What Most Retirees Miss: The Dividend Shortcut Investors Are Using to Win 2025 - June 2025 Training

Welcome to our latest training, What Retirees Miss: The Dividend Shortcut AI Investors Are Using to Win in 2025. I'm your host, David Trainer. I'm excited to be with you today, and we are going to jump right into it. Let me share my screen. We're going to be talking about how to avoid bad dividends and how to find the best dividends. To put it super simply and succinctly, we've got an AI, we've got a technology, we've got a capability that's proven to outperform picking stocks, all kinds of stocks. And we're going to show you today how to best use that for retirement and for dividends. As a key element of everything we do here, remember disclosures, disclaimers. We are not advisors. We are not giving out any kind of tax advice, investment advice. We do not do that. We are publishers. We are providers of information. And I want to hear from you in the chat. Is this your first time with us? What type of investor are you? And again, put your tickers in there that you want us to analyze. If we have time at the end, we would love to go through those with you and give a few examples of how our system works. Now, if you've been paying attention to our content over the last few weeks, You may have noticed that we've placed an emphasis on dividend investing, and today we're going to take a candid look at dividend investing. Most dividend strategies seem solid until you look at the results. Many investors, especially a significant number of retirees, may be falling into hidden traps without realizing it. It's easy to think high yield equals success, but a high yield doesn't mean high returns, and chasing yield Often means missing red flags. So what separates a sound dividend strategy from a bad strategy that undermines your financial goals? By the end of today's presentation, you'll have a clear answer to those questions, an understanding of the difference and how to position yourself for both income and growth. At New Constructs, we believe you deserve both. It takes a lot of work and nothing comes for free, but with the right tools and the right effort, you can get both. Our aim is to present a clear, data-driven strategy, especially relevant as we enter the second half of 2025. If you're new to our community and unsure who I am or why you should listen during this pivotal time, let me introduce myself. David Trainer, founder of New Constructs. I've been doing this kind of work for 25+ years. Was on Wall Street before, during, and after the tech bubble. I helped write a chapter in this book, The Valuation Handbook. And importantly, let's talk about results. Our stock picking has been— has beaten 16,000 buy-side professionals to claim the number one spot in multiple categories for 48 straight months on SumZero, which is again a buy-side-only investor platform. You can see here, number 1 stock picker in multiple categories. Again, the, the, the buy-side aspect of this is super important. We're not talking about Wall Street analysts on the sell side whose stock picks we know tend not to be very good anyway. These are professionals, and we're beating those folks. We hold the number spot, number 1 spot in industrials, and we've held the number 1 spot in just about every category over the last 48 months at one point or another. Also to keep in mind, our work has been vetted and validated by some of the most prestigious institutions in the world. MIT Sloan School of Management, the Harvard Business School, Ernst Young, the Journal of Financial Economics have all published papers proving the superiority of our data. These are independent firms publishing papers proving the superiority of our data, our research, our analytics, and our stock ratings. I don't think there's another firm, research firm in the world that can make a comparable claim. Even better, the performance of the actively traded indices based on our research proves our value add for you. What am I talking about? Bloomberg has a small family of indices that they've created. These are live traded stock picks based on live data. So there's no better way to prove the performance than with these kinds of vehicles. For example, the Very Attractive Stocks Index. This is an index that just holds our very attractive stocks. For those of you who aren't aware, very attractive is our number one strong buy type rating for stocks, ETFs, and mutual funds. But if you created a fund that only holds very attractive stocks, in the first quarter of this year, you'd have outperformed the S&P by 9%. Over the last five years, you beat the S&P by 59 percentage points. Pretty impressive. Next, the core earnings weighted S&P 500 index. So this is an enhanced version of the S&P. I love this one. I like to say anybody can pick the stocks. We'll let someone else pick the stocks, and we'll still beat them in terms of performance. And in this index. What you're talking about is the same 500 stocks, but instead of weighting them based on market cap, you weight them based on core earnings. Guess what? Outperform. In the first quarter of this year, outperformed by 1%. Again, that's holding all the same stocks, just weighting them better. If you look over the last 5 years, it's outperformed by 31% just by weighting based on core earnings instead of market cap. Why? Because the truth about fundamentals matters. Now, it's important to note these indexes are managed by Bloomberg, but they're not available for purchase by the public. You can't get them anywhere. The only place to get that research is from us, right? The only way to get