TheChek News Flow

What the Health-Care Vote Means for the Midterm Elections

Democratic senators in battleground states are likely to face GOP challengers that voted for the ACA overhaul

WASHINGTON—This week’s expected Senate vote on the GOP health-care bill will showcase a sharp partisan divide on the issue in states where Democrats are poised to play defense in next year’s midterm elections.

All Senate Democrats are expected this week to oppose Republican legislation that would dismantle and replace much of the Affordable Care Act. Many of their potential challengers in next year’s elections are House Republicans, who supported a similar bill when it passed their chamber in May.

Such a stark partisan divide, while the norm across much of the country, is unusual in the most competitive states held by Democratic senators. The 10 Senate Democrats up for re-election next year in states won by President Donald Trump comprise much of the shrinking pool of centrist Democrats who are willing to cross the aisle on high-profile votes.

The group includes Heidi Heitkamp of North Dakota, Joe Manchin of West Virginia, Bob Casey of Pennsylvania, Claire McCaskill of Missouri and Joe Donnelly of Indiana

Some of these red-state Democratic senators, for example, voted to confirm some of Mr. Trump’s most contentious cabinet nominees and his staunchly conservative pick for the Supreme Court. They also have broken rank on energy policy and gun-control legislation.

Although many of these Democratic senators have been critical of the ACA, none have endorsed the GOP’s approach to dismantling it.

The partisan split forced by the health-care votes presents a clear political test in these battleground states: Will the ACA’s enduring unpopularity, especially among conservatives, boost those who voted to overhaul it? Or will recently rising support for the ACA, and the public’s skepticism of the GOP alternative, help those who sought to block Republicans’ efforts?

It may come down to which health plan voters dislike more. Candidates on each side appear to be spending more time disparaging the other party’s bill than praising their own.

“Based on my initial review, the health-care bill released by Republican leadership appears to be as bad of a deal for West Virginia as the House bill,” Mr. Manchin said last week. “This bill makes things worse, not better.”

Their stance may in part reflect that the ACA was already a more centrist law than the single-payer government-run system that more-liberal Democrats had hoped to pass, said Gabriel Horwitz, vice president for the economic program at Third Way, a centrist Democratic think tank.

“Its bones are moderate. It’s all about a private-sector solution,” Mr. Horwitz said of the ACA. “If you’re a red-state Democratic member, you’re saying, ‘I support a moderate piece of legislation.’”

In the most recent Wall Street Journal/NBC News poll, just 16% said the House-passed version of the bill was a good idea. The 2010 health-care law, often referred to as Obamacare, was viewed as a good idea by 41% of respondents.

The gap is likely more narrow in red states, however, where Republican leaders dispute the notion that the ACA is “moderate” and have spent years campaigning on their pledge to roll it back.

Republicans currently hold a slim 52-48 advantage in the Senate, and the party that controls the White House often suffers in midterm elections. However, far more Democrats than Republicans are in precarious seats in 2018, and how the health debate plays out in those states could be pivotal to the outcome of the contest for the Senate.

In six of the most competitive Senate seats held by Democrats up for re-election next year, nine possible House Republican opponents have already voted for the GOP health-care legislation.

The House bill was backed by possible Senate challengers GOP Reps. Todd Rokita and Luke Messer of Indiana, Ann Wagner and Vicky Hartzler of Missouri, Mike Kelly and Lou Barletta of Pennsylvania, Kevin Cramer of North Dakota and Fred Upton of Michigan. GOP Rep. Evan Jenkins of West Virginia has already announced he will challenge Mr. Manchin next year.

The Senate Democrats could also face challengers from outside the House, depending on the results of GOP primaries. Those candidates will likely get pressed on how they would have voted on the GOP health-care bill.

The Senate health-care bill headed to the floor this week has much of the same basic architecture of the House bill, though it contains a more gradual phasing-out of the Medicaid expansion and altered tax credits to help people buy health insurance if they don’t get it through work.

One complicating factor for House Republicans with statewide ambitions is that Mr. Trump himself called their bill “mean” in a meeting with Senate Republicans earlier this month. He has told lawmakers he supported making the Senate bill more generous.

