A company with an economic moat can fend off competition and earn high returns on capital for … Conceptualized and named by Warren Buffett, an economic moat is a distinct advantage a company has over its competitors which allows it to protect its market share and profitability. Competitive advantages allow a company to achieve that a company holds that protects its position in the marketplace. This index uses Morningstar fair value estimates to find the most undervalued US wide moat stocks. For a list of Canadian brokers that provide Morningstar access as well as some other ways to get Morningstar free, check out the details in my upcoming article: Quantitative ratings (a computer formula figures it out instead of a person). This system remains in place today. I’m Canadian so I see these limitations with M* and smaller Canadian companies a lot too. The CDASL is one of the most popular resources that DGI&R offers so don't miss out! The ADv2 rating system has found that 17 companies have no moats, which appears to have corrected the issue where the AD rating system found that none of the companies were rated as having no moat. Acts as Check out the holdings of the MOAT – Morningstar Wide Moat ETF Holdings to find undervalued US wide moat stocks. Moat ratings have always required sign-off of committee. h�ĘmS�8����憮,�榓��@��J�� �+��NeH���yq(���uliW땼Ϯ��ƙ����,���7«�/�+��!s]jG���` ��G=4$�9QD=� 7ğ�e"t�V�1��$���̍ݠ�(��'�fFe����%�ɱ�;�3���W�����g�.�PYoQ�ټ��D=AG�0�C+m���u7��^+����0�z����Л�����)�M�w+�\��V��2-��Y��2�v�99�_0�����)s��*[�SYe���~'��%Y++�e��J����[�� �Ar7�:�)�,��V�m9����ȰPh���)�-8�c�_�88�K��| �0J'��=����y������L�-�A�� With 5 Canadian Wide Moat Examples, International Wide Moat Stocks – Every Single One Listed, 8 Canadian Dividend Growth Wide Moat Stocks, J. Chang a.k.a. Also M* changes Moat Rating quite often – if company had a year or two non-perfect financials, M* drops Moat Rating. The link above is geared towards US investors. The measure of the competitive barrier, if any, that gives a company an advantage over its rivals and allows it to generate above-average returns on … Please try again. The capital markets are banking on a vaccine rally to carry through to the end of 2020 and well into 2021. This site uses Akismet to reduce spam. A long dividend streak doesn’t necessarily mean the company has a wide or narrow moat, but it can be an indication of a high-quality company. Starting with 3M Co and ending with Zoetis Inc I listed off all 137 wide moat companies from Morningstar analyst ratings. The company is also reporting an EPS ex amortization, which was $6.17 and would lead to a payout ratio of 48%. Cost advantage. There was an error submitting your subscription. forces drive down its economic profits. Companies in the utility sector, like consumer staples and healthcare, are generally thought to be more recession-proof than other sectors. An economic moat is a distinct advantage a company has over its competitors that allows it to protect its market share and profitability. Quantitative ratings are good for some things, but understanding a company’s competitive advantages and how sustainable they are, isn’t necessarily one of them. We do not share personal information with third-parties nor do we store information we collect about your visit to this blog for use other than to analyze content performance through the use of cookies, which you can turn off at anytime by modifying your Internet browser's settings. Over 90% of the US wireless market share comes from three companies: If you want to learn more about Dividend Kings, Sure Dividend has a good article summarizing them that also has a spreadsheet download of all the Dividend Kings. h�bbd```b``�">�HF;�$"Yk��" �� �f�n�g��a`�,�"�6�H� R�D��˦��W�HS�� $�#A� E ����UE`�00Ґ����� � D�g Yeah that’s a good point about the moat rating changes (Exxon Mobil comes to mind, used to be wide moat, now narrow) and small companies. The idea of an economic moat refers to how likely a company is to keep competitors at bay for an extended period. BONUS: Subscribe today and you'll be emailed the most recent version of the Canadian Dividend All-Star List (CDASL). There were an additional 50 wide moat quantitative ratings. If they do, select US. %%EOF Champions have 25+ year dividend streaks, Contenders have 10-24 year dividend streaks, and Challengers have 5-9 year dividend streaks. The US Dividend Champions List is a free