that data and get the benefit of all that alpha is to buy from us. So you may be wondering, why the dividend theme and why now? First, June marks the midpoint of the year. It's a natural time for investors to assess your first half performance and consider how to best position your portfolios for reliable income and potential growth in the second half. Second, markets are getting expensive in almost every way. Warning signs are flashing. Retail investors are in buying mode, and they have been in a big way, especially after that last dip. We're seeing everything go up. Institutional investors were bearish coming into the last buying, buying mode, but they have since flipped to bullish as well because they're like, why fight the fire? Fight fire with fire. Join the, join the, join the fun. And the other thing that, you know, the other thing that you can't deny here is the S&P is back near its record highs, right? Makes you wonder. Is now the time to be fearful when others are greedy? And it's not just the S&P stocks, Bitcoin, and gold. They're all high at the same time. Hasn't happened in 10 years. Why? Because it's not supposed to happen. These assets are supposed to be counter to each other, right? When gold's doing really well, stocks aren't doing that well, right? And vice versa. And they're all going up. Why? Because everybody's buying. I think it's a sign of extreme Speculation. Third, the economy is yet to show the inevitable effects of tariffs. Like, yeah, look, I know it's probably not going to be as bad as some people have said, but look, the numbers don't lie. You look at how imports increased here in the beginning of 2025. This is a dramatic, dramatic number that also had a huge impact on first quarter GDP. Right? And that first quarter GDP just squeaked through at barely positive. So when you do some research, you know, past some of the headlines, because of the tariffs, inflation is likely to drive higher, even though the official numbers do not yet reflect it. We're not seeing it yet, folks. It's not that it's not going to happen. We just haven't seen it yet. We maintain our view that the impact of tariffs will likely materialize in the coming months. So there's a lot of indiscriminate buying. By the general retail crowd is everyone seeing nothing but good news. But the problem with this is that many of the momentum names that are popular, that have been popular with investors, are really starting to show signs of exhaustion. So even with all this irrational exuberance, even with all this buying, we're seeing these things start to hit a ceiling, I guess a natural ceiling. That is, I think, should be worrisome. And I'm not trying to say that the market's about to fall apart. I'm, you know, I'm just trying to say that even though the institutions or the sharps stop betting against the market, we think that this momentum is a short-term attempt for them to ride the retail wave in the short term and then bail before the reversal and leave the retail crowd to be the bag holders, as is normally the case. Or is always the case over the last 25, 30 years whenever we've seen a correction. And why do the institutions do this? It's because they can, because they have better information. They've got better information about cash flows and they got better information about the direction of the market via order flow. When you see how all the orders are coming down, you know what the market's going to do before everyone else does. Right? I like the joke about if you have all the order flow coming in, you can see the ratio of buy to sell orders, the ratio of buy to sell capital dollar amounts. I'm sure these things have been studied ad nauseam out to multiple decimal points over decades. They have all this data. Do you think they can figure out when that ratio of buy to sell goes below a certain number, you know, where the market's going to go? Absolutely. And they measure this stuff By milliseconds, it's they've written books about it. Absolutely, the institutions can afford to speculate more than the retail because they know what the market's going to do before anyone else. They know when the market's going to turn before anyone else. All these data points I'm sharing with you are warning to be safe in this environment. Again, I'm not saying you need to go live in your bunker and take all your money put under your mattress. No. What I'm saying is to be diligent, to not just throw caution to the wind and just chase momentum. I'm saying be diligent because in a noisy, uncertain market, dependable income isn't just nice to have, it's essential. Right? Earlier this year when the market fell apart, how do you think the people who weren't diligent felt? Compared to the people who were diligent. You don't want to be in that position. You don't have to be. Many investors aim for strong dividend income, but certain approaches can lead to unintended outcomes. So here's the big point. Yeah, you think maybe you're being safe and you've been being safe all this time because you're following a dividend strategy and you got high dividends out there. The problem is that that's not enough. Let me get specific. I'm going to give you 3 of the top mistakes investors make when investing in dividend stocks. Mistake number 1, the misleading yield. This is when things look better than they really are, or what I refer to as a fake dividend stock. Common area of focus for dividend investors is a high yield. But what happens if that attractive yield is undermined by a falling stock price? Digital Realty is a great example. The stock is down more than the dividend yield in the