What’s Your Anchor? Dividends in an Uncertain Market

Markets feel uncertain. Headlines are driving sentiment. Oil prices are volatile, and cracks are forming in private credit, making high yield look more attractive than ever. But is that yield actually protecting you, or pulling you into risk?

In this episode, Greg looks at three real-world examples to examine how income behaves under pressure and what that reveals about portfolio stability. 

We break down private credit and the hidden risks behind high yields and limited liquidity, evaluate Campbell’s ($CPB) and whether its elevated dividend is sustainable amid weakening fundamentals, and revisit Chevron ($CVX) as a case study in durable, growing income during oil market volatility.

Along the way, we explore why rising yield can be a warning sign, how cash flow drives long-term returns, and what separates sustainable dividend growth from income traps.

Because when volatility rises, the goal isn’t to predict the next move. It’s to stay anchored.

Topics Covered

[00:11] Introduction

[03:31] Market Volatility & Investor Sentiment 

[04:47] Private Credit Risks & High Yield Illusion 

[11:04] Campbell’s ($CPB): High-Yield Warning Signs 

[17:17] Chevron ($CVX): Dividend Stability in Oil Volatility 

[26:38] Berkshire Hathaway: Reminder on the Importance of Cash Flow 

[29:11] The Dividend Anchor & Final Takeaways

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Transcript

 [00:11:00] This is Greg Denewiler, and you are listening to another episode of the Dividend Mailbox, a monthly podcast about dividend growth. Our goal is to stuff your mailbox full of dividend checks. When they grow over time, a funny thing happens—you create wealth. 

Welcome to episode 57 of the Dividend Mailbox. And today we come at a time when the market is full of uncertainty. In this episode, we're gonna go over three key areas that have been playing out here recently. We will start with private credit. Private credit has taken a pretty severe hit. There are some really great yields there, so we'll review that and why we're still not in it. 

Then we're gonna go over one stock that is a name I know you'll recognize. We'll just do a quick evaluation of what we think about that. And then, of course, we've got the oil market and the whole war situation. It has affected some of the things that we've talked about in the past. So we're gonna hit Chevron. 

Right now, the news headlines are ebbing and flowing. It definitely looks like nobody knows how this thing's gonna play out in the near future. The great thing about dividend income is it helps give you a little protection in times of uncertainty. The reality is the world's always uncertain, and when things are kind of rough, it's good to have an anchor, or you can get thrown around pretty easily in rough water. So I hope the takeaway that you get from this episode is: what's your anchor? 

Just as a quick note before we get into this, dividend growth investing sounds simple, but doing it well over long periods of time takes discipline and patience. These episodes give you pieces of how we think about it, but if you're trying to build wealth, it helps to have a clear framework you can come back to when things get uncomfortable, which is why we wrote Dividend Growth: The Quiet Engine of Wealth. Ultimately, the real goal of it is to help you tune out the noise and make better long-term investment decisions. 

So if that interests you and you'd like a free copy, you can find it in the show notes or at growmydollar.com/dividend-growth-book. With that, let's get into the episode. 

What I want to do today is just go over a few points to help solidify why dividend growth is so important. And one of the problems is when it really looks good, it's hard to find good value. Well, it's getting a little easier now as prices come down. That's one of the positives to the declining market. 

Last month, one of the things we talked about is how well we were outperforming. We've given some of that back, but I will tell you we are still about 11% ahead of the market. We're positive 9% for the year, and the S&P's down 2%. So from that standpoint, things are still holding in fairly well. 

Well, you throw in some uncertainty with war, oil, private credit. AI has gone from being the best thing ever to now investors are nervous that they've overbuilt and there's some problems. There's politics—it's just, you name it, we're kind of dealing with it right now. From one perspective, it's kind of amazing the market's not down more than it is, but of course, every day we start over. So we will see. 

We're gonna touch on oil here in a little bit, but we're gonna start with private credit. So the first thing, part of that private credit story is these Business Development Corps. There really are two groups of them, or there are two segments. There's funds that are issued—they don't trade regularly—and then there are the ones that are public that trade every day. 

