THE PATIENT CAPITALIST

Boston, MA

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Good Sunday morning. Coffee in hand, I trust, because what follows is the kind of reading that pairs poorly with rushing.

The market had an eventful week - which is to say, financial television had an eventful week. The S&P 500 moved, analysts issued urgent reassessments of positions they held three weeks ago, and at least one prominent commentator described conditions as "unprecedented" despite conditions being, by any historical measure, entirely cemented. Meanwhile, the dividends were deposited, the DRIPs executed quietly, and the patient investor's portfolio did what patient investor portfolios do: approximately nothing interesting, which is the goal.

This weekend's edition covers six items: the market noise worth ignoring (and the one signal worth watching), a sector that's been in the penalty box long enough to be interesting, two Dividend Aristocrat names currently trading at better-than-usual valuations, a behavioral observation about the quarter we just closed, a brief defense of doing nothing in an environment engineered to make you do something, and one genuinely useful number.

Six items. Thirty minutes. Your Sunday afternoon portfolio check can wait until Monday, when it won't feel urgent and therefore won't produce a bad decision. Let's go.

№ 1  ·  The Main Thing

The Noise Was Loud This Week. Here's What Actually Mattered.

The Federal Reserve did not meet this week, but three separate Fed officials gave speeches that were parsed by financial media with the intensity usually reserved for papal encyclicals. The combined signal from those speeches was: the Fed is watching the data, will act appropriately as conditions evolve, and remains committed to its dual mandate. This is what Fed officials say. It is what they have always said. It will be what they say next week.

The one signal genuinely worth watching - not this week, but as a developing situation - is the slow deterioration in consumer credit quality. Delinquency rates on credit cards and auto loans have been quietly rising for four consecutive quarters and are now approaching levels last seen in 2010. This does not mean a recession is imminent. It means the consumer, who has been carrying the economy with the cheerful determination of someone who has not yet checked their bank statement, is showing early signs of fatigue.

For most Dividend Aristocrat portfolios - tilted toward consumer staples, healthcare, and industrials with recurring revenue - the answer is reassuring. For positions in consumer discretionary or financial services, it warrants a closer look at the sustainability checklist we published three issues ago.

Signal-to-noise ratio this week: approximately 1:47. Act accordingly.

№ 2  ·  Sector Watch

Healthcare Has Been in the Penalty Box. The Penalty May Be Ending.

Names Worth Watching:  JNJ · ABT · MDT · BDX

Healthcare as a sector has underperformed the S&P 500 for the past eighteen months, which is the kind of sentence that sounds alarming and is, for the patient capitalist, potentially interesting. Underperformance creates valuation opportunities. Valuation opportunities in sectors with non-discretionary demand and long dividend histories are the patient capitalist's preferred hunting ground.

The reasons for healthcare's underperformance are real but largely known: drug pricing political risk, Medicare reimbursement uncertainty, and the post-COVID normalization of volumes that had been elevated. None of these are new. All of them are priced into current valuations to a degree that makes several quality names look more attractive than they have in some time.

Johnson & Johnson, Abbott Laboratories, Medtronic, and Becton Dickinson all carry 25+ year dividend growth streaks, investment-grade balance sheets, and current valuations below their five-year averages. Medtronic in particular is worth a close look: 48 consecutive years of dividend increases, recently restructured to focus on its core medical device business (a business yours truly once swam in), and trading at a meaningful discount to intrinsic value estimates from multiple independent analysts.

The caveat, as always: healthcare valuations are depressed for reasons. Drug pricing legislation is not resolved. Reimbursement pressures are structural. The patient capitalist does not buy because something is cheap - they buy because the thesis is intact and the price is reasonable. Healthcare's thesis, an aging population requires more of everything the sector produces - remains one of the most durable demographic tailwinds in the investment universe.

Not a recommendation. A direction worth looking. Do the work before you do the buying.

№ 3  ·  Two Names on the Radar

Aristocrats at Better-Than-Usual Prices: A Brief Field Report.

Under Discussion:  PEP · KMB

This section is not a buy list. It is a "these two names have appeared on multiple Graham-criteria screens this month and warrant closer attention" list, which is a less satisfying sentence but a more accurate one.

PepsiCo (PEP)

Fifty-three consecutive years of dividend increases. Current yield approximately 3.7%, which is at the high end of its five-year historical range - meaning the price has come down relative to the dividend, which is the directionally correct way for valuation improvements to happen. The snacks business has been soft amid consumer trade-down pressure, and the stock has reflected that softness. The thesis - durable brands with global distribution and genuine pricing power - has not changed. The price has become more interesting.

Kimberly-Clark (KMB)

Fifty-two consecutive years of increases. The maker of Huggies, Kleenex, Scott, and Cottonelle occupies the portion of the consumer staples shelf that people buy on autopilot and do not stop buying during recessions. Current forward P/E is below its five-year average. Payout ratio is manageable. Morningstar rates it as undervalued. Narrow economic moat from brand loyalty in categories where switching costs are low but switching behavior is also low - people are more loyal to their paper towel brand than behavioral economics would predict, which is the kind of structural irrationality the patient investor is happy to own.

Note: Charges were filed on the whacko Kimberly-Clark employee who lit their toilet paper factory on fire this past week in their Ontario, California facility. Business will be temporarily stunted but thankfully no one was injured.

Both names pass the initial screen. Neither replaces a full read of the annual report. You know the drill.

№ 4  ·  Behavioral Corner

Q1 Is Closed. How Did You Actually Behave?