last 6 months. All right, it's got a 2% or 3% dividend yield, but the stock's down 4%. That doesn't do you any good. The point here is the fundamentals of this business aren't great. It earns a very unattractive rating in our system. You can see here quality of earnings is poor, the valuation is poor, right? Nothing is really looking very good here. So that means this dividend is fake. It could be wiped out in a day. It could be more than wiped out. So if we're talking again about a 2.9% dividend and yet you lose 20% of the stock, That's bad math. Let's go through this. A simple $10,000 investment in a fake dividend stock looks like you make $500 from the dividend, you make— you lose 10% from the stock decline. The net result is minus $500. That yield is nothing. It's gone. It's a negative. You can't trust just going after yields. Our research has always emphasized that a company's financial health is a crucial factor. It's in its ability to be a good stock, but most importantly, to also provide both dividends, to provide dividends, safe dividends. This leads me to my next mistake people make when investing in dividend stocks, which is the unsustainable payout, or what I call a false dividend stock. This is when a company's dividend payout isn't supported by its actual cash generation. This puts the dividend itself at risk of being cut. With these stocks, the dividend eventually goes away because the company lacks the cash flow to support it long term. Let's get specific. CTO Realty Growth, for example, is down more than the dividend yield. It's down 11.6% in the last 6 months. It's got a great dividend. It can be really attractive, an 8% dividend yield, but the company is losing money. Its free cash flow is negative $189 million in the last 12 months, so that high dividend does not look like it will stay high for much longer. You can actually see what we call this a dividend deficit. This is the difference between free cash flow and the amount of dividend paid. That's a lot of money going in the wrong direction. Can't go on forever. People point out, oh yeah, well, they're growing the balance sheet. Well, yeah, growing the balance sheet costs money. They keep growing the balance sheet. They can't pay the dividend. Eventually, that balance sheet might produce a good yield. Let's hope that they're making those kinds of investments. Right now, it's not working at all. So at some point, they better pull back on investing or start figuring out a way to get some real yield. Either way, right now, I'm not so sure how they can maintain an 8% yield when they're burning this much cash. And how do they how do they support this cash? Or how do they support doing this? They issue a bunch of debt and they sell a bunch of shares. That dilutes you even more. So false dividend stocks, beware. Some other examples of false dividend stocks that should ring a bell: JCPenney, Kodak, Barnes Noble. We know what happened to those companies. They at one point had high dividends too, but they didn't have the cash flow to support it. Each showed periods of attractive yields followed by dividend cuts or suspensions. Which often coincided with big stock price declines. We know those stories. And the sad thing is that investors who focused heavily on the yield found their income stream and capital meaningfully diminished. You don't want that. So, no matter, no matter how enticing the dividend, the downside risk in a fundamentally flawed stock cancels it out. Thus, the false dividend. When we analyze dividend stocks, our core requirement involves verifiable cash flow generation. That's what we start with. We're not talking about any companies borrowing money, issuing stock, burning down cash to pay their dividend. These are all firms that can afford their dividends. Mistake number three: the misleading dividend, or what we like to call dividend trap stocks. This is the sneakiest one because these stocks actually. Have a good dividend, like they have a good business, decent earnings. But the problem is the valuation. We got a lot of really expensive stocks out there, folks, and this is what Dividend Trap Stocks is specifically looking to address. There's a lot of really expensive stocks in the market right now, priced to perfection, reaching all-time highs. And if you're not familiar with some of our work, we've done a lot of case studies explaining Why a lot of these valuations are fundamentally impractical. We've done the math on what the cash flows in the future have to be to justify the price, and it's impossible. These stocks we're talking about, dividend trap stocks, often get a neutral rating in our system, right? Not unattractive or very unattractive, but neutral. But it's still bad because what we're talking about here is that the stock price is just way too expensive. Here's a great example: SBA Communications. You can see here quality of earnings pretty good. They can afford to pay a dividend. The problem is stock price, right? And whenever we see this market implied growth appreciation period at more than 100 years, that's a valuation that carries a lot of risk. And that risk is often way more than the yield. And that's what we're talking about with dividend trap stocks. They average around a 2% yield with high-quality earnings. I'm sorry, they average 4% or below yield, right? They all have a yield below the risk-free rate. And by the way, expensive stocks are going to have low yields because the stock, the, the stock price is so high and the market cap is so high. So that's— but that's why, you know, they're sneaky. That's why the traps— they're good-looking