Analysts expect this blockchain company to grow at 19.5% annually over the next five years.
Intuit (INTU)
From Contrarian Outlook
Now that the air has come out of the crypto-mania, I hope it’s safe to talk about the real opportunity.
I’m not talking about Bitcoin. I’m talking about the blockchain—and the dividend growth opportunities that will unfold as this “megatrend” plays out in the coming years and decades.
The blockchain is the nascent technology that serves as the backbone for cryptocurrencies such as Bitcoin and Ethereum. Today, I’m going to introduce you to a pioneering income play that boasts a “blockchain kicker.”
First, a quick primer on blockchain.
The simplest way to describe the technology is to call it a digital ledger of sorts. It’s essentially just a group of encrypted records (“blocks”) that can be used to record transactions and other interactions.
The utilization of blockchain that people are most familiar with are cryptocurrencies—products such as Bitcoin that are meant to serve as digital currencies but have quickly become extremely speculative investments as they’ve gained thousands of percent in just a few years. But companies are increasingly learning that blockchain can be used for so much more, from tracing medical histories to keeping voting records.
As a result, companies from Amazon (AMZN) and International Business Machines (IBM) to Bank of America (BAC) and Goldman Sachs (GS) are becoming increasingly involved in trying to exploit this technology. That has given rise to a few exchange-traded funds (ETFs) focused on this space, including one that’s surprisingly rife with dividend growth names.
The Reality Shares Nasdaq NexGen Economy ETF (BLCN) is a portfolio of companies expected to benefit from blockchain in some way, with the stocks actually graded by their “potential for increased economic profit, operational efficiencies, and transformational business practices.” In short, it holds “companies working to utilize and incorporate blockchain technologies into their businesses.”
What fascinates me about this fund, however, is the dividend growth potential in some of its component stocks.
Reality Shares’ BLCN is a deviation from its main focus: income. The ETF provider boasts another quartet of funds, all of which hold dividend stocks, and three of which are centered around the company’s proprietary “DIVCON” system.
The DIVCON system essentially measures a stock’s dividend health, assigning a score of 1 to 5, “where DIVCON 5 indicates the highest probability for a dividend increase and DIVCON 1 the highest probability for a dividend cut.”
And right now, this system is flashing a ringing endorsement for this blockchain-linked stock, which is at “DIVCON 5.” In other words, it’s in the best position for dividend growth going forward:
If the blockchain acts as a ledger of sorts, what better company to research its applications than Intuit (INTU)—the well-known purveyor of accounting software such as TurboTax and QuickBooks.
Intuit clearly spells out the blockchain opportunity in a post about the technology’s potential:
“Some accounting and auditing firms already embrace blockchain technology. Blockchain transactions are simpler, more visible, and more transparent. Improvements in operational efficiency mean that much of the work accountants do, such as collecting and inputting data, sampling, and proving provenance, takes place automatically. This leaves accountants more time to provide valuable services to their clients.”
Again, this is another prolific dividend grower that has more than doubled its quarterly dole in five years. And its DIVCON rating of 5 implies that INTU is well-armed enough to continue the upward march. BLCN Weight: 1.31%.
Brett Owens, Contrarian Outlook, BNK Invest Inc., 500 North Broadway, Suite 265, Jericho, NY
11753 USA, 516-620-4294, info@bnkinvest.com, May 11, 2018