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Buckingham Bets: A Global Trio

04/08/2014 10:00 am EST


John Buckingham

Editor, The Prudent Speculator


Congratulations to John Buckingham on the 37th anniversary of The Prudent Speculator. Here, the value investor highlights a diverse trio of global, dividend-paying investment ideas: a miner, a bank, and a drug maker.

BHP Billiton Ltd. (BHP)

Australian conglomerate BHP is one of the world's largest miners, with diverse businesses that include aluminum, coal, copper, iron ore, mineral sands, oil, gas, nickel, diamonds, uranium, and silver.

Though there are headwinds, including Australia's Resource Super Profits Tax and economic difficulties in some regions of the global economy, we like that the company has continued to drive its productivity initiatives, in addition to cost efficiencies.

We believe that BHP's low-cost, long-life portfolio of expandable operations is robust, diverse, and well-suited for long-term growth. BHP generates attractive free cash flow, supporting a yield of 3.4%.

Canadian Imperial Bank (CM)

Canadian Imperial Bank, often referred to as CIBC, is the fifth-largest Canadian bank by market capitalization. We like that the firm reported relatively strong Q4 earnings, showing net income growth across all divisions.

Additionally, the company continues to enforce cost control management and the Canadian government has kept the banking segment attractive by maintaining barriers to entry, which help protect attractive returns for CIBC and its big competitors.

As the employment and economic growth outlook improves in Canada, and interest rates eventually rise, CIBC should meaningfully benefit. CM is trading for less than 11 times earnings and is yielding more than 4%.

Sanofi (SNY)

Based in France, Sanofi is a global integrated healthcare company. We like that it has a relatively robust and promising pipeline of new pharmaceuticals, including several that address diseases that have no current treatments.

We are attracted to SNY's industry leading global insulin position, via its mega blockbuster Lantus. Further, differentiated flu vaccines seem to have invigorated sales, and Genzyme's rare disease products are a major growth driver.

We are fans of Sanofi's well-diversified business portfolio and think that the shares are attractively valued, while we note that the current net dividend yield is 3.1%.

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