companies, stock's done really, really well, pays a dividend too. Oh, this is all great. Yeah, until the stock drops by 30 or 40%. And with the price-to-economic book value ratio, this PEBV, that stands for price-to-economic book value ratio, free definition on our site. Anyone who's looked at one of our reports knows exactly what that is. But a ratio of 3.1 implies the company will more than triple its profits from trailing 12-month levels. So there's, there's no upside. Like, where's the upside fundamentally? It's gone up as much as it can go up, and the yield is not enough to offset the downside risk. And owning SBAC at this price. While seemingly safe, these investments might not contribute substantially to an investor's long-term income growth or capital appreciation goals. The income received may barely keep pace with inflation, potentially leading to missed opportunities for greater financial progress available elsewhere. Yes, you're lucky if it keeps pace with inflation, even if the stock price stays flat. with these stocks, but the downside is formidable. So New Constructs, we're going to help you avoid those bad dividend stocks, but most importantly, we believe you deserve the best of all worlds, both reliable cash flow and asset growth. We concentrate on what we believe truly underpins sustainable dividends and stock value: verifiable cash flow and deep fundamental strength. We have the technology to assess this better than anybody else in the world. After all, if you want to retire comfortably, selecting the right dividend stocks is a must. You got to get this part right. You're likely aware of the benefits of quality dividend stocks, but they are worth reiterating. The best dividend stocks offer lower relative risk because they're good businesses at low valuations, strong free cash flow. They have the means to support and grow dividends. And number 3, and most importantly, an attractive or very attractive rating. Remember that Bloomberg index on stock ratings? It does so well, outperforms by 59% over the last 5 years. That's attractive. That's very attractive stocks focused, and our attractive stocks do very well. So the rating on, on your dividend stock needs to be a good rating as well. Historically, dividends have been a significant component of total stock market returns as well. Like, all the people that have done really well in the market, dividends plays a big role. For example, during the 1970s, dividends accounted for a large portion of the S&P 500's total return. You can see here the dividend is 40% of all stock market returns since 1930. It's a big number, folks. The Hartford Funds found that going back to 1960, 85% of the cumulative total return of the S&P 500 comes from reinvested dividends and the power of compounding. There it is. There's the chart. S&P 500 total reinvesting dividends. S&P 500, no dividends. Big difference. Some of the world's most successful investors love dividend stocks. There's Warren Buffett, 68% of his portfolio dividend paying. John D. Rockefeller, he did pretty well, dividend investor. Kevin O'Leary, dividend investor. So the question moving forward becomes, how are we able to avoid the bad dividend stocks and select the best ones? For those of you who've been a part of our community for a while, you'll know That our edge is our robo-analyst technology. How do we do it? We use the first, best, and only AI for investing. I'll explain why this is the only AI in just a second. But this robo-analyst technology is what enables us to get the data and build the models and reveal the truth. Our robo-analyst ratings visualized. You saw some bad ratings before. This is what a good rating looks like. We're going to focus on quality of earnings, and valuation. 5 key metrics. Economic versus reported EPS. This is where we look at the true comprehensive profitability of a business called economic earnings or EBA. All of the sophisticated investors in the market understand this stuff. All right. All the really big, like big-time professors at the business schools, they all teach it. Economic earnings is the one true number. We compare that to the accounting earnings to understand the health of the business. Then we look at return on invested capital. It's a key component of economic earnings. But return on invested capital, that's Warren Buffett's favorite metric. It's a lot of folks' favorite metric because it measures what should matter most, right? How much capital has gone into a business? And then that goes— and then the numerator is how much cash flow does the business generate? So, you look at how much Cash flow the business generates relative to how much capital has gone into it. That gives you a great sense of what kind of a business— how good the business is. Then we've got our free cash flow yield, our price-to-economic book value, also known as PEBV, and then our market implied growth appreciation period. This is based on our reverse DCF model. That's our rating system. Now, our AI has the ability to comb through thousands of financial filings with precision Analyzing every line and footnote. This is what we do that no one else does. And this is why some of the biggest and most successful investors in the world are our clients. Importantly, we do all this work to make things easier for you, not harder. We're not going to try and flummox you with a bunch of mumbo-jumbo terminology. We're going to make things simple. Green means good. Red means bad. And as I mentioned before, all 5 metrics play a critical role in rating a stock. Now, who here knew that we're the only stock rating system with an official