The attractiveness of them is that they have very high yields because they have a pool of money and they go out and lend to—usually it's referred to—mid-market companies, borrowing $20 million to $100 million. Their rates in the past have been like 10%, plus or minus. Some of them are a little higher. 

We have talked about Oaktree as one of the ones that we have a small interest in, that we've followed. They're not dividend growth—they're just high yield, which can work—but we weren't interested in putting any real money into them until a couple of things happened. 

The main reason why we've stayed away from them, or we suggest don't buy these things just for the yield, is because there is credit risk in them. And we've seen how that's played out recently. Some of these loans were made in the high-tech area, and with the whole AI scare, you've had a lot of demand wanting to come out of these private credit funds. 

The one that's really been in the headlines is Blue Owl. One of the problems is with these funds that are not liquid—the only way you can get out is to go in quarterly and request a distribution. And their normal operating policy is they will pay out up to 5% of what the value of the fund is, and that's to make sure that they don't have to liquidate the portfolio. 

Well, when you have a mass exodus, it just swamps the 5% number. What has happened—Blue Owl and several other of these things, even BlackRock—they basically have halted distributions. So right now, you can't even get your money out of them. And the funds have been hit hard. 

That has transferred over to these publicly traded Business Development Corps, and they've come down substantially. In fact, Oaktree is down almost 50% from its high last year, and right now it's $10.80. According to the stated book value right now—which is a whole other conversation, and part of why these things are getting hit so hard right now—the book value is like 0.66, meaning the stock is trading at just under 70% of what book value is stated as. 

The issue right now, and one of the reasons why these things are getting hit so hard, is because people don't even trust what that book value number is. They think it quite likely is less because there is a lot of flexibility in how these companies value their assets. 

Well, you might say, is the value of them just based on that book value getting close to a point where you can buy it? This is kind of fascinating to me as you look at markets and how different things interact. The answer is no, because one thing that has not happened yet—the credit problem is pretty much, at the moment, totally confined to this private credit market. 

How I can kind of prove that is if you look at the high-yield market, which is a version of the same thing but publicly traded, so you don't have the problem of marketability—just take some of these high-yield funds. They're barely off their highs. 

And if you look at the single-B rated bond compared to the triple-C rated bond, historically, when there's distress in the credit markets, those spreads between those two ratings—those are down in the junk category—will widen dramatically. They will widen by more than 10% and can go over 20% when you're in a really bad situation like 2008. 

Right now, that spread is just barely over 6%. January 1st it was 5.8%. Yields have gone up a little bit, but it's gone up on the total bond market because Treasuries are up a little bit from the first of the year. Treasuries have gone from a 4.05 to a 4.24 as of today. 

So the market really isn't worried about a credit problem. They are worried about liquidity, but what is not happening is there's no real distress in the overall debt market. When people get scared of being paid back their principal, that's when you see the real discounts. 

But we continue to watch them. And here's the deal: if we actually start to go into recession and these credit spreads widen, you're gonna be able to buy these things for an absolute steal. And trust me, we will buy them. 

We're looking for dividend growth, but if we get something that pays an income and it's at a considerable discount to what its value is, because of the discount, you don't need dividend growth—you just need it to survive. And then as the market recovers, you can make a lot of money in these things. 

So that's enough on private credit. 

Looking at some opportunities that are potentially unfolding—some of these brand-name companies have gotten really cheap. That's gonna lead me into the next little segment here, and as soon as I say it, you're gonna know exactly what it is and what they do. That's Campbell Soup. 

I've been watching it a little bit out of intrigue because it's a very strong brand. It's been around for a long time. It's an interesting story right now because in the past it has been a dividend growth story, but recently they've started to run into some problems. 

I mean, the stock is down significantly, and at this point it trades at a dividend yield of almost 7%. So you look at it and go, oh, great brand name, growing dividend, long-term track record—that probably makes it safe on some level. 

So you're sitting there thinking, okay, well, here's a great opportunity if the company can just stabilize and just continue to pay that almost 7%. I mean, this is a win. 

We've talked about before—we love growing dividends—but if you get a high enough dividend, it doesn't have to grow. You just could get compounding on the cash flow and take that and do something else. 

So the first question may come up: well, why not? Why not buy Campbell Soup? The thing trades at a forward PE of nine. It's very cheap. 