“I agree with the president,” Ms. McCaskill said last week. “I look for opportunities to agree with the president, and I agree with him on that one.”

House Republicans noted that Mr. Trump had invited them to the Rose Garden for a press conference touting their victory the day it passed in May. “The president clearly embraced the work of the House. He pushed hard for the House passage of a bill,” Mr. Jenkins of West Virginia said Friday.

Others said they viewed Mr. Trump’s comments as strategic.

“One more time he’s proven he’s not the traditional, stereotypical politician,” said Mr. Cramer of North Dakota. “If this is his way of playing senators, I’m all for it.”

In 10 Years, Your iPhone Won’t Be a Phone Anymore

Siri will be the conductor of a suite of devices, all tracking your interactions and anticipating your next moves

It’s 2027, and you’re walking down the street, confident you’ll arrive at your destination even though you don’t know where it is. You may not even remember why your device is telling you to go there.

There’s a voice in your ear giving you turn-by-turn directions and, in between, prepping you for this meeting. Oh, right, you’re supposed to be interviewing a dog whisperer for your pet-psychiatry business. You arrive at the coffee shop, look around quizzically, and a woman you don’t recognize approaches. A display only you can see highlights her face and prints her name next to it in crisp block lettering, Terminator-style. Afterward, you’ll get an automatically generated transcript of everything the two of you said.

As the iPhone this week marks the 10th anniversary of its first sale, it remains one of the most successful consumer products in history. But by the time it celebrates its 20th anniversary, the “phone” concept will be entirely uprooted: That dog-whisperer scenario will be brought to you even if you don’t have an iPhone in your pocket.

Sure, Apple AAPL 0.45% may still sell a glossy rectangle. (At that point, iPhones may also be thin and foldable, or roll up into scrolls like ancient papyri.) But the suite of apps and services that is today centered around the physical iPhone will have migrated to other, more convenient and equally capable devices—a “body area network” of computers, batteries and sensors residing on our wrists, in our ears, on our faces and who knows where else. We’ll find ourselves leaving the iPhone behind more and more often.

Trying to predict where technology will be in a decade may be a fool’s errand, but how often do we get to tie up so many emerging trends in a neat package?

Apple is busy putting ever more powerful microprocessors, and more wireless radios, in every one of its devices. Siri is getting smarter and popping up in more places. Meanwhile Apple is going deep on augmented reality, giving developers the ability to create apps in which our physical world is filled with everything from Pokémon to whatever IKEA furniture we want to try in our living rooms. All these technologies—interfacing with our smart homes, smart cars, even smart cities—will constitute not just a new way to interact with computers but a new way of life. And of course, worrisome levels of privacy invasion.

Apple’s acquisitions—it buys a company every three to four weeks, Chief Executive Tim Cook has said—tend to be highly predictive of its future moves. Since it first bought Siri in 2010, Apple has continued to make acquisitions in artificial intelligence—Lattice Data, Turi and Perceptio among them, all of which specialize in some form of machine learning. The company is reportedly working on its own chips for AI.

Apple’s preview of iOS 11, with deeper integration of Siri than ever, suggests it hopes to make Siri capable of doing nearly everything on an iPhone that we currently do through its touch interface.

Apple has also made many acquisitions related to augmented reality—the overlay of computer interfaces and three-dimensional objects on a person’s view of the real world—including Primesense and Metaio. Mr. Cook has said he is so excited about AR he wants to “yell out and scream.”

Side view of a ‘head mounted device’ for putting a ‘portable electronic device’—presumably an iPhone—as close to a person’s eyeballs as possible. This could be Apple’s first step toward standalone AR glasses.

By 2027, the problem of bulky AR headsets like Microsoft’s HoloLens should be solved, which means Apple and others are likely to release some sort of smart eyeglasses. With their ability to convincingly supplement our visual and auditory reality, delivering information at the time and place most appropriate, they’ll occasion a cultural change as big as the introduction of the smartphone itself.