U.S. patent? We also provide a level of detail that goes far beyond your typical stock screeners. Our roboanalyst has processed and structured data from over 500,000 filings and counting, maybe more than that, especially when you're counting how our AI has tested itself against human-validated filings. We've done that potentially infinite number of times. Over 20 years, we've been going through the filings to build the best system ever for understanding fundamentals. We've got a very, very specific ontology and taxonomies that know how to organize data better than anyone else, as demonstrated by the alpha and the indices, as demonstrated by the papers that have been published on our data. We have this auto parsing technology that allows us to go and get that footnotes data more efficiently. So it's important that we know what to do with all this data. That takes special IP. On top of that, you got to have the taxonomies that organize it all relatively relative to all the other data points. And let me tell you, we're talking about millions and millions and millions of different data points because companies do not always call things the same thing within the same company, even from one quarter to the next. So therefore, New Constructs, you could say we've analyzed 5 times as many financial statements as Warren Buffett and counting, because there's an article recently they talked about how Warren Buffett, they believe that they estimate he read over 100,000 financial statements in his life. So we're 5 times that and more. Consider us the AI version of Mr. Buffett. We use a proprietary technology to standardize complex financial disclosures into accurate measurement of cash flows and free cash flow. These metrics, we believe, are vital for assessing a company's health. This is how you do it right, and our technology allows us to do it at scale. And that's why it's been able to help us identify stocks such as Williams-Sonoma. It was added to the Dividend Growth Model portfolio in July 2019. It's up 422%. Versus the S&P at just 117. W.W. Grainger added to the dividend model— dividend growth model portfolio in June 2018. Total returns of 288% versus the S&P at just 148. We also maintain true independence. We have no investment banking conflicts, and it shows in our ratings. Only Only less than 4% of all the stocks we cover, around 3,300, less than 4% earn our very attractive rating. Less than 13% have an attractive rating or better. So we're very discriminating, we're very discerning. We don't give out good ratings to just any stock out there. We're really careful to make sure we only give the good ratings to the stocks that deserve it, which is why our very attractive stocks Index outperforms. On the other hand, Wall Street, you know, they're going to tell you 96% of stocks have a buy or a hold rating. They don't want to give out any sells. Why? Because their paychecks depend on you buying stocks. They make no profits from research. And according to recent data, 57% of Wall Street ratings are listed as buy. Compared to our 13%. Check that out. 57, over half the stocks. Many investors rely on readily available financial websites or general AI tools like ChatGPT to find dividend stocks. Unfortunately, these resources do not do the forensic accounting required to fully assess a company's cash-generating ability and the sustainability of its dividend. You're not getting that kind of diligence out there, my friends. If you're not paying for it or not doing the work yourself, you remember, you know, you know the old saying, if you're not paying for the product, you are the product. And that's the same case with research. You're looking at stuff on Yahoo or wherever it is, you can't trust that research. I don't trust it. I don't think you should trust it because Yahoo does a lot more business when markets are good and people are buying. They're not really in the business of giving out truth any more than anyone else on Wall Street is in the business of giving out truth. Our AI is built on processing and interpreting data directly from source filings, and our dividend picks are extremely selective as a result. How selective? Out of over 1,400 dividend-paying stocks in our coverage universe, we only recommend about 40 highly, highly vetted names In our model portfolios. There's the chart. Here we are covering around 3,300 stocks. 43% of those stocks pay a dividend. Only 1% get marked as good. It's not about quantity, my friends. It's about quality. Our approach is designed to deliver what we call the best of both worlds in dividend investing. We combine reliable income and growth potential. You deserve that. We do this by selecting stocks with the following pillars in place. Number 1, reliable dividends backed by strong verified free cash flow. 2, capital appreciation potential. Companies with attractive or better stock ratings. Best place in the world to find those kind of stocks. Number 3, growing payouts. Our Dividend Growth Stocks Model Portfolio specifically targets companies with a track record of increasing dividends and the financial strength to continue increasing those dividends. When these pillars are in place, you can build long-term wealth from dividends and can reap the rewards from stocks such as NetApp, added to the Safest Dividend Yields Model Portfolio in July 2020, up 152% while the S&P just 96%. Ameriprise Financial, added to the dividend growth model portfolio in July 2019. It's up 283% while the S&P's up just 117%. Dick's Sporting Goods, added to the dividend growth model portfolio in April 2021, up 153% versus the S&P at just 51%. That's a 