Don't guess the Fed’s next move. 🚨

The bigger story is inflation - and what it means for your portfolio.

Here’s what the data says, and why REITs may be one of the best opportunities right now 🧵

Inflation has cooled since the 2022 spike—but it hasn’t gone back to pre-COVID levels. Both the U.S. and Europe are running hotter than the 2010s average.

If CPI measures what you pay at the checkout counter, PPI measures what businesses are paying to stock the shelves.

And PPI is rising faster than CPI

From July ‘24 to July ‘25, Producer Prices rose +3.3% (vs. 2.5% expected). 

Even more concerning: service costs (the biggest part of the U.S. economy) are rising faster than goods.

Possibly even more concerning - tariffs don't expalin the inflation in services.

The #1 driver of rising service costs? 

Wages.

The Atlanta Fed’s tracker shows wages spiked in 2022, slowed since, but remain above pre-COVID levels.

In fact, wages have been outpacing inflation since early 2023.

Good news for workers—but it raises the risk that higher costs get passed along in prices.

 Fed Chair Powell just hinted at Jackson Hole that the Fed may tolerate inflation closer to 3%+ in order to protect jobs.

Translation: the “2% inflation world” might be gone.

So, what does well in a higher-inflation environment?
• Stocks (tend to keep pace over time)
• Inflation-linked bonds (like TIPS)
• Physical assets: gold, commodities, real estate

Real estate is one of the best inflation hedges:
• Supply is limited
• Property values tend to rise with inflation
• Landlords can raise rents, lifting cash flows

That’s where REITs come in.

A REIT owns income-producing real estate—apartments, offices, warehouses—and passes most of the cash flow to shareholders as dividends.

Right now, REITs are unusually attractive.

Rising rates crushed them, pushing prices down and yields up.

Many are trading at steep discounts to the market.

A few well-known REITs and their yields today:
Prologis (PLD)

If inflation really is sticking closer to 3%+, REITs might be one of the best ways to protect  and grow your income.

What’s your favorite REIT right now? 👇

Follow me @TJ_Terwilliger for more dividend + investing insights, and share this thread if you found it useful.

Inflation and REITs: Investment Insights

8 High-yield stocks with:

• >5% 5-yr Revenue, EPS, DPS growth
• Payout ratios <70%
• 8% or better ROIC over last 5 years
• Strong balance sheets

👇

PACCAR $PCAR

Dividend yield: 4.4%
Payout Ratio: 21.6%
5-Year avg. ROIC: 13.7%

Amundi S.A. $AMUN.FR

Dividend yield: 6.7%
Payout Ratio: 52.3%
5-Year avg. ROIC: 9.9%

Admiral Group $ADM.L

Dividend yield: 6.6%
Payout Ratio: 65.1%
5-Year avg. ROIC: 9.2%

Teleperformance $TEP.FR

Dividend yield: 6.0%
Payout Ratio: 51.7%
5-Year avg. ROIC: 8.7%

Metcash $MTS.AX

Dividend yield: 4.6%
Payout Ratio: 69.6%
5-Year avg. ROIC: 9.9%

Shutterstock $SSTK

Dividend yield: 6.1%
Payout Ratio: 68.7%
5-Year avg. ROIC: 10.5%

Oxford Industries $OXM

Dividend yield: 6.5%
Payout Ratio: 52.0%
5-Year avg. ROIC: 16.5%

Civmec Ltd $CVL.AX

Dividend yield: 6.0%
Payout Ratio: 51.6%
5-Year avg. ROIC: 8.7%

TL;DR:
High yield doesn’t have to mean junk.

These 8 stocks combine income, growth, and solid balance sheets

👉 Follow me for more stock ideas.
❤️ Like this thread.
🔁 Share it with friends who invest.

High-Yield Stocks Selection

Just read one of the most comprehensive and balanced investment cases I've seen lately for $PYPL from @MnkeDaniel

A new CEO.
A focused turnaround.
And a plan to unlock massive optionality.

Here’s why PayPal might *finally* shed the PainPal label 🧵

PayPal’s history reads like startup legend:
Peter Thiel. Elon Musk.
A merger. A mafia.
A coup that ended with Elon fired on his honeymoon.
And an eBay acquisition.

But after early innovation came years of stagnation… and now, finally, the makings of a new chapter.

Former CEO Dan Schulman wanted PayPal to become a “super app” like WeChat.

The result?
A bloated product with confused users, weak engagement, and failed targets.

