Last year’s market recovery prompted me to rein in new investments to start accumulating more cash in case the market took a break. I sold a few losing positions while allowing dividends and cash conversions to accumulate so that my cash position is now more than 5% of the value of my portfolio.
I plan to use some of this cash stash in the coming weeks after the market calms down to start 2024. Chevron (CVX 0.30%), Kinview (Kvio -1.10%)And Visi properties (Visi 0.99%) It is among the top three stocks I plan to buy. That’s why they’re at the top of my buying list.
Fuel for growth
Chevron is coming off a down year. The oil giant’s shares have fallen by about 20% over the past 12 months, affected by oil prices and its impending takeover of a rival company. Hess. However, this sell-off has Chevron trading at an attractive dividend yield (4.2%) and value (given the growth it can achieve at low oil prices).
Chevron has placed significant emphasis on improving its investment returns by focusing capital spending on higher-returning opportunities. This enables the oil company to grow its cash flows at a healthy rate over the coming years, even in a negative scenario where oil prices average $60 per barrel through 2027 (and fall to $50 in the final years of its forecast). Even then, Chevron could achieve annual free cash flow growth of more than 10% over the next few years. This supports the company’s view that it can continue to grow its dividend with share buybacks at the lower end of its annual target range of $10 billion to $20 billion.
On the other hand, Chevron has significant upside potential if oil prices average $70 per barrel (around the current price point) and it completes its acquisition of Hess. These factors would give Chevron the fuel to more than double its free cash flow by 2027 while extending its production growth forecast into the 2030s. This would provide the oil giant with more cash to return to shareholders and invest in growing its low-carbon energy business. It can also give them the fuel needed to produce strong overall returns.
A healthy future
Kinview Shares tumbled after the health care giant’s IPO and spinoff Johnson & Johnson. Shares are down more than 20% since going public, pushing the dividend yield to 3.8%. This is largely due to shareholder turnover.
The company has gotten off to a healthy start as an independent public company. In the third quarter, it reported sales of $3.9 billion, an increase of 3.3% year over year. It also recorded strong profitability. The company expects sales to rise 4% to 4.5% for the year.
Kenvue produces good cash flow, which has allowed it to initiate a dividend and launch a stock buyback program. The company’s growing sales, profits and cash flows should enable it to follow in the footsteps of its former parent company and steadily increase its profits in the future. This growth should help push the stock price higher in the future, which should enable Kenvue to achieve healthy total returns.
A fast-growing real estate investment fund
VICI Properties’ stock price has fallen approximately 7% over the past year. This decline was driven by real estate investment trusts (I wish) Dividend yield of up to 5.4%.
While its stock price has declined, the experimental property owner is growing rapidly. Its revenue rose 20% year over year in the third quarter, while its adjusted funds from operations (FFO) by approximately 11% per share. VICI benefits from rising rental rates and an expanding portfolio. With growing profits and falling stock prices, VICI has become much cheaper over the past year.
The REIT continues to make new investments to drive growth. Over the past few months, VICI has acquired 38 bowling entertainment centers from Bolero In the amount of $432.9 million Sale and leaseback transactionIt agreed to provide up to $212 million in construction financing to the Kalahari to develop an indoor water park resort, and expanded its investment with Chelsea Pierce and Cabot to approximately $550 million. These investments will increase its income in the future, giving the REIT more cash flow to increase its profits. This combination of growth and income should enable it to achieve exciting total returns in the coming years.
Strive to capitalize on strong total return potential
Chevron, Kenvue and VICI Properties have all performed poorly in recent months. However, it should generate attractive and growing dividend income in the future with the potential to generate strong total returns over the long term as its dividends increase and its stock prices recover. They look like very attractive places to start distributing my cash stash.
Matthew DiLallo holds positions at Chevron, Johnson & Johnson, Kenvue, and Vici Properties. The Motley Fool has posts on and recommends Kenvue. The Motley Fool recommends Chevron, Johnson & Johnson, and Vici Properties and recommends the following options: Long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.