The first quarter of 2026 delivered volatility that tested the patience of patient capitalists. Markets sold off in March on tariff anxiety, recovered partially, sold off again, and closed the quarter with the S&P 500 meaningfully negative while the Dividend Aristocrats index, as has been its habit during downturns, held up considerably better. Go figure.

The useful question to ask now that Q1 is closed is not "how did the portfolio perform" - that number is what it is and is largely outside your control. The useful question is: how did you behave? Did you check prices daily during the selloff? Did you turn the notifications off as we have repeatedly recommended or did you read every one of them? Did you make any decisions that you would not have made in January, before the volatility began?

If you held, reinvested dividends on schedule, and ignored the financial media's weekly declarations of unprecedented conditions: excellent. If you reduced positions, moved to cash, or deferred reinvestment while waiting for clarity: you now have the data point that Q1 2026 provides about your actual risk tolerance versus your theoretical risk tolerance. These are frequently different numbers, and knowing the real one is valuable information for portfolio construction going forward.

The honest Q1 review is the one that includes your decisions, not just the index's performance.

№ 5  ·  The Patient Defense

In Defense of Doing Nothing, Again, With Feeling.

This publication has made the case for patience so many times that returning to it risks the appearance of a newsletter that has run out of ideas and is recycling its thesis. We have not run out of ideas - there are seventeen more topics queued. We are returning to patience because Q1 provided fresh evidence for it, and fresh evidence deserves fresh acknowledgment.

During the March selloff, approximately $34 billion left equity funds in a three-week period, according to fund flow data. The majority of that money moved into money market funds, where it is currently earning approximately 4.3% annually while waiting for clarity that, in the patient investor's experience, arrives approximately never in a form that feels unambiguous enough to act on.

The $34 billion will return to equities. It always does. It will return, as it always does, at prices higher than the prices at which it left because the clarity that feels necessary before re-entering the market only arrives after prices have already recovered. The investor who sold in March and is waiting for clarity is, in practice, waiting to buy back at prices above where they sold, having earned 4.3% annualized in the interim on a timeline that the market will determine, not them.

The patient capitalist who did nothing in March did not feel clever during the selloff. They felt uncomfortable. Doing nothing during a selloff always feels uncomfortable - this is by design, as we have documented in our FOMO column. The discomfort is the cost of the return. It is not a signal to act. It is a signal that the strategy is working exactly as it should.

Doing nothing is a decision. In most market environments, it is the correct one.

№ 6  ·  One Number

$1,638. The Number Worth Keeping.

One number this weekend, offered without excessive commentary because it speaks for itself.

$1,638 is the approximate value today of $100 invested in the S&P 500 Dividend Aristocrats index on January 1, 2000, with dividends reinvested. The same $100 invested in the S&P 500 total return index over the same period is worth approximately $714. Both numbers assume full reinvestment of dividends and no taxes, which understates the Aristocrats' advantage in tax-advantaged accounts.

The 26-year horizon is the footnote that most investors skip and should not. The Aristocrats did not outperform the S&P 500 every year. They did not outperform in 2019 or 2020 or 2023, when growth and technology dominated. They underperformed during every period when exciting things were working. They outperformed during every downturn, and they compounded the recovery dividends from a higher base, and at the end of 26 years the arithmetic produced $1,638 versus $714.

Twenty-six years is a long hill. The snowball is the size it is because nobody got off the hill.

One number. Twenty-six years. The whole argument in a single row of the spreadsheet.

Until Next Weekend

That is the weekend edition. Six items, the amount of coffee (or Coke Zero) it took to write them, and the hope that one of the six sends you in a useful direction between now and Monday morning.

A reminder that the Patient Capitalist's full columns - on boring sectors, when to sell, the S&P 500's concentration problem, the DRIP, FOMO, yield chasing, Ben Graham, and the tortoise who doesn't have a podcast - are all on the way to subscribers.

The market will open Monday with fresh urgency about something. The urgency will be real. The required response will, in most cases, be the same as it was Friday: hold the quality names, reinvest the dividends, and resist the considerable temptation to do something interesting.

Enjoy the weekend. The stocks will still be there Monday. Most of them will be worth approximately what they were worth Friday. The ones that aren't will either be opportunities or lessons. Both are useful.

— The Patient Capitalist

Skip Maloney writes The Patient Capitalist, a newsletter for investors who believe wealth is built slowly, rationally, and usually a little boringly.

A senior business executive with more than 25 years of leadership experience, Skip has spent his career studying how successful publicly traded companies actually create value-through smart capital allocation, disciplined leadership, and durable competitive advantages. Those same principles guide his investing philosophy.

In a financial world obsessed with hot tips, meme stocks, and overnight fortunes, The Patient Capitalist takes a different view: buy great businesses, collect growing dividends, ignore most of the noise, and let time do the heavy lifting.

The newsletter focuses on dividend stocks, resilient companies, and the quiet strategy of long-term ownership all with a splash of satire because life is too short not to have a little fun.

Because the real secret of investing isn’t excitement.

It’s patience.

Time to make my lawyers happy.

This newsletter reflects personal views, not professional advice.

The Patient Capitalist is written for informational and educational purposes only. It is not financial, investment, legal, or tax advice and it is not a recommendation to buy, sell, or hold any security.

I write with conviction, but not with knowledge of your financial situation, risk tolerance, or objectives. That part is your responsibility.

Investing carries risk. Capital can be lost. Outcomes are never guaranteed, and past performance tells a comforting story but not a predictive one.

From time to time, I may hold positions in the securities discussed and may change those positions without notice.

Do your own work. Think independently. And if needed, consult a qualified financial advisor before acting.