That era is over.

New CEO Alex Chriss is cutting the fat.

Out with low-margin Braintree contracts.

In with core strength: branded checkout and peer-to-peer (Venmo + PayPal).

Revenue is growing slower — but it's more profitable.

PayPal’s crown jewel is data:
400M users + rich purchase detail.

And they’re finally turning that into a business.

Think: Amazon-style targeted ads based on not just what you bought — but how, where, and when.

“It has your money and your pants size.”

Fastlane creates a one-click guest checkout like Stripe’s Link.

With 70%+ of carts abandoned at checkout, speed matters.

This alone could unlock billions in volume.

PayPal is also preparing for an AI-first future.

They’ve partnered with Perplexity for instant AI-driven checkout.
And they’re experimenting with embedded agents for in-app use.

Cancel subscriptions. Reorder essentials. Even gift suggestions.

All handled by AI.

Competition is real.
Apple Pay in mobile.
Zelle and Cash App in P2P.
Stripe and Adyen compete for merchants.

But PayPal is still a leader.

And it’s holding its ground.

The stock? Dirt cheap.

PayPal generates ~$6–7B in free cash flow annually.
It’s buying back stock at an 8–9% yield.

And the new team is aiming for 80–90% of FCF to go to repurchases.

Share count is falling. Fast.

Daniel built a conservative model:
• 3% FCF growth
• 5% annual buybacks
• No upside priced in from ads or AI

Even then? He sees ~17% IRR with a $97/share intrinsic value.

The stock is under $80.

TL;DR

PayPal looked broken. Now it looks focused.
New CEO. Higher margins. Smarter capital allocation.
Massive hidden optionality in ads + AI.

It’s not a sure thing - but it’s a compelling asymmetric bet.

This was just the surface.

If you care about business turnarounds, digital payments, or long-term investing…

Go read the full piece by @MnkeDaniel.
It’s one of the best writeups I’ve seen on PayPal.

https://intrinsicvalue.beehiiv.com/p/pypl

PayPal's New Chapter

"Dividends are dumb!" Ever heard that?

The 'Total Return' crowd loves to bash them, saying they're taxed, bad capital allocation, and that you should just sell shares for income.

But are they right?

Let’s break it down with real numbers and facts.

Taxes? Sure, dividends get taxed - about 15% in the US.

But so do capital gains.
And your paycheck.
Taxes are part of life. 

The real question: does the tax hit make dividends a bad deal? Let’s see.

Picture this:
• $100K in a 3% yield dividend portfolio
• 7% price growth
• 7% dividend growth
• 15% tax.

After 20 years? $623K + $19K yearly dividends.
Total: $641K. Not bad, right?

Now, a growth-only portfolio:
• $100K, 10% annual growth, no dividends.

After 20 years? $672K.

Looks better on paper. But here’s the catch - those gains are just numbers on a screen until you sell.

Dividends give you real cash—$165K over 20 years, spendable, no selling needed.

Growth-only? You wait 20 years and depend on the market.

Need cash when the market is up? Great!

Need it when the market is down? Not so great...

Dividends give you tangible returns along the way, without relying on the market.

Growth only defers your gains for decades.

Time value of money makes that cash today way more valuable.

The growth only portfolio shows a higher value, but to account for this, it should!

“Dividends cut stock prices!”

True, on ex-dividend day, prices adjust - in theory.

But in reality, earnings and market confidence drive prices.

If dividends tanked stocks, yields would skyrocket. They don’t.

“Just sell shares for income!”

Sounds easy, but timing matters.

Sell in a 2022-style crash? You’re forced to sell low. 

That’s sequence of return risk - devastating in retirement. Dividends? 

No selling, no stress.

Buybacks vs. dividends?

Both can work if management nails it.

Dividends are steady cash. Buybacks shine when stocks are cheap.

Smart companies do both when it makes sense.

Avoid dividends entirely?

You’re skipping 25-130% of S&P 500 returns every decade.

Plus, dividend payers often beat the market and are less volatile - easier to hold in a crash.

Dividends pay you now, cut volatility, and shield you from bad market timing.

When you leave the world of financial theory and consider human emotions, behavior, the reality of the market, and the need for actula cash in retirement, they absolutely have a place.

Dividends are a business result and pay you like an owner.

Capital gains are a market result, and force you to sell your stake.

They're both legitimate strategies, but they're not equivalent.

Know which you're doing and why.