3x. Now, how do we give you the best of both worlds? The ability to avoid bad stocks and find good dividend stocks? Introducing the AI Dividend Investor's AI-Driven Playbook, your solution for finding the safest growing dividend stocks in the world. Model Portfolio #1, Safest Dividend Yields. This identifies approximately 20 large and 20 small-cap stocks monthly with a very attractive or attractive rating and a dividend yield greater than 3%, and importantly, positive free cash flow and economic earnings. It can afford to pay its dividends. That's why it's safe. You got at least 3% yield and you've got capital appreciation potential with an attractive or very attractive rating. These are businesses that our analysis indicates have the cash flow to support their dividends. This reduces the, the risk of dividend cuts and reduces the risk of the stock going down. This is why we call it the safest dividend yields model portfolio. Now, here's a real test. Let's, let's compare our model portfolio to stocks in the Vanguard Dividend Index Fund, one of the most popular dividend index funds in the marketplace. You can see that our model portfolio does a much better job of allocating to attractive-rated stocks, right? 100% of our stocks get an attractive or better rating. 25% very attractive, 75% attractive. Well, let's take a look over here at the VIG. The VIG, you're barely getting 15% in attractive and very attractive. You've got over 30% in unattractive or very unattractive. Bad sign, bad sign. We're going to do better than what you're going to get off the shelf anyplace else. You want to know how these stocks perform? You Here are some recent examples from our current model portfolio. Please note, these examples are not a guarantee of future performance for any of these stocks or any other stocks. There are no guarantees in this world or in this presentation or in our research, except that we're going to work really hard. Now, for May 22nd, 2025, which is when we published the last model portfolio, we have one stock up 21%, another one up 11%, another one up 10%. Model portfolio number 2, the dividend growth stocks model portfolio. This one usually has about 30 stocks, and here's what these stocks have in common. They all get an attractive or very attractive rating. That's always important. Positive trailing 12 months economic earnings and free cash flow. A 5-year cumulative free cash flow greater than their 5-year cumulative dividend payments. So not just cash money now, But cash money over the last 5 years to cover everything. And they've also increased their dividends for at least 5 consecutive years. And the dividend yield is at least 1%. So you got a company that's been increasing its dividend 5 years in a row, at least a 1% dividend, making a lot of money. Great rating. Great rating. We're focusing on companies with a history and capacity for increasing dividend payouts. This is why you need to think about your portfolio through our lens. Your dividend income should be going up and the stock should be going up, both. But in order to be, be sure that that's the case, you got to do your diligence. Also, let's take a look at how this model portfolio compares to the VIG. Now we know the VIG's over 30% and unattractive, whereas our model portfolio is all attractive. 71% attractive, 29% very unattractive. These— this guy over here, it's just not as good a product because they don't have the data, they don't have the insights, they don't have the diligence, they don't have the mission that New Constructs brings to the table. Want to know how stocks in this model portfolio perform? Again, these, these are examples and not a guarantee of future performance. But in just the last month, we had one stock up 8%, another stock up 7%, another stock up 6%. That's not bad. Now, our goal with this playbook is to help you execute a superior dividend investing strategy to grow your wealth faster. You need to build a model. You need to build a more reliable and growing income stream backed by proven, proven superior AI-driven research rather than just focusing on high yields that are not sustainable. That's the first part of the plan. Second, you gotta avoid the common dividend investing mistakes That can blow up your portfolio. That's the fake dividends, the false dividends, and the dividend traps. You got to do both. And you need research that's doing this diligence unless you have the time to read through 200-page filings for every company you cover every quarter. The 3rd thing you need to do is position your portfolio for success in the 2nd half of 2025 with insights derived from the latest data and the best fundamental research. So number 1, invest in the right stocks. Number 2, invest the bad stocks. And number 3, position your portfolio now for what is likely to be a very tumultuous second half of 2025. You deserve all 3. You deserve the best of all worlds. You deserve reliable dividend income. You deserve capital appreciation, and you deserve success in the second half of 2025. So key differentiators for New Constructs. What do we do that no one else does? Get the question a lot. We have superior cash flow analysis. That's proven. That's proven statistically by Harvard Business School and MIT Sloan. Proven outperformance, plural, proven, proven outperformances by our Bloomberg indices, family of Bloomberg indices. We know how to identify the bad dividend stocks. We've shown you that. Extreme selectivity. We are extremely discerning in what it is we do. We, we care more about that than most people. Some people might even say too much, but if you're a client, it