates, HON shares may appear overvalued but I could make the argument that this company has the best prospects out of this peer group. To this point, Honeywell reported above-average sales growth over the last 5 years and the company is projected to significantly grow earnings over the next 5 years.

EPS next 5Y 8.22% 4.27% 10% 13%
Sales past 5Y 1.50% 0.50% 0.30% -3.30%

(Source: Data from Finviz; table created by W.G. Investment Research)

This is one of the many reasons why Honeywell deserves a ‘premium’ valuation. Per Yahoo! Finance, Honeywell has a “Buy” rating and a price target of $165/share (7% upside from today’s price). I, however, believe that Honeywell will not only grow into its current valuation but I anticipate for the company’s forward estimates to get ratcheted up over the next two-to-three quarters. As such, I believe that HON shares will be trading north $175 over the next 12-18 months.


A global recession is the most significant risk to my investment thesis, at least in the near term. I do not believe that a recession is not likely to happen over the next 12 months, but if one were to materialize, Honeywell’s businesses would be negatively impacted in a major way. Furthermore, investor sentiment is extremely bullish for Honeywell at this point in time and it largely revolves around the prospects for the aerospace division, so a slowdown in this industry would likely result in shares selling off.

Another risk point relates to the company’s restructuring plan because there is no guarantee that the spin-offs will go without a hitch. If the company has cost buildups or issues with the formation of the two separate entities, Honeywell’s stock could be under pressure in late 2018/early 2019.

Bottom Line

My biggest takeaway from Honeywell’s Outlook Investor Meeting was that this company appears to be well-positioned for 2018 and beyond. Honeywell is as good as it gets if you are looking to invest in the industrial space. This company is a best-of-breed industrial conglomerate that has promising business prospects, especially if the global economy continues to improve in 2018. Additionally, there are several catalysts – tax reform bill, spin-offs, and potential infrastructure spending bill in 2018 – that are likely to play out over the next 12-18 months, so investors with a time horizon longer than 1 year should view any pullbacks as long-term buying opportunities.

Author’s Note: Honeywell is a core holding in the R.I.P. portfolio, and I have no plans to reduce my stake in the near future.

Full Disclosure: All images were taken from Honeywell’s 2018 Outlook Investor Meeting, unless otherwise stated.

Disclaimer: This article is not a recommendation to buy or sell any stock mentioned. These are only my personal opinions. Every investor must do his/her own due diligence before making any investment decision.

If you found this article to be informative and would like to hear more about this company, or any other company that I analyze, please consider hitting the “Follow” button above. Or, consider joining the Going Long With W.G. premium service to get exclusive content and one-on-one interaction with William J. Block, President and Chief Investment Officer, W.G. Investment Research LLC.

Subscribers to the premium service have access to my 12-18 month price target for Honeywell, in addition to having exclusive access to a more in-depth analysis of the company.

Disclosure: I am/we are long HON, GE.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Better Dividend Aristocrat: McDonald's Or Coca-Cola?

Investors looking for high-quality dividend growth stocks should consider the Dividend Aristocrats. When it comes to dividend growth stocks, the Dividend Aristocrats are hard to beat. They are a group of stocks in the S&P 500 Index with 25+ consecutive years of dividend increases. You can see all 51 Dividend Aristocrats here.

McDonald’s (MCD) and Coca-Cola (KO) are both Dividend Aristocrats, and the two companies are closely tied. Those who enjoy a trip to McDonald’s, often wash it down with a Coca-Cola. McDonald’s and Coca-Cola are both highly profitable companies, with strong brands, and should continue to increase their dividends each year.

But the past year has treated McDonald’s and Coca-Cola much differently.

MCD Year to Date Total Returns (Daily) data by YCharts

Coca-Cola has had a good year, with a 15% total return (including share price appreciation and dividends). But Coca-Cola is no match for McDonald’s, which has produced a 46% return year-to-date. McDonald’s has delivered more than three times Coca-Cola’s returns in 2017.

McDonald’s has been the far more rewarding stock to own, and its investors have done much better than Coca-Cola’s. But due to its huge rally, McDonald’s now appears to be overvalued, while Coca-Cola still has a reasonable valuation. This article will discuss why value and income investors might favor Coca-Cola for 2018.

