American Express Company (AXP), Mondelez International Inc (MDLZ): Gabelli Equity Income Picks

Page 1 of 2

Gabelli Equity Income Fund (GABEX) is ranked four stars by Morningstar and is run by famed investor Mario Gabelli. With a focus on dividend income, the fund is an excellent source of ideas. Recently Gabelli highlighted Mondelez International Inc (NASDAQ:MDLZ), American Express Company (NYSE:AXP), and The Boeing Company (NYSE:BA) as having good prospects.

What Gabelli Looks for

When looking for investments, Gabelli tries to find stocks yielding more than the S&P 500 Index. However, that alone isn’t enough to get a stock in the fund. The manager is also looking for companies with strong free cash flow, a history of regular dividend payments, and the potential for long-term earnings growth. A performance catalyst, like a management change, new business line, or a spin-off, is also important.

The approach has worked well over the long term, leading Equity Income Fund to outperform the S&P 500 over the trailing five-, 10-, and 15-year periods.

An Outlook

Gabelli isn’t overly excited about the outlook for The United States right now. “Unfortunately, the economy is not gaining momentum,” he wrote recently. And, “The United States is in for another year of weak growth.” That’s a dour outlook and is compounded on the corporate side. “We have started to see that earnings are peaking, and the disconnect between continuing profit gains in the face of flattish revenues is over.” He suggests that investors “invest at good prices in dividend paying stocks with strong prospects for longer term earnings, dividend growth, and good cash earnings.”

Here are three stocks that make Gabelli’s list:

A Spin Off

Mondelez International Inc (NASDAQ:MDLZ) was one of the fund’s top performers in the first quarter. After separating from Kraft Foods Group Inc (NASDAQ:KRFT), Mondelez generates about 75% of it revenues from the snack business. Moreover, about 45% of the top line comes from emerging markets. Gabelli expects that number to increase to 50% over the next two years.

After the separation Mondelez International Inc (NASDAQ:MDLZ) was something of a laggard, but Gabelli believes that investors are “gradually beginning to appreciate the strong international growth prospects for the company.” Its stable of brands includes Oreo, Ritz, Trident, and Cadbury. An impressive collection that underpins Gabelli’s view of a bright future.

Investors can get an attractive 2.5% or so yield while the market continues to get a better feel for a new company with solid growth prospects from an enviable brand portfolio.

The Card for Rich People

American Express Company (NYSE:AXP)Gabelli describes American Express Company (NYSE:AXP) as “the largest closed loop credit card company in the world.” While that’s true, it is probably better to think of American Express as the credit card for rich people. That’s important because this group doesn’t just earn more, it tends to spend more and pay its bills in a timely manner.

Although the 2007 to 2009 recession led to a dip in revenues, the top line has been climbing since 2009. More notable, perhaps, is the fact that American Express Company (NYSE:AXP)’s bottom line didn’t dip into the red during the recession. Recently earnings have been in the $4 range.

Gabelli likes that “[t]he company’s strong consumer brand has allowed American Express to enter the deposit gathering market as an alternate source of funding…” He expects the company to “continue to expand into other payment related businesses like corporate purchasing, while also growing in emerging markets.” That could spell years of growth.

American Express Company (NYSE:AXP) shares are trading around all-time highs and yield only around 1.3%. They are most appropriate for growth investors. However, this company should probably be on everyone’s watch list just in case a broad market sell off creates fire sale prices again.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!