can never be too much diligence. And that's what people pay us for. And then we're independent and unbiased. Remember, dividend investing, when done correctly, is a winning strategy, especially in environments with inflation and/or market uncertainty. And we got a lot of that now. The sooner you start with a sound approach, the more time for potential compounding gains. Remember that chart about how the majority of wealth was from dividends being reinvested and compounding? The best time to start a smart investment is right now. The best time to get smarter, to improve your process, is right now. Don't let common dividend mistakes undermine your financial goals. Find a way to transcend the noise and make the smart moves, not the mistakes. This is your opportunity to access our institutional quality research and potentially improve your income and growth prospects for the second half of the year and beyond. But don't take our word for it. Here's some notes from our clients. Along with your integrity, we appreciate your commitment to maintaining high standards. And your courage for saying so. New Constructs and American— and an American firm in practice in Paris that does my taxes remain at the top of my list of respected companies. Simply and instantly, you can see how stocks or funds are rated and where they are trading compared to economic book value. I highly endorse the New Constructs system as one must-have tool in any stock or fund selection system. She's been an investor for a long time, for a long time now. She says flat out, I sincerely appreciate all the work that has gone into creating the New Constructs system and database. Going from marked-up footnotes and filings to reliable, easy-to-understand indicators of a company's performance is a huge undertaking, and you deserve my utmost respect. I find New Constructs information to be reliable, relevant, and trustworthy. I sincerely appreciate the transparency, the education and the personalization through the portfolios and alerts. I expect to continue using New Constructs throughout my life to avoid ever running out of money. New Constructs is the only company, the only company that has allowed me to feel secure in both my buy and sell decisions, and that has been truly valuable, and I've tried quite a few over the years. I look for value in my selections, and I found your analysis superior. Many stock rating analysis type services are available, but as a business owner, I know how financials can be manipulated to put forward best-case scenarios, thus hiding critical information. Your research digs that out for me and provides a high level of confidence in my selection process. I use other metrics to compare, but I rarely buy something that does not have solid ratings from New Constructs. I maintain all my investments in one of several portfolio listings on your platform, which allows me to quickly reference the asset if I see something happening. New Constructs leverages my expertise in areas where I don't have enough people to break down all the balance sheet stuff, footnote stuff, and standardize it. It provides me with concise insights into the investment opportunities derived from meaningful, meaningful metrics that I couldn't duplicate on my own. I think we're good to jump into the tickers. Alrighty, what do we got? Who's our first one? Will be Pepsi, PEP. PEP. Alrighty, so what you're seeing here is our professional system. I like driving this around. It's, it's, that's, it's my favorite because, you know, I get all the bells and whistles. If you can drive any car on the lot, you might as well drive your favorite, right? So here it is, Pepsi. Attractive rating. See, 4.3% dividend yield. We'd like it. Credit rating also looks good. And yeah, we're going here, quality of earnings. I mean, it's the same all the way across the board. All looks attractive. So you got good quality business, got a relatively cheap valuation. These are some of the articles that we've written on Pepsi over the years. If we want to go deeper into the rating breakdown, you can see how accounting earnings looking a little bit better than economic earnings, but economic earnings still holding positive. Return on invested capital, really steady, which is great. You like to see companies be able to hold a high return on invested capital and keep that steady. You can see we also got 2, 3, 4, 5-year averages there. There's our NOPAT margin and invested capital turns. So you can see which parts of the business are doing well, which parts are not doing well. So while margins were going down, guess what Pepsi was doing? They're getting better merchandising. They had less product in the system. But generating the same amount of revenue. So that increased their capital efficiency when margins were down so that, again, return on invested capital stayed steady because they were able to improve efficiency in other parts of the business even when the margins went down. So that's very powerful. It's a great sign. It's a really well-run company. Free cash flow yields, the 2-year free cash flow and the regular free cash flow yield, pretty similar. We're seeing a pretty decent amount of free cash flow generated by Pepsi. You know, I mean, they were negative back in 2022, probably related to an acquisition, but you can see a lot of free cash flow here being generated. 