A new year brings a new spat. In essentially a public relations ploy, Carrefour (CRRFY) took it upon themselves to unilaterally combat inflation and shrinkflation, the current target being Pepsi (PEP). This is one the French public is likely to embrace out of a combination of nationalism and frustration with the inflation battle. Yet, this could present a buy opportunity for Pepsi.
I believe this is negotiating tactic being used by Carrefour as the French government, in an effort to protect their farm industry, restricts price negotiations to annual events. Last year’s pricing locked in a higher rate of inflation which is now trying to be clawed back. Hence, the government accelerated the schedule from March to January. Worst case, if all negotiations fail, Bernstein analyst Callum Elliott estimates that Carrefour stores account for 0.25% of Pepsi’s global revenue.
Considering Pepsi’s raised guidance, I couldn’t restrain myself from making my initial 2024 purchase as they had a nice drop at the open Monday, and I was able to improve the on price paid on the last tranche in November.
Interestingly, the war of words spilled over into Tuesday’s trading with both sides seeming to want to claim the prize for being the one to hold the line on their convictions.
As I’m realigning my spreadsheets for the new year, one oddity stood out from last year’s data. Only one of my holdings had a deviation in dividends greater than 1%, the culprit being Blackstone (BX) which pays a percentage of earnings rather than a set amount. Obviously, I didn’t accomplish the increase of my core holdings to the threshold I had expected when 2023 began and the transactions performed were largely minimal in nature to the broader portfolio.
While continuing with the same mindset entering the new year, I dusted off and updated the Dividend Goal tab. The underlying data doesn’t present a pretty picture.
- 13% of the portfolio have declared increases averaging 4.83%. This compares unfavorably to 2023’s (January view) 10.09% or 2022’s (January view) 5.95%. (2022 was distorted being post-covid and had T’s cut).
- The current projected dividend stream is slightly below 2023 as I have yet to replace the dividends lost with some of the end of year sales.
While I expect the 4.8% to grind a little higher (7.5% perhaps?) and projected dividends to increase some, it would appear that I’m dependent on interest this year to close the gap in order to attain the 10% annual passive income increase goal. Now, companies may accelerate their annual increases, but I’m not holding my breath. The better part of valor is to get ahead of the eight ball and complete the CD ladder. I can always swing the focus back to dividends if/when the trend improves. The downside being the loss of compounding, which when a portfolio is in the distribution phase is negligible considering the compounding effect takes 7-10 years to bear fruit.
So time to hunker down as the first wave of the arctic blast just hit. Our esteemed governor has promised no power grid problems this time around, but I’m not holding my breath on that item either.
Stay safe and warm!
Seeking Returns 