Business Overview

Winner: McDonald’s

Coca-Cola and McDonald’s both have tremendous brands, and lead their respective industries. For example, Coca-Cola is the 5th most valuable brand in the world, while McDonald’s has the 9th most valuable brand. But right now, McDonald’s fundamentals are in better condition.

Coca-Cola is the world’s largest beverage company. It owns or licenses more than 500 non-alcoholic beverages, including both sparkling and still beverages. It sells its products in more than 200 countries around the world, and has 21 brands that generate $1 billion or more in annual sales.

The core sparkling beverage portfolio includes the flagship Coca-Cola brand, as well as other soda brands like Diet Coke, Sprite, Fanta, and more. Coca-Cola also has a large portfolio of still beverages, including Dasani, Minute Maid, Vitamin Water, and Honest Tea. Coca-Cola enjoys top market share positions across a number of its core product categories.

Market shareSource: 2017 Investor Day Presentation, page 4

Coca-Cola’s growth has not been as impressive as McDonald’s in recent periods. For example, in 2016, Coca-Cola’s organic revenue increased 3%, while adjusted earnings-per-share rose 5%. Earnings growth was due to price increases, volume growth, and share repurchases. Organic revenue increased another 2% over the first three quarters of 2017, driven by price increases.

Meanwhile, McDonald’s is the largest publicly-traded fast food company in the world. It operates over 37,000 locations, in more than 100 countries around the world.

2016 was a year of recovery for McDonald’s. Global comparable-restaurant sales increased 3.8% for the year. Adjusted earnings-per-share increased 16% last year. McDonald’s has enjoyed a successful turnaround, driven by increased franchising and new menu initiatives such as all-day breakfast.

2017 has been another good year for McDonald’s. Revenue declined 6% over the first three quarters, but this was driven mostly by the sale of its businesses in China and Hong Kong, and increased franchising. However, these initiatives have improved McDonald’s profitability. Adjusted earnings-per-share increased 16% through the first three quarters.


Winner: Coca-Cola

While McDonald’s has reported stronger growth over the past year, the bad news is that investors now have to pay a hefty price for this growth. In the past four reported quarters, McDonald’s had adjusted earnings-per-share of $6.40. Based on this, the stock has a trailing price-to-earnings ratio of approximately 26.9.

McDonald’s is valued significantly above the S&P 500 Index, which has an average price-to-earnings ratio of 25.8. Therefore, McDonald’s appears to be slightly overvalued, while Coca-Cola is still valued below the S&P 500.

Coca-Cola had adjusted earnings-per-share of $1.89 per share in the past four quarters. As a result, the stock trades for a price-to-earnings ratio of 24.3. McDonald’s is valued approximately 11% above Coca-Cola.

McDonald’s valuation premium could be justified, if it continued to generate significantly higher earnings growth than Coca-Cola. But analysts expect McDonald’s momentum to slow in the years ahead, while Coca-Cola is still in the early stages of its turnaround.

According to ValueLine, McDonald’s is expected to increase earnings-per-share by 7% in 2018, and by approximately 9% per year from 2020-2022. For its part, analysts expect Coca-Cola to grow earnings by 3% in 2018, but growth is expected to accelerate to 11% per year from 2020-2022.

Dividend Analysis

Winner: Coca-Cola

When it comes to dividends, Coca-Cola has the advantage. There is no doubt that McDonald’s has an impressive dividend history—it has increased its dividend every year since its first payout in 1976. The most recent hike was a 7% raise on September 21st.

In the past five years, McDonald’s has a compound annual dividend growth rate of approximately 5.5%. Coca-Cola has increased its dividend by 7.7% per year, over the past five years, which is a higher dividend growth rate than McDonald’s in the same time frame.

The other disadvantage of McDonald’s dividend, is that it has a fairly low yield. Due to the huge share price rally in the past year, the stock has a dividend yield of 2.3%.

MCD Dividend Yield (NYSE:TTM) data by YCharts

On the other hand, Coca-Cola’s share price has not appreciated nearly as much as McDonald’s, which has kept its dividend yield elevated. Coca-Cola has a dividend yield of 3.2%.