Watch the full video:
https://youtu.be/01W_v8LohBA

The Dividend Debate

🚨 PEPSI EARNINGS REPORT 🚨

$PEP revenue and earnings beat low expectations, but that's not where the real story is for me. 

This is 👇

Sales volume is still declining in foods, and is flat in beverages. 

The growth in the top and bottom lines comes from charging more, not selling more. 

Pepsi has seen declines in food volume in NA and EMEA - the two biggest markets.  

PepsiCo's payout ratio has been climbing - currently at about 80%.

But if we dig deeper, the company is paying out 100% of FCF as a dividend.

Tey also did so in 2019 and 2022. 

How long can $PEP keep making up for falling volume with higher pricing?

With 100% of FCF going out the door as dividends, there's not room for dividend growth. 

Will PepsiCo give up it's Dividend King throne?

Pepsi Earnings Analysis

There are 3 types of edges in investing, but only one works for individual investors. 

Here's all 3, and the one that can make you rich.

Dividends don’t pay you. The stock just drops by the same amount.”

That’s the favorite line of people who’ve never run a business.

Let’s break down why it’s wrong. 🧵

This argument comes from Miller & Modigliani in 1961.

They called it "dividend irrelevance."

Their theory is now commonly interpreted as "a $1 dividend just means the stock drops $1. Nothing gained, nothing lost."

But that wasn't what they said...

Here's their real assertion:“the higher the dividend payout in any period, the more new capital that must be raised from external sources to maintain any desired level of investment.”

It made sense at the time, but they admitted one case where they wouldn't be right...

For internally financed companies - which they call an “extreme” or “special” case - “dividend policy is indistinguishable from investment policy; and there is an optimal investment policy which does in general depend on the rate of return.”

They don't like this scenario at all. They go so far as to call it “treacherous.”

In other words, what was once an "extreme case" is now the vast majority of companies in the U.S. stock market.

Their theory also relied on a perfectly efficient market with:
• No taxes
• No fees
• No inflation
• No financial stress 
• No emotions
• No one who ever needs to withdraw money

In other words: a fantasyland no investor has ever lived in.

In the real world, dividends are just a capital allocation decision.

Management has 5 choices:
1. Reinvest in the business
2. Buy another business
3. Build up cash on the balance sheet
4. Pay down debt
5. Return capital via dividends or buybacks

Sometimes reinvestment is right.Sometimes… it’s not.

The test is simple:Can management reinvest your capital at high returns?

If yes, reinvest. If no, pay it out.

But never forget - it’s your capital.

And you should demand to get paid when the math makes sense.

Now let’s get real.

Imagine your barber, Dave. He owns the shop, cuts hair, does the books.

You walk in and say:

“Dave, don’t pay yourself. Buy a fourth chair. Hire more barbers. Reinvest!” 

He’d laugh you out of the shop.

Because Dave didn’t open a barbershop to eventually sell it to someone else.

He opened it to get paid.

That’s what business is: turning time, risk, and capital into cash for the owner.

And if you never get paid?You’re not an owner.

You’re just another speculator.

Here’s the danger of ignoring dividends:

You become completely dependent on Mr. Market.

If you need money in a downturn, you’ll have to sell shares at the worst time.

That’s sequence of return risk.

And it’s how retirees go broke.

Dividends protect you.

They give you cash without selling. 
They buy time.
They reduce reliance on market timing.
They give you freedom.

This is why smart investors love them.

Yes, the stock might drop when a dividend is paid.

But over time?

Dividend payers - especially dividend growers - dominate.

They signal strength. Discipline. Real profits. And they pay you to wait.

So let’s be clear:
Dividends aren’t a magic bullet.

They’re just a capital allocation tool.

But in the hands of great managers - they can be one of the most powerful wealth-building forces in the market.

Cash in your hand is always worth more than theory on a chalkboard.

If you wouldn’t run a business without paying yourself…

Why would you own a stock that never will?

Dividends Misconception Clarified

Learn from the best.

Here's one important lesson from 12 of the best investors ever 🧵

• Warren Buffett
• Peter Lynch
• Terry Smith
• Joel Greenblatt
• Benjamin Graham
• Li Lu
• John Templeton
• Mohnish Pabrai
• Jack Bogle
• Rakesh Jhunjhunwala
• Charlie Munger

Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1.

- Warren Buffett

If you invest $1,000 in a stock, all you can lose is $1,000, but you stand to gain $10,000 or even $50,000 over time if you're patient.