excel spreadsheet with stock information on US companies that have either increased or maintained their dividend for 5+ years in a row. Thank you for good report. Lumen’s stock (formerly CenturyLink) is depressed, in our view, because the market has continually focused on revenue rather than the stable free cash flow the firm continues to produce. There are two major requirements for firms to earn either a Narrow or Wide rating: 1) The prospect of earning above average returns on capital; and 2) Some competitive edge that prevents these returns from quickly eroding. Fair Value Uncertainty: Very High. Companies that can deliver or produce their goods or services … Developed Countries 100.00%. Portfolio Update - Potash Corporation of Saskatchewan Purchased, 8 Canadian Dividend Growth Stocks With No Long Term Debt, All International Dividend Growth Wide Moat Stocks, All Canadian Dividend Growth Narrow Moat Stocks. endstream endobj 227 0 obj <>/Metadata 15 0 R/OCProperties<>/OCGs[251 0 R]>>/OpenAction 228 0 R/Pages 224 0 R/StructTreeRoot 23 0 R/Type/Catalog/ViewerPreferences<>>> endobj 228 0 obj <> endobj 229 0 obj <>/Resources<>/Font<>/ProcSet[/PDF/Text]/Properties<>>>/Rotate 0/StructParents 0/Thumb 13 0 R/TrimBox[0.0 0.0 612.0 792.0]/Type/Page>> endobj 230 0 obj <>stream And here’s the table so you can see which ratings come from analysts vs. quantitatively: Half a century’s worth of dividend increases is certainly a good indicator of a high-quality dividend growth stock, but it doesn’t necessarily mean the company has a strong moat. Strength under pressure Narrow moat companies aren’t expected to be able to maintain their competitive advantages as long as wide moat companies. What Canadian sectors and industries have dividend paying and dividend growth stocks, and what are these specific stocks? endstream endobj startxref Warren Buffett said in the 1999 Berkshire Hathaway annual meeting that (emphasis added): I think this comment still holds true and who am I to argue with one of the greatest investors of all-time. Financial Freedom through Dividend Growth Investing. vs. a wide moat rating made by a real person (an analyst), like the ones above. Maybe I’m being too hard on the academics.”, Here’s an excerpt from Morningstar’s analyst Andrew Bischof in his August 10, 2020 report on the narrow moat. 0 Quite simply, an economic moat is a long-term competitive advantage that allows a company to earn oversized profits over time. However, the threat of material value destruction is low, and normalized returns exceed costs of capital in most cases, leaving us comfortable assigning narrow moats to many regulated utilities. It turns out that regulation for the public good typically prevents them from reaching a wide moat rating, but at the same time these regulations also help maintain a narrow-moat. Success! Open an Tangerine account with my Orange Key 17002298S1 and get a $25 Bonus! Keep reading to see the list of every wide moat stock in the USA. Bottom line: I put more weight in the Morningstar moat ratings that are made by analysts compared to the quantitative ratings. After you click the link they may ask you which country you are from. MOAT. And there you have it, every wide moat stock in the US. MOAT Economic Development. The kind of moat I'm referring to is an economic moat, a term popularized by Warren Buffett to describe the ability for a business to sustain a competitive advantage over its rivals. Well, maybe more than a few …. Morningstar analysts give every company an economic moat rating: wide, narrow or none. Economic moat is the ability of the business to adapt to rapid changes that determines how strong and wide the economic moat of the business is. The wide, narrow and no-moat ratings reflect how sustainable a competitive advantage is. There are two major requirements for firms to earn either a narrow or wide rating: 1) The prospect of earning above-average returns on capital and 2) some competitive edge that prevents these returns from quickly deteriorating. “No formula in finance tells you that the moat is 28 feet wide and 16 feet deep. Fair Value Estimate: $18. If you have a tabbed inbox, make sure to check the "Promotions" tab of your inbox. Despite the narrow-moat ratings, utility stocks can make good dividend growth stocks. Moat Size. What is an Economic Moat? It’s natural to wonder why at least one of these companies wouldn’t be considered