Well, are we missing something? I don't know the story real well. There could be a turnaround cooking here, but I don't know what it is. 

Let's just start with 2025. Campbell Soup had total assets of $14.9 billion. They've got a lot of debt out. The shareholder equity part is $3.9 billion, so theoretically you liquidate the entire company—it's worth $3.9 billion. 

Here's the first problem: you have goodwill and intangibles of $9.3 billion, meaning that is more than what the equity of the company is worth, and it's more than 50% of what the total asset base is. 

What that tells you is they have bought businesses and paid more than what the book value of the business is. That's not uncommon—in fact, it is common—because businesses are theoretically always worth more than their asset value unless they're really distressed. 

But here's the problem: they've made all those acquisitions and they haven't really produced any growth. 

And the other big problem—in 2022, the return on invested capital was 10%. That's kind of our minimum hurdle rate because it implies it's more than their cost of debt and basically what the cost of equity is perceived to be. 

Well, if you could buy something at a 6.5% dividend and they were able to maintain that return on invested capital of 10% and then maintain that dividend, you probably have a great story. 

That's not what's happened. In 2025, return on invested capital is down to 5%. They've spent money trying to grow, but their returns have been getting worse, not better. 

They've had revenue growth, but at what cost did it come? In our view, it's too high. 

You've had the dividend—in 2022 it's $1.48. Now it's up to $1.56. That's about 6% growth over three years. In 2022, earnings were $3. In 2025, they're $1.93. The estimate for 2026 is $2.40. 2028 is $2.60. 

Basically, the analysts think the business is gonna somewhat stabilize in here, but analysts tend to have a herd instinct, and in the end, they don't know. 

And this story is just a little bit scary in my mind. The market's already discounted some bad news, but it's not gonna take much for this story to get worse. And they've got problems. 

Because if you've got a dividend of $1.56 and you only have earnings right now of $2, you're paying out most of your money in cash flow to the shareholder. And that becomes a dangerous situation for a dividend cut at some point in the future. 

The good news—why I wouldn't panic if you own it—their debt's 1.8 times equity. The times interest is four times, which means they should be able to continue to pay the debt without any problems. 

But again, if we thought they could maintain that dividend, we might look at it. But there's too many issues at play here. The profitability's not there. The trend's not there. We don't have confidence there's not gonna be a dividend cut and that they'll continue to grow this business. 

What can happen—a new CEO can come in, have a different game plan, and actually help turn it around. I mean, this thing is probably wide open for a major investor to come in and try to turn it around, but that's not really a game we play. 

We're looking for that 10-year horizon where we feel like the dividend can double. 

So it's an interesting story, but there is a point where high yield stops becoming attractive and it starts raising flags as to whether there's any growth or there's possibly gonna be cuts coming.  

The next piece I want to go into—this is on a little different note—but oil has become the center of the universe for pretty much everything right now. Iran is clearly using oil as their main leverage to try to survive, and the rest of the world is trying to take that away from them so that oil prices come back down. 

All the politics behind this really drives prices from one day to the next—whether it's getting a little better or a little worse. This is where you really get the benefit when you have a dividend. 

Chevron's one that we've talked about in the past, but we haven't really bought it for a while to any size. But it is one of our core positions. 

The great thing about Chevron is even at its current price, which is in the mid-$190s, the yield on it is 3.6%. When it was back down around $160, the yield was well over 4%, so you had a great income stream coming out of Chevron. 

And the reason why we own it is because it's also a dividend grower. It's one of the few oil companies—the big internationals are all pretty much in this list—but Chevron has other businesses. They have refining, they have chemicals. Not only do they drill it and take it out of the ground, they transport it. 

Chevron is a very big, diversified business in the energy market, and they even have some clean energy stuff, and they are trying to move a little bit more in that direction. But the majority of their business is oil and gas. 

Even in the case of that brief period of time—while it was one day in 2020 when oil went negative on this short futures market because there was so much oil out there, there was no place to store it—there was a few-hour period where you actually got paid to take a thousand barrels of oil. 

And through that entire period, Chevron paid their dividend, and they actually increased it. 

