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If Exxon Mobil Corporation Can Work With Russia, Then Why Not BP plc?

BP (LSE: BP) warned investors that further sanctions against Russiacould impact its operations and earnings, due largely to its part-ownership of Russian oil giantRosneft. Yet Exxon Mobile (NYSE: XOM.US) just kicked offa joint venture in Russiawith the very same Russianfirm. What gives?

If you’re interested in backing companies with exciting growth potential, then you’ll want to read ourlatest FREE report. Simply click through to discover our analysts’number one growth stock for 2014!

Owain Bennallack has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Tesco PLC Should Learn From Carrefour SA’s Recovery

Tesco(LSE: TSCO) is the retailer everyone loves to hate. The company just cant seem to find any friends. Indeed, despite the companys size and multiple attempts to lure customers back into its stores, sales are still sliding and there is now talk of a dividend cut.

However, long-term investors shouldnt be worried as Tescos troubles are similar to those faced by larger peerCarrefourseveral years ago. Carrefours recovery, after only a year and a half, is starting to gain traction.

European troublesTesco

Carrefour, the worlds second largest retailer in terms of sales, ran into trouble back during the financial crisis and things steadily got worse. The European debt crisis sent the retailer over the edge and during 2011 the companys share price was cut in half. Sales collapsed across Europe and the company was forced to take drastic action.

Just like Tesco, Carrefours first move was to give its CEO the boot. The new CEO found a company that had become complacent, over-complicated and disconnectedfrom its customers and its roots sound familiar?

So, during 2012 the turnaround began.The new CEO immediately slashed the hefty marketing budget, and began exciting markets around the world. In addition, the dividend payout was scrapped and what has been described as a ruthless cost-cutting programme began.

Making progress

Now, halfway through its turnaround plan, Carrefour updated the market on its progress earlier this year. Thankfully, sales have begun to recover again and the companys share price has nearly doubled from its 2012 low.

Carrefours turnaround shows what Tesco is capable of. Just like Carrefour, Tesco has overexpanded and an aggressive programme to cut costs, reduce waste and exit unprofitable markets will most likely turn the companys fortunes around.

Actually, it may be easier for Tesco to turn things. Carrefours key markets are within the Eurozone, where competition is aggressive and the economic situation is yet to improve.

Unfortunately, Carrefours dividend cut does imply that Tesco is likely to cut its payout in the near future. Still, at present levels Tesco supports a dividend yield of 6%. Even if the payout was slashed by 50%, the company would still support a yield of 3% only slightly below the FTSE 100 average dividend yield of 3.4%.

Turnaround will take time

It has taken Carrefour a year-and-a-half to start seeing results from its turnaround plan. With this in mind, as Tescos is yet to launch an aggressive turnaround plan, investors may have to wait several years to see results.

For long-term investors, two years of waiting is a small price to pay. Whats more, two years of lacklustre share price performance gives investors to reinvest their dividends at an attractive price, which should turbo-charge returns when Tesco springs back into life.

Reinvesting your dividends is an easy, but often overlooked way of increasing your wealth. All you need to do is buy a selection of reliable dividend paying stocks, sit back and relax.

To help you build your dividend portfolio, the Motley Fool’s top analysts have put togetherthis freereport revealing the secrets on how you can“Create Dividends For Life”.

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Rupert Hargreaves owns shares of Tesco. The Motley Fool owns shares of Tesco. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The Risks Of Investing In AstraZeneca plc

Today I am highlighting what you need to know before investing in AstraZeneca (LSE: AZN) (NYSE: AZN.US).

Sales projections to haunt AstraZeneca later on?

In a bid to stave off the overtures of US rival Pfizer, AstraZeneca chief executive Pascal Soriot announced back in May that a rejuvenated research and development plan is set to turbocharge revenues to a mammoth $45bn by 2023.

This was a bold statement given that turnover at the company continues to slide, and group sales rung in at just $25.7bn last year. And as astrazeneca2Barclays Capital points out, around $15bn of this projection is generated from drugs which are yet to pass through the companys pipeline, a risky strategy given the hit-and-miss nature of drugs testing.

AstraZeneca has already cautioned that its massive restructuring plan which includes the construction of a brand new state-of-the-art HQ in Cambridge and establishment of several satellite bases across Europe and the US will not make a meaningful contribution to the firms revenues until 2018 at the soonest.

In the meantime the business will continue to suffer the effect of crumbling patents, such as that of cholesterol-battler Crestor later this year this one drug alone is responsible for more than a quarter of group turnover.