“What you’re going to see with all this augmentation is the psychology of using your phone could change dramatically,” says Ryan Walsh, a partner at venture-capital firm Floodgate who from 2014 to 2016 directed product management for media at Apple. “Instead of using your phone to get away from the world, you’ll use it to join in the world in a much deeper and more meaningful way,” he says.

Augmented reality and artificial intelligence will also benefit from the Internet of Things trend: everyday gadgets getting sensors, actuators and a wireless internet connection. Apple controls smart-home products with HomeKit. It aggregates health information with HealthKit, and ties in the car (CarPlay), cash register (Apple Pay) and even the StairMaster (GymKit). Apple clearly wants its devices to connect to everything on Earth.

With our every action mapped to every outdoor and indoor space we inhabit—combined with the predictive power of AI and distributed across a suite of devices for which Siri has become the default interface—the result could be a life directed by our gadgets, a sort of “Choose Your Own Adventure” for our daily routines.

At first, this will be straightforward. Having automatically filled our calendars using the kind of scheduling AI that already exists, our devices will direct us from one task to another, even suggesting transportation—ridesharing, mass transit or flying car. But the relationship will change as the AI gets to know more about you.

“You might be walking by someplace and it might tell you, ‘Hey, you should go in here, they make a great cup of coffee and there’s also this person you really would like, too’,” says Jonathan Badeen, co-founder and chief strategy officer of dating app Tinder, where he leads teams that think about how to incorporate Apple’s latest technology into apps.

By 2027, Apple and its competitors will also have cemented a world of tradeoffs: If you want your life enhanced by AI and all the rest of this tech, you’re going to have to submit to constant surveillance—by your devices or, in many cases, by the tech giants themselves. Apple’s bet is that you will trust it to do this: The company’s privacy stance is that it isn’t going to look at or share your data, and it will be encrypted so others can’t look at it, either.

Getting used to that won’t be easy. Just as getting in a stranger’s car or sleeping in a stranger’s home seemed crazy before Uber and Airbnb, the 2027 iPhone’s most important differentiator may be our willingness to accept things we can’t even fathom today.

Prosecutors allege he ran hedge fund as though it were a ‘Ponzi-like’ scheme

When Martin Shkreli gained international notoriety for raising the price of an Aids and cancer medicine by 5,000 per cent, he was quick to point out he had done nothing illegal.

That might be true but federal prosecutors allege he did break the law by defrauding investors in a hedge fund before he became known for price gouging, and on Monday he is due to stand trial in Brooklyn, New York.

Mr Shkreli’s alleged fraud is small beer by the standards of other well-known cases, and might have gone unnoticed by the world’s media were it not for his actions as chief executive and founder of Turing Pharmaceuticals.

In September 2015, Turing bought a decades-old drug, Daraprim, and promptly hoisted the price from $13.50 to $750 a pill — putting it out of reach for some of the Aids and cancer patients who needed it to fend off a deadly type of infection.

The public outcry was deafening and echoed around the world, drawing Mr Shkreli a rebuke from then Democratic presidential candidate Hillary Clinton and catapulting the issue of high drug prices to the forefront of the 2016 US election campaign.

Three months later, Mr Shkreli was woken by the Federal Bureau of Investigation on a rainy December morning and frogmarched to a Brooklyn courthouse, where he was charged with defrauding his investors to the tune of $11m by running his MSMB hedge fund as though it were a “Ponzi-like” scheme.

He has filled much of the intervening time by live-streaming his life on YouTube from his apartment in midtown Manhattan, sometimes for more than 10 hours at a time.

Viewers can pepper him with questions, watch him play online chess, or even take lessons in chemistry and, somewhat ironically, the basics of investing and finance.

If a member of the audience asks about the trial, Mr Shkreli usually demurs, heeding the advice of his lawyer Benjamin Brafman, an attorney who is no stranger to high-profile cases, having represented rapper Sean “P Diddy” Combs and Dominique Strauss-Kahn, former head of the International Monetary Fund.

However, on occasion, he errs from the script and confidently predicts he will prevail.