This means Coca-Cola offers 39% more dividend income than McDonald’s, which is a significant difference.

Coca-Cola also has a longer history of dividend increases than McDonald’s. Coca-Cola has increased its dividend for 55 years in a row. In addition to being a Dividend Aristocrat, Coca-Cola is also a Dividend King, an even smaller group of just 22 stocks. You can see all 22 Dividend Kings here.

Final Thoughts

McDonald’s and Coca-Cola are both world-class brands. Each stock is likely to generate positive returns for shareholders moving forward, through earnings growth and dividends. But investors should try to avoid buying stocks when they are overvalued. Future returns can be mediocre or poor, even from strong businesses, if too high a price is paid for earnings growth.

McDonald’s has enjoyed a massive rally this year, which has elevated its valuation, while Coca-Cola has not rallied nearly as much. Coca-Cola remains fairly valued, and has a higher dividend yield than McDonald’s. As a result, value and income investors might prefer Coca-Cola to McDonald’s right now.

McDonald’s and Coca-Cola are both high-quality Dividend Aristocrats. But there are other Dividend Aristocrats that are even more undervalued than McDonald’s and Coca-Cola. Our service Undervalued Aristocrats provides actionable buy and sell recommendations on some of the most undervalued dividend growth stocks around. Click here to learn more.

Disclosure: I am/we are long MCD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The Best Games of 2017, From 'Nier: Automata' to 'Legend of Zelda'

2017 was an incredible year for videogames—a mixed bag of genre, style, and mood. The best titles ranged from sweeping adventures to tense shooters to meditations on the existential burden of life. Some of the games released this year will go on to be lauded as the most important, profound videogames of this generation. If you don’t know how to dive into videogames in the coming days, here is where to start.

10. Lone Echo

Virtual reality’s great promise has always been that of escape, and nowhere has that been put to better use than in Ready At Dawn’s captivating, compelling space adventure. Half puzzle-heavy exploration, half zero-G playground, Lone Echo delivers what traditional gaming cannot: a truly embodied adventure. Most of that is due to an ingenious locomotion mechanic, which eschews the all-but-default teleportation to lets you move through the game via combination of thrusters and pushing off solid surfaces. The disc-golf-in-space multiplayer companion, Echo Arena, has become a fan favorite, but it’s Lone Echo that will be remembered as a singular, medium-defining game.

System: Oculus Rift

  1. Everything

You might begin life as a polar bear. Or a kangaroo. Or a twig. Maybe a mitochondria. Then you might grow and reach with your mind and perception until you’re a galaxy, or the sun, or the magic of consciousness itself. In David O’Reilly’s meditative masterpiece, you can be, literally, everything. Everything derives power from a logic of interconnectedness, weaving a philosophical fable about the nature of objects while teaching the player a mechanical dance that surprises and stir. You ever wondered what the world looked like from the perspective of a soda can? Now’s the time to find out.

System: PlayStation 4, Microsoft Windows

  1. Resident Evil 7

In Resident Evil 7, you open doors by pressing into them, face first. It’s a neat little metaphor: the act of moving forward is an act of dogged, perhaps irrational, persistence. In this brilliant revival of one of gaming’s originary survival horror franchises, it’s the sort of subtle touch that goes a long way. And Resident Evil 7 is full of subtle touches: the scattered trash in the derelict rural manor your hero is trapped in; the unsettling, flowing, almost oil-y design of the game’s monsters; the way videotapes are used to create a hallucinatory alternate reality experience while also playing with found footage horror tropes. Resident Evil 7 is two-thirds a brilliant horror adventure, and one-third a solid action game. It’ll undoubtedly be frustrating when the horror starts to run dry, but every step taken on the way is more than worth it, if you have the courage to get that far. Play in VR at your own risk.