So what happens when oil spikes up? Well, the price of Chevron goes up. The rest of the market, not so much, because they're worried about inflation and what's going on with this war—how much is it gonna disrupt? 

And when you have oil going from $65 a barrel to $95 a barrel or over into the low $100s, then everybody starts thinking about recession and what's gonna happen. 

Well, here's the point that I really want to get to on Chevron, and it's back to what do you do when there's uncertainty in the marketplace and the headlines start to get a little scary. 

The art of forecasting and trading is extremely hard, and the best example I can give you is—let's go back to March 2nd, when the war really had just gotten started. Crude oil hit $72. As the marketplace usually does, they panic both on the upside and the downside. The stock actually hit $189. 

If I told you that in the next four days oil's gonna go from $72 to over $100 a barrel, you would be thinking, well, okay, I better bet the farm on Chevron. 

You get out to March 6th—oil is $17 higher than it was on March 2nd, but the stock's still the same price. 

The casual observation is, what the heck's going on here? 

What drives the market is the perception of the future, not the present. The present has an impact, but it usually doesn't last very long. 

So even though oil is up because of temporary supply-demand problems, people are looking at the overall environment and saying, okay, oil is up, but it may not last that much longer. 

Well, Iran is starting to focus pretty much all of their energy, so to speak, towards trying to close this strait. 

And even though we don't use hardly any of it for our demand—and we are the biggest consumer of energy in the world—we produce enough that we can meet our own demand, which is one reason why oil's probably not at $150 right now. 

But the rest of the world—most of it—still depends on a lot of imports, and a lot of that goes through the strait. 

So at this point, it's looking like the disruption's gonna last a little longer. The marketplace is willing to pay a little bit more for the stock at this point. 

So therefore, oil's up to $95 and Chevron moves up to $198. 

So why do I go through all this? 

Well, should you take advantage of a short-term move? Should we have sold it, or should we sell it? 

Because I'm willing to wager that oil is probably not gonna stay here long term. I mean, at some point, this thing's gonna get resolved to some degree, and then the market returns to some level of normalcy. 

These company stock prices tend to revert back to the mean. 

In Chevron's case, I really think that the dividend can really change your mindset on how you look at it. 

Because it doesn't mean that you shouldn't take advantage of some significant moves, but it takes a lot of pressure off of whether you need to worry about what to do with it from day to day. 

Here's the beautiful thing about dividend growth investing. 

Chevron pays a dividend of $7.12. If you take Chevron just declining back to—let's just say back to the $165 level from where we are right now—if you miss the opportunity to sell it and you just hang on, in four years you've got probably close to $30 of dividends just at the current rate. 

Even if you just sit on your hands and do nothing and miss a short-term opportunity, the dividend eventually bails you out. 

And us being a little bit more value-conscious, we'd have a hard time buying it up here—a really hard time. In fact, we won't. 

But let's just say you bought it at $190. The stock drops back down to $160 and stays there, and you're thinking, oh, maybe I shouldn't have done that. 

Well, over the 10-year time horizon, this is still a decent investment. 

Even if the stock—you pay too much for it—and in 10 years, with no dividend increases at all, you're gonna have more than $70 coming out in dividends. 

That's the beauty of investing for income and having something that has a growing income stream. It really starts to take a lot of pressure off trying to guess what the marketplace is doing and what should I do on a short-term basis. 

If you sell it and it goes higher, you've made good money on it. You've had a great income stream. There's a little bit of opportunity cost where you gotta go somewhere else and you're trying to replace the yield. 

Or the other option is you just do nothing and keep collecting the dividend. 

It is paying a 3.6% dividend at its current rate, and it will quite likely grow it. Estimates are more than 5% for the next several years. 

There are options here, and the good news at this point—none of them are wrong. They all will probably lead to a good outcome in the future. 

And this thing has actually been in the model portfolio since day one. Since we have owned this thing for more than 15 years, we have gotten our entire cost basis out of it in dividends. 

That's the beauty of a growing income stream. 

In full disclosure, since Chevron is one of our larger positions, we may sell a small piece of it. Small to me is 25%, maybe as much as a third, because I really do like the oil story long term. 

But the whole idea is you are looking for total return and trying to maximize the use of your capital. 