He was just as bullish when he sat down for Lunch with the FT in November, suggesting that his notoriety might even help sway the jury and comparing his case to that of OJ Simpson.

“I have this fringe theory that I’ve sort of stress-tested a little bit — the more polarising and popular a case is, the more likely an acquittal,” he said at the time.

The prosecution will allege that Mr Shkreli covered up heavy losses at two hedge funds he ran between 2009 and 2011 and then plundered assets from Retrophin, a drugmaker he founded, to pay back investors.

Mr Shkreli has plead not guilty.

In comments made during the November interview with the FT, which have yet to be published, Mr Shkreli said the trial would reveal that “a lot of what I did was based on trust . . . and not necessarily dotting I’s and crossing T’s”.

The government alleges that Mr Shkreli told his hedge fund investors that the vehicle was solvent when it was not. He counters that he eventually transferred Retrophin stock to the fund which “ended up working out great and the punters made a fortune”.

He added: “The [government] said, ‘you didn't transfer that stock until later’. I said, ‘well, I made the promise to transfer’.

“And it worked out in the end, most importantly. To me that was what was important.”

One of fashion’s most influential brands finds a new way to show, plus SS18 Paris menswear reports of Hermès, Dior Homme, Balmain and Acne Studios

Demna Gvasalia of Vetements was stuck in traffic. It had been gay pride in Paris on Saturday and the parade was heavily policed, so the streets were snarled. It meant he wasn’t around for the first hour of his label’s No Show, the first Vetements “happening” since announcing earlier this month it was ditching the traditional show schedule. What’s a No Show? It wasn’t the designer not turning up. Vetements debuted its spring/summer 18 collection in a parking garage to the north-east of the city with a free bar, a stage for a band, and a series of photographs.

Gvasalia had taken photos of its S/S18 collection on random people in Zurich, the city he is making the home for Vetements, along with himself and his brother Guram, CEO of the brand. The streetcast models had a say in what they wore, and were shown a series of classic fashion photographs. They were then asked to strike a pose. It was a fun idea.

The clothes were a pause and a reappraisal while they move their operations to a new city. The Vetements label-defining long-sleeve floral dress was cut in new prints, like black leopard print on red, or white polka dots on green with a scattering of emoji. There were new sweatshirt and long-sleeve T-shirt collaborations with brands like Umbro and Tommy Hilfiger, their logos corrupted. Tech outerwear jackets were designed in collaboration with parcel deliverers DHL.

Guram Gvasalia said it turned out to be more work to do a No Show than a show. “At the end of the day the collection became almost three times bigger than usual,” he said. “Because I think we were like, OK, we can launch more. It’s a step back to understand what’s happening around and have a different perspective.”

After a scorching few seasons, there’s less consumer white heat around Vetements, especially now Demna Gvasalia is also artistic director of Balenciaga. In Paris, the new season Balenciaga T-shirt, that repurposes the campaign logo of Bernie Sanders is a complete sellout. Vetements became such an instant fashion cult, it’s a smart move to stand still while the company changes location, to see what new inspiration its new home will bring.

How’s the move from Paris to Zurich going? “I thought it would be easy, like moving my own place,” said Guram Gvasalia. “I thought we would just pack the office and move. It’s taking longer because it’s a company and there’s people involved and lots of things involved. There are people who are not from the European Union. You have to organise visas. There’s a lot of paperwork. I hope we can completely move by the end of the year.”

On to Hermès, where interesting ideas worked great on some garments, but not so much on others. A hooded short-sleeve black cotton T-shirt was a weird idea. A hooded long-sleeve blue suede shirt? A dream of a piece: get me to my parallel universe where I have a yacht now.

It continued. A black fine knit with a thin white line down its centre: how is that going to look on any male belly? But then the same fine white line on the edge of a black cardigan looked eloquent. Trackpants in shiny tech fabric? No thanks. But a big yes to zip up blouson and parkas in the same water-repellent cloth. Filter out the other stuff, and it was a strong collection.