System: PlayStation 4, PlayStation VR, Xbox One, Microsoft Windows

  1. Yakuza 0

Taking place in Tokyo’s Red Lights District during the late 80s and early 90s, Yakuza 0 is one of the most riveting, carefully crafted dramas ever put in front of a videogame controller. It’s also a game where one of your main characters uses Street Fighter moves and random objects on the street to fight vengeful clowns. Yakuza 0 manages an impossible alchemy, merging a self-serious crime drama largely about real estate with some of the goofiest and off-beat supporting material the creators at Sega could come up with. It feels, on the whole, like a love letter to what videogames are capable of. Games are places where powerful, fascinating drama can happen. They’re also places where a giant dude named Mr. Shakedown will chase you through the streets of Tokyo and try to steal your cash until you learn how to beat him up with a baseball bat. Yakuza 0 sees the dissonance, and it loves it. And you’ll love it, too.

System: PlayStation 4

  1. Splatoon 2

Splatoon 2 is the rare multiplayer shooter that has the power to reach beyond the core “gamer” marketplace that those games usually cater to. Part of that is the platform: the Nintendo Switch is a console built for people who hate the nonsense of modern videogame consoles, and that gives any game on it an allure it might not otherwise have. But more than that, it’s in the design. The squid-kid world of Splatoon is bright and playful, awash in colorful ink, aquatic pop stars, and Harajuku high fashion. And cleverly, the designers use this aesthetic to create a shooter that actually doesn’t employ violence at all. Victory is a matter of covering as many surfaces and enemies with ink as possible. Nobody gets hurt. Splatoon 2 is a marginal refinement of the original game, and that might make it less compelling for returning players, but the core of the experience remains so solid and wholesome that not changing enough can hardly be considered a flaw.

System: Nintendo Switch

  1. Hellblade: Senua’s Sacrifice

Hellblade: Senua’s Sacrifice is a controversial game, largely because of a single page of text that appears before the experience even begins, claiming that Hellblade is a story about mental illness, specifically psychosis, and that care has been taken to make that representation thoughtful and accurate. Whether or not that’s true, or to what extent telling that kind of story is appropriate in a game mostly about obscure puzzles and hack-and-slash combat, is a question worth debating. But Hellblade is, at its heart, a game that rises above those conversations, and above the sum of its own components. The story of Senua, a warrior journeying into the land of death in search of her lost love, is an uncanny screaming death knell of pain and perseverance. It’s held together by the brilliant work of Melina Juergens, whose motion capture and vocal acting as Senua is possibly the best performance in the entire medium. Hellblade is flawed, sometimes monotonous and sometimes infuriating, but it’s unlike anything else I’ve played this year, and its imagery and sound will stay with me for a long, long time.

System: PlayStation 4, Microsoft Windows

  1. Super Mario Odyssey

At its best moments, Nintendo’s flagship Mario title for the Nintendo Switch feels like Super Mario at his best. His most surreal, his most silly, his most unpretentiously fun. Operating out of an effortless dream logic, Super Mario Odyssey is the story of Mario Mario (that’s his real name, I swear) travelling across the multiverse to crash a wedding party with the help of his friend, a cap that has the power to possess anything in the world that doesn’t have its own hat. The cap’s name is Cappy. This premise doesn’t require you to understand or accept it. You just have to follow it, jumping, flipping, and wah-wah-wah-hoo-ing to whatever unlikely, unpredictable turn it offers next. If it had Luigi, and left some of its insensitive cultural tendencies behind (Mario, take off that sombrero, please), Super Mario Odyssey would be perfect.

System: Nintendo Switch

  1. PlayerUnknown Battlegrounds

I have spent roughly half my time with PlayerUnknown Battlegrounds hiding in a shed. Surprisingly, that’s not a complaint. PlayerUnknown Battlegrounds has a simple premise, one with surprising power. Take a large map, a derelict Eastern European city, perhaps. Fill it with a hundred players. Litter weapons around, some vehicles, some traps for funsies. Last player alive wins. This straightforward idea, literally cribbed from a movie, imbues every single moment of Battlegrounds with tension. Every movement in the grass, every shadow out of the corner of your eye, could be one of 99 other players with you in the crosshairs. Under that kind of scrutiny, every single microdecision becomes terrifying. Which is how I find myself hiding in a shed, over and over and over again, aiming a shotgun at a door that may never open. But let me tell you: hiding has never been so riveting.

