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The market is selling off… Let’s get ready for a great week of investing. Below, I break down my largest buy of 2025 and give you a full update on my dividend growth stock portfolio.

Today’s topics:

• $268K Portfolio Update

• New Buys & Sells Explained

• Buffett & Munger on Diversification

• HESM Stock Analysis 2025

• Earnings This Week

The Key Story

🚨 My Top Stock Buy Right Now - $268,000 Dividend Investing Update

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*Not financial advice. Do your own research before investing.*

$268K Portfolio Update (0:00)

• I made one of the largest reallocations ever in my dividend growth portfolio: I rebalanced and added new cash to make Hess Midstream (HESM) my #2 position.

• Context: HESM fell 18.7% in the past month and is down 24% from its July high, pushing the forward yield to ~8.9%, the highest in 3 years.

• Account snapshot: $268K (recently low $270s). Highly concentrated: MSFT 22%, HESM 20.8%, V 15.7%, MO 14.2%, GOOGL 14.2% (7 holdings total).

• Income impact: projected $10,043/yr = $2,510/qtr, $836/mo, $27.52/day, $1.15/hr (finally over $1/hr). November is now my biggest month (at least $1,515), largely from midstream names.

Intro (3:44)

• I’m sharing the rationale behind this move, how I think about diversification vs. concentration, and a full HESM analysis—leaning on Buffett & Munger’s philosophy for active investors who truly study businesses.

Secret Project Update (4:38)

• I’ve been heads down on Secret Project 1—the biggest update ever to DividendData.com—targeting late October. Follow along and use the same tools shown in the video on DividendData.com.

New Buys & Sells Explained (4:57)

Buys

• HESM: 1,149 shares @ $34.58 (~$48,716). Current annual dividend $2.95 → 8.53% yield on cost. Annual income +$4,156.

• MPLX: +7 shares @ $49.95 (prior to the HESM selloff). Current annual dividend $3.83 (~7.67% yield). Annual income +$26. (Priority remains HESM.)

Sells / Rebalance (opportunity cost + tax optimization)

• CRM: exited (~$18.1K) to harvest a loss and offset gains.

• EPD: trimmed (~$4.5K). Great run since 2020/21, but I prefer HESM’s business/value and know it better after 4–5 months of deep work.

• TPL: exited the building position—excellent business, but doesn’t fit my current energy thesis in a likely lower oil price environment.

• V: partial trim (35 shares @ $351.47) to right-size exposure and fund HESM.

Buffett & Munger on Diversification (9:20)

• For most people: extreme diversification via low-cost index funds is appropriate.

• For professionals who truly know the businesses: owning your best 6 or fewer ideas and loading up when odds are exceptional can be superior. Big fortunes rarely come from your 30th idea.

My Take on Diversification (21:40)

• Not financial advice—I do this for a living and spend many hours analyzing businesses.

• I hold long-term compounders (MSFT, GOOGL, MO, XOM) but still rebalance when opportunity cost demands it.

• Thought experiment: if a wonderful business suddenly becomes obviously superior at a huge discount, concentration is rational—tempered by risk tolerance.

HESM Stock Analysis 2025 (26:41)

Business & Contracts

• Market cap < $7B. Fee-based midstream in the Bakken (gathering, processing, storage, terminaling), heavier in natural gas than oil.

• 100% fee-based with minimum volume commitments (MVCs) and inflation escalators; commercial contracts extend through 2033. MVCs currently set through 2027.

Numbers (ttm) & Multiples

• EBITDA ~$1.9B → trading <6× EBITDA.

• Operating cash flow ~$960M → ~7.3× OCF.

• Free cash flow ~$666M → ~10.5× FCF.

• Dividend CAGR ~11% (5-yr); raised every quarter; guidance of at least 5% annual dividend growth through 2027; buybacks possible.

Chevron Overhang

• Post-Hess Corp acquisition, Chevron plans to reduce rigs 4 → 3 in Q4’25.

• Guidance: Nat-gas volumes grow at least through 2027; oil throughput plateaus in 2026 (not necessarily declines).

• 2026 EBITDA relatively flat vs 2025; 2027 growth expected. Capex significantly lower in 2026–27 (could lift FCF).

• Chevron’s Investor Day in November should clarify Bakken development; scenarios range from continued partnership to a possible HESM takeout (I view acquisition as low-probability; downside if it caps long-term compounding).

Price Target & Valuation (43:13)

• Street: Low $36; Consensus $41.50 (~+26.6% upside vs ~$33).

• DDM (conservative, dividends only) using forward dividend:

  • 5% growth @ 10% discount: $61.95

  • 5% @ 13%: $38.72

  • 5% @ 15%: $30.98

  • 7% @ 15%: $39.46

  • 10% @ 15%: $64.90

• DCF (base): ~$43.23 implied with 0% revenue growth in 2028–2029.

Bottom Line: HESM’s fee-based model, MVCs, inflation escalators, lower capex, and dividend growth framework support an attractive yield + FCF story despite Chevron-related uncertainty. I’m concentrating here because I believe the risk-adjusted opportunity is superior right now.

*Not financial advice. Do your own research before investing.*

Earnings News

Earnings Season Starting!

Companies are starting to report new financials, which will highly influence the market over coming months.

P.S. Our official partner for Earnings news is Earnings Hub. Create an account so they know we sent you.

That’s it for this week’s update. If you want to follow along in real time, analyze these tickers, or track your own portfolio, jump into DividendData.com. You’ll also find our Discord community and my AI research assistant there. Hit reply and tell me what you’re buying—I may feature a few notes next week.

📅 Keep Investing. Stay informed.

– Zach
Founder, Dividend Data

P.S. Questions or suggestions? Reply to this email—I'd love your feedback!

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Disclaimer: Dividend Dividend (Dividend Data LLC) is not a professional financial service. All materials released from Dividend Data (Dividend Data LLC) are for educational and entertainment purposes. Dividend Data (Dividend Data LLC) is not a replacement for a professional's opinion. Contributors to the Dividend Data (Dividend Data LLC) might have equities mentioned in the newsletter