It’s been a season of short shorts in menswear, mostly for day. How about for night? Dior Homme suggested extremely short gym shorts be worn with a tuxedo. One pair was worn with slender tails with a twisted seam back. Another pair were barely visible under a double-breasted white tux. Dare trying that out next time you’re invited to a black tie event.

The gym shorts at Dior Homme did not appear intended for real life: they were more a styling trick which looked queasy on the very young and mostly white models. But if we ignore the shorts, the tailoring was strong and technically adept, if not innovative. Elsewhere in the collection, a slash-sleeved sweat-top with a collegiate graphic seemed to be making a play for Givenchy territory, now that Riccardo Tisci has quit that brand. A graphic of a hoody-wearing figure with their back turned will be commercially successful, appearing on shirts and a rucksack. Really, we’re talking about product, not passion.

I continue to be impressed by Olivier Rousteing’s quiet radicalism at Balmain. It’s there in the padded sharp shoulder of a leather long sleeve top, or the snug sharp shape of a little bouclé jacket. He’s pushing a provocative view of men’s fashion that should be defended. Long line tailoring had cutaways at the waist. Shimmer Breton stripes were a smart design decision.

This is clothing of extreme excess and embellishment on a controlled silhouette.

Rousteing understands that it’s not going to win over the haters. His style at the brand is well established, and the look is now so familiar it’s become easy to hate. Maybe it’s time to take his radicalism further, and push somewhere new.

When I arrived the Acne Studios presentation, I was pointed towards backstage. Wait, I’m not a model. There were mirrors for hair and make-up, rails of clothing. I was led to the entrance to the catwalk. A man with a headset told me to wait my turn. Don’t make me go out there! I’m not in the show!

This wasn’t a fashion critic’s cold-sweat nightmare, but a conceit in which editors stood on a runway, and models were sat on chairs, judging our every move. It was also a smart way to show the long line of the brand’s loose trenches and roomy tailoring with wide pants. It’s a look that Acne Studios have touched on often before, and it’s one that is now finding real favour across menswear this season.

Munich Re Stock Could Rise 15%, as Reinsurance Market Revives

After several years of falling premiums and low interest rates, turnaround appears to be near.

Munich Re, one of the world’s biggest reinsurance companies, could be poised to deliver solid investment returns after weathering tough market conditions in recent years.

Reinsurers mainly provide coverage for insurance companies and have been struggling to lift earnings for years because of pressure from the twin evils of falling premiums and low interest rates.

The market hasn’t turned around yet, but there are signs that it at least might be bottoming out. The Federal Reserve has started raising interest rates, and there is growing speculation that improving economic conditions could prompt the European Central Bank to follow suit.

When Munich Re (ticker: MUV2.Germany) announced first-quarter results in May, it said the stiff competition that had been capping reinsurance premiums was easing, albeit slightly.

Nick Davis, a fund manager at U.K.-based Polar Capital, likes well-capitalized businesses with solid management that have fallen out of favor with investors. To him, the German reinsurer fits the bill. “Munich Re is suffering from two cyclical effects. Very low bond yields have hit its investment income, and reinsurance pricing has been getting worse for the last few years,” he says. He says the group’s return on equity is 8%, and that it trades at about 0.9 times book value. “But 8% ROE is respectable in the context of the soft reinsurance cycle and low interest rates hitting investment income. What’s good about Munich Re is that it’s very well-capitalized and very disciplined.”

MUNICH RE’S STOCK has gained almost 14% in the past year, in line with the Stoxx Europe 600 index, but has underperformed in the past three months, rising only 0.8%, versus 3.6% for the main index. Despite that, Munich Re has a reputation for looking after its shareholders. FactSet Research puts its current dividend yield at 4.87%, and the company is working through its latest one-billion euro ($1.11 billion) share buyback.

“In this downturn, they are focusing on capital returns. They have an attractive dividend and they’ve got a buyback program on top of that,” Davis observes.

Its first-quarter results were slightly disappointing, pushing Munich Re’s shares down 1.6% on the day they were released last month. Net profit rose 28%, to €557 million, but missed consensus forecasts of €598 million. A much improved contribution from its life and health reinsurance business, which at €126 million was more than five times bigger than in the first quarter last year, was largely offset by a 20% profit decline in its important property-casualty reinsurance business, at €340 million.