Against this backdrop AstraZeneca will need to continue delivering a steady stream of good news from its extensive testing network. The firm received a boost this week when the US Department of Justice closed annexed an investigation into a trial used to gain marketing approval for its Brilinta cardiovascular drug, long identified by the business as a significant sales driver in coming years.

But given the unpredictable and often prolonged process that new products have to pass through, any setbacks could deliver a hammerblow to the companys earnings prospects.

AstraZeneca is expected to punch a third successive annual earnings dip this year, with a 13% fall currently pencilled in by City brokers. This leaves the pharma giant dealing on a P/E multiple of 16 for 2014, above the benchmark of 15 which is generally considered reasonable value for money. And this moves to 17.1 for next year amid predictions of a further 6% fall.

By comparison GlaxoSmithKline, which in my opinion has a far more bubbly pipeline than its rival, trades on far more attractive multiples of 14.8 and 14 for 2014 and 2015 correspondingly. Given AstraZenecas relatively-heady premium, I believe that any signs of spluttering product development could have a catastrophic effect on the firms share price.

What We Think The Smart Money Is Buying

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Royston Wild has no position in any shares mentioned. The Motley Fool has recommended shares in GlaxoSmithKline. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The 5.7% Income At GlaxoSmithKline plc Could Be Too Good To Miss

As the market continues to tread water and interest rates remain at record lows

And while gold loses its shine and the price of bunker baked beans are still on a 2-for-1 deal

There is at least something going up.

Yes, Foolish readers, dividends are on the march higher yet again.

But this time its not just payouts from the FTSE 100 that are climbing. Dividends from all around the world are gaining ground.

Shareholders could receive an extra $100bn this year

According toAlex Crooke, the head of global equity income at Henderson Investors, global income investors are enjoying a bumper year.

Mr Crooke says:

2014 looks set to deliver the fastest growth in global dividends since 2011, only this time, most of that growth will come from increases in payouts from firms themselves, rather than from swings in currencies

Sounds good to me.

Indeed, the boffins at Henderson calculate global dividends surged almost 12% to a record $426.8bn during the second quarter of this year.

Payouts advanced throughout Europe, America, Japan, Hong Kong, Australia as well as here in the UK

thanks to the likes of Nestle, Sanofi, China Mobile, Commonwealth Bank of Australia, British American Tobacco, Toyota, Wal-Mart and Exxon.

And if the dividend momentum keeps going, Mr Crooke reckons shareholders around the world could receive an EXTRA $100 BILLION during the year as a whole.

Which is not bad going for holding so-called boring Foolish blue chips.

You can understand why the FTSE has stalled this year

Still, theres always something for the doom-sayers to latch on to.

And yes, currency fluctuations have hurt some British dividends during 2014.

You see, between July last year and July this year, sterling has jumped from less than 1:$1.50 to more than 1:$1.70

so reducing the converted payments from dollar-payer faves such as BP, Shell, Rio Tinto and AstraZeneca.

Heres a good example of the effect currency rates can have on our returns:

In dollar terms, this years Q2 dividend from BPadvanced 8% to 9.75 US cents.

Yet in sterling terms, the payment looks set to inch from 5.76 pence to about 5.84 pence an increase of just 1%.

And when you think just how significant the dividends from BP, Shell and so on are to the FTSE 100, you can understand why the wider market has stalled this year.

A MASSIVE $4.5 TRILLION has been paid out in the last five years

Of course, such currency movements are part and parcel of investing. So if they scare you from backing quality blue chips or investing in general, simply leave your money in the bank.

Indeed, if you are not prepared to invest for the long term

allowing currency movements to even themselves out and the stock market to weave its compound-return magic

simply leave your money in the bank.

And good luck if you do decide deposit accounts and their rock-bottom interest rates are for you.

Because the stock market is not for everyone.

But when you realise, according to our friends at Henderson, that during the last five years:

  • Global dividends have surged almost 60%;
  • Investors have shared payouts totalling a MASSIVE $4.5 TRILLION, and;
  • Currency movements have affected total dividends by just 1.4%

then youll understand completely why I think buying tip-top dividend-paying blue chips for the long haul makes perfect sense to ordinary investors such as you and me.

And talking of tip-top paying-dividend blue chips

Buying today at less than 14 gets you a super 5.7% income

I said on Monday that there are always opportunities to buy quality companies on the cheap, whatever the market conditions.

And trawling through the index, I see GlaxoSmithKline(LSE: GSK) (NYSE: GSK.US) has returned to a new yield high.

As the chart below shows, Glaxos shares now offer a 5.7% income matching that attained during the banking crash and the Greek-euro crisis.