- Peter Lynch

Investing can be very simple: buy good companies, don't overpay and do nothing.

- Terry Smith

The secret to successful investing is relatively simple: Figure out the value of something and then pay a lot less.

- Joel Greenblatt

In the short run, the market is a voting machine but in the long run, it is a weighing machine.

- Benjamin Graham

Being a value investor means you look at the downside before looking at the upside.

- Li Lu

If you want to become really wealthy, you must have your money work for you.

- John Templeton

'I'm a shameless copycat. Everything in my life is cloned… I have no original ideas.

- Mohnish Pabrai

Time is your friend; impulse is your enemy.

- John Bogle

You know, a balance-sheet is like a bikini, it shows more but it hides what is vital. 

 Rakesh Jhunjhunwala

The big money is not in the buying or selling, but in the waiting.

- Charlie Munger

Investing Wisdom from 12 Experts

Morningstar has released their 10 best dividend stocks.

Here's the list and a 🧵 with a short take on each one:

🛢️ExxonMobil $XOM

• Dividend yield: 3.3%
• 5-yr DPS CAGR: 2.4%

Solid, diversified oil company with a fortress balance sheet.

Worth a look if you're willing to accept the volatility of oil prices.

Trading towards its highest yield in 2 years

💊Johnson & Johnson $JNJ

• Dividend yield: 3.1%
• 5-yr DPS CAGR: 5.6%

One of the most diverse healthcare companies out there.

Uncertainty around litigation, drug patents expiring and new ones in development create the chance to buy a Dividend King at a relatively high yield:

🛢️Chevron $CVX

• Dividend yield: 4.2%
• 5-yr DPS CAGR: 6.4%

Another diversified oil company with a great balance sheet.

Chevron's management has shown discipline in spending and is working to lower their cost of production

Trading at a relatively high yield

💊 Merck $MRK

• Dividend yield: 3.2%
• 5-yr DPS CAGR: 7.4%

Less diversified than J&J, Merck is all about developing and selling new drugs. 

Most of the growth is from Ketyruda which is patent protected until 2028.

The risk lies in Merck continuing to develop new drugs

🥤PepsiCo $PEP

• Dividend yield: 3.1%
• 5-yr DPS CAGR: 6.8%

Second in soft drink sales to Coke and a leader in snacks

Main risks: increasing health consciousness and falling volumes

A Dividend King at a relatively high yield:

😷Medtronic PLC $MDT

• Dividend yield: 3.3%
• 5-yr DPS CAGR: 6.0%

A medical device maker of things like pacemakers and insulin pumps

Medtronic seems to be returning to growth with new products. The tailwind of increasing chronic diseses will also help. 

🍫Mondelez $MDLZ

• Dividend yield: 3.2%
• 5-yr DPS CAGR: 10.4%

Another global leader in snacks.

Mondelez has been improving the effiency of its business and returning lots of cash to shareholders

Main risks: healthy eating shifts, high cocoa prices, obesity drugs

🛢️Schlumberger $SLB

• Dividend yield: 2.6%
• 5-yr DPS CAGR: -11.7%

The premier global oilfield-services company

Positive: SLB has the majority of the digital services market, with sticky revenue and upward trends

Negative: the exploration cycle is slowing down, dividend cut

🧪LyondellBasell $LYB

• Dividend yield: 7.3%
• 5-yr DPS CAGR: 4.8%

A leading petrochemical company

The North American operations have access to low-cost feedstocks; the international businesses do not

Risks: commodity business subject to macro conditions, debt

🥣General Mills $GIS

• Dividend yield: 3.8%
• 5-yr DPS CAGR: 4.0%

A cereal, snacks and pet food company

Positives: Strong pet brands (Blue Buffalo), leading share in several categories

Negatives: Falling cereal consumption, premium brands subject to consumers trading down

The most interesting companies in this list if you ask me?

💊Johnson & Johnson $JNJ
🛢️Chevron $CVX
😷Medtronic PLC $MDT
🍫Mondelez $MDLZ
🧪LyondellBasell $LYB

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If you want to learn to analyze dividend stocks like a pro, get a free email course here:
https://sendfox.com/lp/3lrje6

Morningstar's Top 10 Dividend Stocks

Investing Lessons from Chuck Akre's 3-Legged Stool

• Focus on businesses you truly understand
• Prioritize long-term competitive advantages
• Seek high-quality management teams
• Look for long runways for growth 