2 to 3% of enterprise value. That's great. What does that mean? They can afford to pay their dividend. Here's the free cash flow margin, or free cash flow divided by revenue. Here's the price to economic book value. You can see economic book value has come down a bit here. At one point it was above the stock price. But here's why we got a good, you know, this is the ratio, 1.2. Stock price is coming down, economic book value staying pretty steady. We like that. We like that. And then here's their market implied growth appreciation period summary. You can see to justify the current stock price, it's showing that all they got to do is maintain profits about where they've been over the last 5 years and grow revenue at 4% compounded annually for 4 years. That's what $131 a share is embedding. That's sort of the answer. That's what the stock market is pricing the stock at. And the answer as to what that means for the future of the business or what the future of the business has to be to justify the price, that's the answer. That's our reverse DCF model. That's what drives this rating here. The 4 years you see, that's our reverse DCF model. Doing the diligence. GAAP reconciliation. I love this section because it always shows how we take the reported data from the company and reconcile it back to how we get our calculated or proprietary metrics. You can see very steady NOPAT. Here are all the adjustments that we've made in order to get from net income to NOPAT. We want you to see how much work we do. Because we want you to challenge any other research provider to do just as much work because we don't think that they can measure up. Same is true with the balance sheet, total assets unadjusted, all the adjustments we make to get to invested capital. And then really the most important part is the valuation adjustments. A lot of people miss the fact that there's deferred tax liabilities, deferred compensation assets, preferred capital, outstanding options, underfunded pensions. We bring this all to bear. You can see we got all those adjustments here accounted for. So that's, that's a deep dive here on Pepsi and what we think about that. Kyle, what's our next? Next one, ticker NSP. Insperity, neutral rating. All right, a decent dividend yield and decent economics. So it's almost a trap dividend stock, not quite. Right? I mean, you know, the price-to-economic book value doesn't look great, but the market implied growth appreciation period looks pretty good at 7 years. So that's, you know, this is what I call a meh stock. Like, I want to be— I want to be long the stuff that looks really good. I want to be short the stuff that looks really bad. Everything in between, yeah, don't mess with it. Don't play with it. We got too much opportunity, the extremes, to be forced into stocks that Maybe don't look that compelling one way or the other. And that's sort of my take on this. And you can see they've got all the same data and capabilities. No hidden items. Interesting. On the balance sheet here, not a lot of adjustments in a lot of places. So pretty clean business, but otherwise not that compelling. So if we go to the— let's go to the price-to-economic book valuation. That's what looks pretty bad here. Yeah, you can see economic book value is headed down. Free cash flow gone down a lot here recently as well. Capital return is doing well, but margins headed down. So yeah, not looking so great. Not looking so great. What's up? What's up? Pick number 3. Last one, CVX, Chevron. Chevron. So they, they are in the middle of a big acquisition, and that caused us to suspend the rating. Late last year. And yeah, you know, the, the oil and gas industry, we're pretty bullish on it in general for a lot of companies. But look, some are better than others. Chevron is a fan favorite because I think we all know Warren Buffett owns it, but the quality of earnings is not so great. Valuation looks better. It's kind of a flip of what, what I was saying before, you know, when with a dividend trap stock you usually have good quality of earnings, bad valuation, good company, bad stock. But with Chevron not looking so great, we still need this acquisition to close. That's going to change quality of earnings the way that looks quite a bit. Usually acquisitions— excuse me— usually acquisitions make the quality of earnings look worse, not better. It's pretty rare when the opposite is the case. That said, stock's looking pretty cheap. This would probably be one where I'd want to open our company model and really do diligence on understanding what the future's got to be to justify the price. Because right now it's showing a less than 1-year market implied growth appreciation period. And that means basically they need no growth, but the price to economic book value is 1.4. So I'm guessing the issue with Chevron is probably some huge amount of debt that depresses the economic book value a fair amount. You can see come down, stock price is really more flat. If we go to the GAAP reconciliation section. We're seeing, yeah, it's, you know, $33, $34 billion in debt. Big tax-deferred liability as well. That doesn't help. Underfunded pension by another $2.7 billion. Yeah. And look, to understand where we get our numbers, we have this level of transparency that no one else has. So, for example, if we wanted to know where those option liabilities were, that pension liability was for Chevron, Click here. Bam! There's your pension information. All right there. Want to see where our income statement adjustments come from? Here they are. Earnings distortion, dry hole expense. We'll show you, and we show all of our clients. This is why we are vetted and validated by some of the biggest and most prestigious institutions in the world, because they've been able to vet and validate everything it is that we do. All right, great. Well, thank you everyone for my— for your time.