Source: CapitalIQ

True, a quick check of Glaxos results showed a challenging first half, with those nasty currency movements not helping matters.

In fact, core EPS for the half of 40.1p slipped 5% in constant currency terms but plunged 22% at actual rates.

But all companies endure difficulties from time to time even global dividend powerhouses such as Glaxo.

But they can also enjoy periods of notable success and market enthusiasm. In fact, that chart shows Glaxos yield dropping below 3% during 2005 and below 2% during 2001 in the good times

And one day, new products and rising sales could rekindle that market enthusiasm, lift the share price and so push the yield lower.

You never know, perhaps the yield may drop down to 3% again. If it did, the shares would sit at 26 based on the current 80p payout.

And if you really want to be ambitious, the shares would be 40 to give a repeat of the 2% yield seen in 2001.

In the meantime, buying today at less than 14 gets you a super 5.7% yield and a slice of the near-4bn Glaxo adds to the global dividend pot every year.

All told, I can think of worse shares to consider right now.

Anyway, Ill leave the last word to Mr Crooke at Henderson:

When considering equities, most attention is paid to the daily movements in share prices, but in fact, over the long term, dividends and dividend growth offer the principal source of an investors total return, and provide a compelling basis for valuing companies.

GlaxoSmithKlineis one of five shares in theFTSE 100that our top analysts have highlighted in our special report “5 Shares To Retire On“. To find out the reasons behind their inclusion, and the names of the other four shares, simplyclick hereto have it delivered completely free to your inbox.

Maynard owns shares in Commonwealth Bank of Australia. The Motley Fool has recommended shares in GlaxoSmithKline.

What You Were Selling Last Week: Gulf Keystone Petroleum Limited

gulf keystoneOne of Warren Buffetts famous investing sayings is be fearful when others are greedy and greedy only when others are fearful. Or, in other words, sell when others are buying and buy when theyre selling.

But we might expect Foolish investors to know that, and looking at what Fools have been selling recently might well provide us with some ideas for investments that may be past their prime

So, in this series of articles, were going to look at what customers of The Motley Fool ShareDealing Service have been selling in the past week or so, and what might have made them decide to do so.

No bed of roses

Its really not been a good year so far for shareholders inGulf Keystone Petroleum(LSE: GKP).

Last yearwasnt exactly a bed of roses Gulf Keystones share fellby as much as 35% at one point in 2013, but it clawed its way back up (and down and up again) to end the year only slightly below its start-of-year level.

But 2014 has been a disaster.

To begin with, the first Competent Persons Report (CPR) on Gulf Keystone, published by ERC Equipoise in March this year, only confirmed proved and probable reserves in the Shaikan andSheihk Adifields of 299m barrels of oil, putting Gulf Keystones share at just 163m barrels. The report also put thegross oil in place at 12.5bn barrels over a third lower than previous estimates, and less than had been estimated for Shaikan alone.

The market reacted badly tothe reports contents andGulf Keystones share price dropped close to30%.

Director departures

The situation wasnt improved when three board members finance director Ewen Ainsworth and three non-executive directorsleft Gulf Keystone in June,followed in July by thedeparture from the board ofhighly controversial CEO and founder, Todd Kozel, together with yet another non-exec.

That said,Kozels stepping down as CEO would have been greeted with pleasure by many shareholders, who had long been dismayed by his more than somewhat generous remuneration package, and his replacement,John Gerstenlauer, is an industry veteran, having started his career with a division of Shell in 1978.

By the middle of July,Gulf Keystones share price was down nearly 50% since the start of the year.

The fog of war

Butif all the company-related bad news werent enough,Gulf Keystone now finds itself on the edge of what amounts to a war zone, as Islamic State the jihadist militia formerly known as ISIS tries to impose its caliphate on Iraq by force.

Although Islamic State has recently seized some key oilfields in Kurdistan, Gulf Keystones operations are probably not under direct threat. Even so, having a war going on next doorcan only complicate matters, and Gulf Keystone could well be indirectly affected by any problems with infrastructure caused by the mountingconflict, and by the inevitable disruption to business in Iraq in general.

As a consequence of the above and despite gaining a main-market listing and starting commercial production this year Gulf Keystones share price is now down 56% so far in 2014, compared with aFTSE All-Share index that has barely moved either way), and there are no immediatereasons why it should go up significantly again any time soon.

So, perhaps some shareholders had simply had enough last week, and decided to put their money into a less troubled venture, thereby securingGulf Keystone the number one spot in our latest Top Ten Sells list*.