The company attributed the results to rising claims for man-made and natural catastrophes that more than quadrupled to €403 million from the year before. It said the biggest single claim was €100 million for damage from Cyclone Debbie in Australia this year. It said there also was an unusual spate of significant but localized natural catastrophes in the U.S., including severe rainstorms in parts of the country and deadly tornadoes from Texas to Florida.

ALTHOUGH RISING CLAIMS hurt reinsurers’ earnings, they can also improve pricing. Relatively low numbers of claims in recent years have left the sector awash with capital. That would be depleted during a period of heavy claims. Reinsurers would then be compelled to lift the premiums they charge to build up their claim-loss reserves again. At the same time, hefty losses would shake out some of the sector’s weaker players, reducing reinsurance capacity and easing competition.

Davis says Munich Re is solid enough to support rising claims. “Munich Re’s a very high-quality underwriter. Because of its track record and the quality of management, and the amount of capital it has, if there is a big natural catastrophe event, you can be confident that it will be standing the next day and be ready to carry on writing policies,” he says. He adds that the company is also being strategically savvy, scouting out new growth avenues, such as cyberrisk: “That’s in people’s minds quite a lot. As you have moves to develop the Internet of Things, clearly who pays for cyberrisk becomes interesting.”

Morgan Stanley analyst Xinmei Wang has Munich Re at Overweight with a €204 price target, giving it nearly 15% upside from its current level of about €178. “Munich Re continues to be one of the highest-yielding stocks in our sector, with a projected total return yield of 8.6% in 2017, versus the reinsurance average at 7.3%, and dividend yield of 4.6% for the sector,” Wang says.

Munich Re’s forward price/earnings ratio stands at 11.8 times estimated 2017 earnings, slightly higher than some of its main competitors, but well below the Stoxx Europe 600 average around 16.

12 Consumer Stocks With Nice Payouts

Despite challenges, consumer-staples companies continue to generate lots of cash, which supports dividends.

The MSCI World Consumer Staples index is up about 11% in 2017.

Tobacco stocks have led the way lately, with a particularly strong showing in May. On the year, that has helped Altria Group (ticker: MO) notch a 15.4% total return; Reynolds American (RAI), 19%; and Philip Morris International (PM), 33%.

“We believe the reason U.S. tobacco has outperformed is that whereas most U.S. staples are struggling to grow sales currently, [Altria’s] pricing model is holding up as well as ever, and [Philip Morris] is guiding to well above +6% organic sales this year,” Citi Research Equities wrote in a recent note to clients.

And therein lies one of the contradictions of consumer-staples stocks for investors, including those looking for income.

On the one hand, these businesses, whose wares include tobacco, beverages, diapers, and other products, are entrenched and, at least in theory, less susceptible to big revenue declines in tougher economic times than are more cyclical companies.

But on the other hand, growth can be hard to come by for the companies in this sector, which also faces other headwinds—one being a stronger dollar.

“Our analysts expect muted growth, amid shifting consumer preferences and competition,” asserted a Bank of America Merrill Lynch research note in late February. A spokesman for the firm said last week that the research team hadn’t changed its view on the sector.

The 12 stocks shown in the nearby table have an average one-year total return of 9.2%. But if the three tobacco outfits are excluded, the average falls to a much more modest 3.6%—well below the Standard & Poor’s 500’s 8.75% over that period.

So what kind of dividend prospects do companies in this sector offer? There are some very attractive yields. In fact, all of the companies in the table boast yields well above the S&P 500’s average of nearly 2%.

“When earnings-per-share growth and dividend yields are combined, the vast majority of stocks generate more than an 8% return—which isn’t bad in an era of low inflation,” notes the recent Citi Research Equities report.

Nor is the group a bad option when, despite four quarter-point interest-rate hikes by the Federal Reserve since late 2015, yields remain very low. Late last week, the 10-year U.S. Treasury was at 2.15%.