And I just want to bring up a quick comment: companies don't have to pay their cash flow out in dividends. But what is important is do they create it, and do they use discipline in growing it? 

If you follow the markets much at all, you know Warren Buffett has retired. Berkshire Hathaway is now run by Greg Abel. 

And even though Berkshire Hathaway doesn't pay a dividend, their entire focus of their business model is about compounding cash flow. 

In this annual letter, which came out a few weeks ago, Greg Abel goes through and talks about the current businesses at Berkshire Hathaway and where they're at. 

He actually lists some of the top major holdings of the public companies—Apple, American Express, Coke, Moody’s—the four largest holdings. 

Actually, Chevron is up there on that list that's relatively high, and Conoco's up there—two oil stocks. 

And he shows the 2025 dividends that came out of that group. The interesting thing is they all pay dividends. 

He talks about some of the private equity investments. One of them is Pilot, and Pilot delivered $1.7 billion of net cash from their operating activities. 

It's really always been their business model—they go after growing cash flow. 

In the end, everybody eventually invests for cash, period. 

Even if you're speculating on whatever name you want to come up with and you're hoping it goes up for a week and then you can sell it for double—kind of an extreme example—but there is some of that out there. 

Well, what are you doing? You're investing for cash. You put cash in, you get cash out, you're hoping you get more cash out. 

Option two—the other way—is you hold it for a while, you get paid a cash flow like Chevron. 

You've got your entire cost basis out in dividends, and we still have an asset that we can sell for a lot more than what we paid for it. 

So in the end, whether you think so or not, it's all about cash flow. 

And this is probably a good segue into—we're gonna conclude with—an anchor can be a really good thing. 

One way you may look at this is if you've got a ship or a boat—really no matter what it is—the anchor is a small fraction, like 1%, 2%, 3% of the weight of the boat or ship or whatever you're referring to. 

But what happens is the anchor keeps that vessel from floating out to sea or just drifting in the water. And it doesn't take much weight to really control the entire boat. 

We'll see how the markets play out. They're very volatile right now. Headlines are really driving the bus. 

And I hope the point you got from this episode is the anchor is, of course, the dividend. It's the whole concept of yield and how it can play out in several different forms. 

And on the private credit side, that dividend is not an anchor—it's potentially the iceberg that you hit. It can be part of the problem of why the whole thing potentially falls apart. 

And unfortunately, that's what sucks people into buying these things—thinking that the income will help keep it safe. 

With Campbell Soup, on the surface, you would think great brand names, long-term track record—it’s been a great dividend growth story. 

But it only matters from today on. Is the dividend a sustainable growth story, or has something changed with the company? 

And quite possibly what has happened in Campbell Soup is they've moved out of mature and into potentially a declining business—unless they can reinvent this thing. 

When you've got a 7% yield, it helps protect you if you're wrong. That'll help dig you out of the hole. 

But in the end, how you make money and create wealth is you want the dividend to grow. 

And that leads us finally to Chevron. 

The dividend is growing. The core business looks solid. The future looks good. 

You get into a little bit of a dilemma—should I take some profits or not? 

When you've got a dividend that's returning capital to you, it truly just helps to change the whole frame of your thinking. 

Take some of the pressure away from focusing on day to day, and it turns it into—if they do compound the dividend, that's where the wealth is, not whether the stock has gone up 20% or 30% in the last month. 

So that's my little analogy there to an anchor. 

And the reality is, it really works if your mindset becomes convinced that you're gonna grow that dividend over time. 

And especially just like our model portfolio—our income now, on a cost basis of what we originally started with, is now up close to 15%. 

So anchors work, and when the income stream is strong enough and it's growing, it just gives you a lot of room to be patient. 

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If you would like more information regarding dividend growth or our investment strategy, please visit growmydollar.com. There you'll find previous episodes and also our monthly newsletter. 

If you have any questions or anything to add to today's episode, please email ethan@growmydollar.com
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Past performance does not guarantee future results. Every investor should consider whether an investment strategy is right for them and all the risks involved. Stocks, including dividend stocks, are volatile and can lose money. 

Denewiler Capital Management may or may not have positions in the publicly traded companies mentioned herein.