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☕ Dividend investors beware

Feb 06, 2025

Howdy! 👋

It’s super early Thursday morning as I type and there isn’t a whole lot of headline news at the moment, but the markets are moving.

Futures are set up for what just might be another day higher after 2 back-to-back winning sessions.

Where to hunt?

Anything that’s moving.

That’s a hard concept for most investors to grasp but not a hard concept for profitable investors to understand.

Movement isn’t enough, though.

If you’re a trader, that’s one thing… volatility is your lifeblood. But if you’re an investor, it’s a powerful sign to keep your eye on the bigger, longer-term picture.

For example, we know AI isn’t going anywhere and, in fact, will accelerate to the tune of trillions of dollars. Further, that every business on the planet will adopt, adapt or die in one way or another.

At the same time, I expect naïve investors, particularly those with the attention span of a gnat, to sell companies like Apple on news this morning that China’s going to “protect” its markets from US bullying.

We know better, but more in a moment.

Meanwhile, burn this image into your brain.

Here’s my playbook.

1 – China wants to “protect” its markets from US bullying

Chinese Ministry of Commerce Spokesperson, He Yongqian, stated, that “In the face of one-sided acts of bullying, [China] will firmly protect its own rights and interests.”

That’s rich.

Makes sense, though.

China thinks in terms of strategic deception so what Yongqian is really doing is flying a test balloon to see if the US reacts. Then, if it doesn’t, he’ll fly another… and another… and another.

The goal is to keep pushing boundaries until it meets resistance—or better yet, no resistance at all.

This is classic Beijing.

A game of incremental escalation, played over years, if not decades.

The strategy?

Probe, adapt, advance… rinse and repeat.

China has long manipulated global trade to suit its own interests, from currency devaluation to intellectual property theft, forced technology transfers, and a slew of hidden subsidies propping up its industries. Yet, whenever the U.S. or its allies push back, Beijing cries “bullying” and wraps itself in the victimhood narrative.

He Yongqian’s statement is a textbook example of strategic deception—laying the groundwork for more aggressive economic maneuvers while framing China as the aggrieved party. If Washington blinks, China will escalate. If Washington pushes back, China will recalibrate.

Either way, Beijing gets valuable intel on what it can get away with.

That’s a particularly dangerous thought given the intelligence coup it just pulled off with DeepSeek because I can all but guarantee you Beijing now knows who will say what and how to get at ‘em when they do.

Bigger picture, this isn’t just about tariffs or sanctions.

The game is about reshaping global economic power on Beijing’s terms. The ultimate goal is to reduce dependency on Western markets, strengthen its own economic fortress, and establish a new rules-based order—one where China makes the rules.

Invest “because of China” not “in” China.

2 – I hate saying I told you so, but in this case I did

Last September, I made the case to the super-savvy Stuart Varney that Costco would a) be a smart buy and b) take out $1,000 a share. (Watch)

The dang stock closed last night at $1,042.88 after posting January sales figures: (Read)

Net sales came in at $19.51 billion, +9.2% increase YoY
E-commerce sales increased +13.6% YoY

That’s a 15.08% return in just over 4 months versus the S&P 500 which turned in 6% over the same time frame.

I hope you got on board or that you’ve at least made a similar move.

What’s next?

I don’t think there’s any question which is why I’ve just updated my price targets for the One Bar Ahead® Family.

Meanwhile, you’ve got a decision to make.

There are only two retailers on the planet worth owning right now imho.

Do you? 🤷🏻‍

3 – Ford: Dividend investors beware

I didn’t think they could do it so props to Ford for pulling a rabbit outta the hat and reporting Q4 earnings that beat both top and bottom line. (Read)

Earnings per share: $0.39 vs. $0.33 expected
Revenue: $44.9 billion vs. $43.02 billion expected

Team Farley, however, gave soft 2025 guidance saying they expect a 2% industry price decline and slightly lower wholesales. Meanwhile the company’s Model e (EV Division) is still bleeding cash and remains unprofitable.

I said I wouldn’t be even remotely interested in Ford until it hit $10 a share and suggested putskies – a bet the stock would drop – when it broke $14 at the time last summer.

As I type, the stock sits at $10.01, down 17.07% over the past 12 months when the S&P 500, by comparison, has tacked on 22.35%.

Close enough, but no cigar as the old expression goes.

I don’t think CEO Jim Farley can get the job done which stinks because I really do like Ford vehicles and have a perennial soft spot for the GT40.
Tesla and the Chinese both have Ford’s number.
Ford does a lot of business via Mexico so short of onshoring, I don’t think that Ford can weather the margin squeeze I see coming. In fact, I think Ford’s costs are going to skyrocket.

Investors love the company’s ~6% dividend but I think that’s now at extreme risk.

Putskies.

$5 a share a year from now.

Keith’s Investing Tip: Many investors make the same classic mistake repeatedly because they fall in love with the stocks they own only to ignore the red flags, make excuses and wake up one day wondering where all their money went. Love your Ford, fine. Love your money more.

4 – Could Uber give Tesla’s robotaxis a run for its money?

Uber reported Q4 earnings (Read):

Revenue came in at $11.96B, +20% YoY and beating estimates
EPS came in at $0.23 adjusted, missing expectations of $0.50

The stock fell anyway by ~7% on weaker-than-expected guidance.

Hmmm.

The company is launching robotaxi rides in Austin, Texas, in partnership with Waymo (Alphabet) and the buzz is that it’s looking to leapfrog Tesla which is doing the same thing this summer.

Fans think that the risk of disruption is real given Uber’s existing ride-share dominance, driver supply and entrenched customer behavior.

Critics – including me – think that’s overrated.

Uber will have to use Waymo’s vehicles which means they’ve got an entirely different economy of scale to contend with. What’s more, Waymo’s got to succeed if Uber’s gonna have wheels. The situation is a lot like ranching on somebody else’s land.

Tesla, on the other hand, can produce roughly 4 robotaxis for every one Waymo vehicle and can immediately scale into existing infrastructure at low or almost no cost if various data hold true.

I think it’s far more likely that Uber will ultimately strike a deal with Tesla and, if so, then the company really could be worth something. Or at least this part of it anyway.

Too bad there’s not a way to speculate purely on Uber’s driving ambitions; I don’t have any interest in owning the stock otherwise.