a wide moat stock. Were you surprised by any companies that didn’t make the wide moat list? “The risk of adverse regulatory decisions precludes regulated utilities from earning wide economic moat ratings. It can give a team the third starter or extra bat they need to make a playoff run. With a market cap just over $11 … What Is an Economic Moat? M* analysts often ignore small and non-US companies, hence some of them have “only” Quantitative Moat Rating. Segment Benchmark. This investing term “moat” was made popular by famous investors Warren Buffett and Charlie Munger. Wide and narrow moat ratings represent Morningstar’s belief that a company may maintain its advantage for at least 20 years and at least 10 years, respectively. All content cannot be stored on any retrieval system, reproduced, reposted, displayed, modified or transmitted in any form, electronic or otherwise without written permission of the copyright owner, unless it is a brief excerpt of content not exceeding 100 words and a link is provided back to the source page on this blog and authorship is properly attributed. We won't send you spam. Unsubscribe at any time. But those players will leave at the end of the season. This can lead to long dividend growth streaks (consecutive years of dividend growth). 268 0 obj <>stream Economic Moat ratings represent the sustainability of a company’s competitive advantage. A no-moat company has no sustainable competitive advantages and a narrow-moat company that has some advantages that are expected to erode over the next 10 plus years or so. Wide moat companies are a natural starting point for investors looking for high-quality stocks. we assign one of three Economic Moat™ Ratings: None, Narrow, or Wide. Besides the other articles in my wide moat series, here are three additional resources you might find helpful. Even though the quant ratings are less reliable, I was glad when the quantitative moat ratings were introduced because M* coverage of Canada wasn’t that comprehensive. This does not necessarily mean that the products of non branded companies are inferior in quality, but since people trust Lakme for its quality, they do not mind shelling out … … The articles posted on this blog/website are the opinion of the author and should not be considered professional financial advice. Morningstar initiated economic moat rating in late 2002, subdividing entire coverage universe into three moat buckets: none, narrow, wide. If you were surprised that a company didn’t make it on to the wide moat list, it’s likely because Morningstar has it rated as narrow-moat instead of wide. The NAV is not necessarily the same as the ETF 's intraday … A firm must possess a … To help investors identify companies that have a moat, we assign one of three Morningstar Economic Moat Ratings: none, narrow, or wide. You’d think that most of these companies would have wide moats, so I was surprised to find out that only…. When trying to determine if a company has a wide moat, a quantitative rating is less reliable than a rating made by an analyst. Economic moat. Instead, Morningstar has AT&T and Verizon rated as narrow-moat stocks and T-Mobile has a no-moat rating. %PDF-1.6 %���� If Warren Buffett thinks understanding a moat is difficult for academics used to creating a formula for everything, then I don’t think quantitative moat ratings are going to be as reliable as the analyst ones. *�M>�0��f��� ��RCY��-�&g���)�J�|j�w�>����P@��I�F��j�. To help investors identify companies that possess an economic moat, Morningstar assigns one of three economic moat ratings: none, narrow, or wide. Dividend Kings are companies that have been able to increase their dividends for 50+ years in a row. So its fluctuates for cCyclical industries (e.g. A firm with a domineering position within its industry can build … However, the threat of material value destruction is low, and normalized returns exceed costs of capital in most cases, leaving us comfortable assigning narrow moats to many regulated utilities. , here are three additional resources you might find helpful. The spreadsheet was created in 2008 by Dave Fish (deceased 2018), and is now updated monthly by Justin Law. Economic Moat: None GM takes up a little more than 1% of Berkshire's portfolio, and Berkshire owns about 5% of GM's outstanding stock. Learn how your comment data is processed. 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