There may be an argument to be made that perhaps things cant really get worse, andmaybe now is the time to bagan oil share at a bargain price. If things were tostart going Gulf Keystones way, its share price could rocket.

But, of course, things can always get worse, so youd need to think very carefully before deciding what to do.

Picking the wrong company to invest incan really hurt your wealth. That’s why The Fool’s expert analysts have produced anexclusive newreportin which they revealWhere We Think The Smart Money Is Going Now.

It’s completelyFREEand there’sno further obligation. Soget your copynow!

Jon Wallis has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

* based on aggregate data fromThe Motley Fool ShareDealing Service.

Boohoo.Com PLC vs ASOS plc: Which Should You Buy?

boohoo 2

Online fashion is a highly lucrative market. Indeed, it seems to be gaining in popularity all the time, with teenagers and twentysomethings using their tablets and mobiles more frequently to buy clothing items, with free and no-hassle returns making the shopping experience an even better one.

Two companies that offer such a service are Boohoo.Com (LSE: BOO) and ASOS (LSE: ASC). Which, then, is the better buy?

Vast Disappointment

Investors in ASOS and Boohoo.Com have endured hugely disappointing years. Since it listed in March of this year, Boohoo.Com has seen its share price fall by 47%, which sounds awful until you find out that ASOSs share price has dropped by 65% over the same time period. Part of the reason for their share price falls have been overly inflated expectations when it comes to their growth forecasts.

Clearly, all companies would love to maintain superb levels of growth, but it just doesnt happen. There are disappointments, for example ASOSs bigger-than-expected losses in China, and unforeseen challenges that are simply not initially factored into the share price. So, while price to earnings (P/E) ratios are likely to always be at a premium to the wider index (and can remain so for a prolonged period as was the case with ASOS), when there is disappointment, shares are hit even harder as has been the case with Boohoo.Com and ASOS this year.

Looking Ahead

Still, Boohoo.Com and ASOS are expected to post strong numbers moving forward. As mentioned, ASOS has had a tough year, with earnings per share (EPS) forecast to fall by 18% this year, before rising by 43% next year. Meanwhile, Boohoo.Coms 2014 is set to be much better than that of ASOS in terms of profit growth, with the Manchester-based company expected to grow earnings by 20% this year and by 36% next year. All of which are hugely impressive numbers if the two companies can hit them, of course.

After the recent share price falls, ASOS and Boohoo.Com now seem to offer reasonable value for money. Certainly, if their growth forecasts are met, they seem to offer growth at a reasonable price. For instance, ASOS trades on a price to earnings growth (PEG) ratio of 0.9, while Boohoo.Coms is just 0.7. For this reason, Boohoo.Com could prove to be the better investment of the two, although PEGs of less than one indicate that both companies could prove to be sound investments at current prices.


Of course, a prudent move could be to complement ASOS or Boohoo.Com with larger, more established peers such as Next (LSE: NXT) and M&S (LSE: MKS). The former offers investors considerable growth potential, with earnings set to increase by 15% this year and by 8% next year, while M&S is due to grow its bottom line by 10% next year. Furthermore, Nexts share buyback programme remains highly lucrative for investors (and ensures the company only buys shares back when they represent good value for money), while M&S continues to yield an above-average 4.1%. As such, both Next and M&S could prove to be winning future investments, too.

Clearly, low inflation and low interest rates are having a positive impact on UK retailers. Therefore, it could be a good time to take a look at the sector (and others) in more detail. That’s why we’ve written a free and without obligation guide to where we think the smart money is headed.

The guide could help you to uncover hidden gems and give your portfolio a boost. It could help you to retire early, pay off your mortgage, or even make sitting by the pool a more regular event!

Click here for your copy of the guide – it’s completely free and comes without any further obligation.

Peter Stephens owns shares of Marks & Spencer Group. The Motley Fool UK owns shares of ASOS. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Is BHP Billiton plc’s Demerger A Bonanza Or A Headache?

Mining giant BHP Billiton (LSE: BLT) (NYSE: BBL.US) is set to spin off its non-core assets into a new company, and management claims the restructuring will deliver greater value for shareholders. That remains to be seen, but either way there could be a sting in the tail for UK shareholders

An income investor should spread their money between different companies and sectors, rather than putting too much faith in the notoriously cyclical commodity sector for their future income. To learn more about securing an income stream from dividends,download our free report now!

Owain Bennallack has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

So We Meet Again!

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Are You Here, Again?

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Hello Again World!

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Femi Ogunshakin Managing Director
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