System: Xbox One, Microsoft Windows

  1. The Legend of Zelda: Breath of the Wild

The commanding image of Breath of the Wild is a sweeping vista. Encountered roughly five minutes into the game, this vista–a wide shot of a whole continent’s worth of wilderness, open and ready to be explored–is a promise. Lots of videogames offer this promise, of freedom, of unfettered and truly organic exploration, but most fail. So many game worlds feel empty, and dead, and basically constructed. Which, in a very real sense, they all inevitably are. But some special games have enough of their creators in them that their worlds feel real, and beautiful, and are able to pass off the illusion that you’re not just running through handcrafted levels but through a full, living place. Breath of the Wild is one of those games, and it uses such a place to deconstruct and resurrect the mythology and ideas of The Legend of Zelda, a game that was originally very simple: a story of a boy, and a big, scary place, and the promise of someone he loves at the end of the journey. No sequel in this series’ thirty years has so captured the elegance and joy of that story. And now it’s hard to imagine how any other game after it could.

System: Nintendo Switch

  1. Nier: Automata

WIRED made one significant mistake with its gaming coverage in 2017: we never reviewed Nier: Automata. This is my fault. I came to the game a month or two late, and there was no room for coverage in our calendar. And yet Nier: Automata is so excellent, such a significant contribution to the medium of gaming and to my own life that I cannot in good conscience place any other game in the #1 spot. It’s the story of two androids caught in an ancient, horrible war, but that explanation doesn’t do Nier: Automata justice. It is a genre-hopping, brilliantly written, intricately crafted magnum opus about persistence, and love, and hope in the face of absolute loss. Game director Yoko Taro has famously said he makes “weird games for weird people,” but Nier: Automata might be for everyone.

System: PlayStation 4, Microsoft Windows

Desperate Bitcoin Investors Who Forget Their Passwords Are Resorting to Hypnotherapy

Help is in sight for that batch of early-Bitcoin-adopters who are sitting on untapped bounties because they’ve forgotten the passwords needed to get into their ‘wallets’.

A hypnotist in South Carolina has recently begun offering to help people recall forgotten passwords or find misplaced storage devices. Jason Miller charges one bitcoin plus 5% of the amount recovered–though he claims that rate is flexible.

“I’ve developed a collection of techniques that allow people to access older memories or see things they’ve put away in a stashed spot,” he told The Wall Street Journal.

A number of investors who bet on Bitcoin years ago are now in a painful limbo. In the way that bank accounts are protected by passwords, Bitcoin wallets that use ‘keys’ to transact are also typically guarded by complex security codes. However, unlike a bank, Bitcoin has no central hotline to call for a reset.

Elon Musk tweeted last month that he’d misplaced part of his bitcoin, and many other bitcoin owners have watched in similar distress as the price of the cryptocurrency surged over 20-fold at times this year to more than $19,000. On Tuesday morning, it was trading at $18,000.

Read: Elon Musk Doesn’t Know Where He Left His Bitcoin

One such mourner is Mr. Philip Neumeier, who bought 15 bitcoins for roughly $260 in 2013, when he was toying with the idea of accepting the virtual currency on his e-commerce site, reports the WSJ. Now that his cache’s value is nearly $300,000, he’s trying to recover that long-forgotten password. Though he considered hypnosis to help recall the subconscious memory, he decided instead to build a supercomputer that tries to use “brute force” to crack the code.

The brute force required is hot and heavy work, and so the five foot-tall computer system sits in a 270 gallon tank of special mineral water to disperse the heat it generates, says the WSJ. Mr. Neumeier suggests it might even take a few hundred years to run through every possible combination of letters, numbers and symbols.“I should probably be about 332 years old by then—hopefully bitcoin will be worth something,” he said to the WSJ.

Read: Commentary: 3 Reasons Bitcoin Is Worth So Much Right Now

The WSJ reports another case of a father who wiped the old laptop where he kept his password. Youssef Sarhan is live-tweeting his saga.

“It’s a slippery slope to going crazy,” Mr. Sarhan said to the WSJ. “It’s like trying to crack open your own brain.”

However, even he won’t be able to help James Howells, a British IT worker who says he threw away a hard drive with 7,500 bitcoins on it in 2013, and is now trying to work out how to locate the hard drive in the landfill site where he believes it’s buried. They were worth $130 when he threw it away – and they’re worth $126.7 million now.