In fact, 10-year Treasury yields and consumer-staples stocks tend to have a strong correlation across economic cycles. That makes sense, because as yields rise—and bond prices, which move inversely to them, fall—investors tend to have a more bullish view on the economic outlook. That normally helps staples companies.

But that relationship has broken down since the U.S. presidential election in November. “Since then, consumer stocks have moved up quite sharply, even though 10-year [Treasury] yields have been relatively static, albeit with some volatility,” Citi notes.

Whatever the case, most of these large consumer-staples companies generate strong free cash flow, and that should support their dividends, even if revenue growth is harder to come by now.

As of March 31, Altria had thrown off $3.6 billion of free cash—which essentially is operating cash flow minus capital expenditures—over the previous 12 months, according to FactSet. Analysts expect the tobacco giant to earn $3.29 a share this year, up nearly 9% from $3.03 in 2016. Its dividend is predicted to grow at a similar clip, to $2.58 a share from $2.35 last year.

Beverage companies are another big component of the broader staples sector.

Coca-Cola (KO), which has had a sluggish one-year total return of 4.3%, yields 3.3%, one of the highest payouts among staples companies in the S&P 500. Analysts are expecting the beverage maker’s earnings to be flat this year, at about $1.88 a share.

Some concerns: The company’s revenue fell in the first quarter, and Coke has incurred heavy expenses as it sells some of its bottling plants.

Still, analysts expect the beverage giant to increase its free cash flow this fiscal year to $7.2 billion, compared with $6.5 billion in 2016, according to FactSet. In addition, analysts are forecasting that its dividend will be boosted by 3.6%, to $1.45 a share from $1.40.

Rival PepsiCo (PEP) sports a dividend yield of 2.7%, a little lower than Coke’s. Also, at 61%, its payout ratio—the percentage of net income handed to shareholders as dividends—is among the lowest of the 12 firms on our list. That suggests the company has plenty of flexibility to keep raising its payout.

That, along with strong free cash flow, bodes well for the payout.

The beverage and snack maker is expected to post earnings of $5.13 a share this year, up nearly 6% from $4.85 in 2016. And its dividend should ascend at a similar pace, to $3.16 a share.

Procter & Gamble (PG), whose products include Tide laundry detergent and Pampers diapers, has struggled to increase its revenue. However, it throws off plenty of cash to support its dividend. P&G is expected to generate $11.7 billion of free cash this year, down from $12.2 billion in 2016. Nonetheless, Wall Street analysts expect the payout to climb nearly 4%, to $2.79 a share.

IN OTHER NEWS, grocery-store operator Kroger (KR) declared a quarterly dividend of 12.5 cents a share, a 4.2% increase from 12 cents previously. Late last week, the stock was yielding 2.1%… Medtronic (MDT) is hiking its quarterly dividend to 46 cents a share, up 7% from 43 cents. The medical-device maker’s stock was yielding 1.9%…Department-store operator Target (TGT) has declared a quarterly payout of 62 cents a share, up two cents, or 3.3%, from 60 cents. With the increased dividend, the stock yields 4.9%. The increase comes even though the big retailer is struggling against online competition and had weak revenue in the past year, during which its stock returned minus 23.43%… Lowe’s (LOW) earlier this month announced that it will increase its quarterly payout to 41 cents a share, up from 35 cents. That’s a 17% hike. The company is a national retailer of home-improvement products. The stock, which was yielding 2.1% late last week, returned 1.8% over the past 12 months, as home-building activity has cooled. “Following strong year-over-year growth in home construction during the first quarter, building activity has slowed meaningfully in the past two months, in contrast with largely positive macroeconomic data in the U.S.,” Morningstar analyst Jamie Katz noted recently.

Up 158 percent against the U.S. dollar this year, bitcoin is now the best-performing currency. Many are confused as to how this mathematical protocol can be worth more than $2,600, and why it keeps going up. The short answer: Bitcoin is money, just a little better and cheaper than the alternatives.

If you don’t understand money, you cannot understand bitcoin. For most of us, money is the U.S. dollar, the fiat currency of the United States issued by the Federal Reserve and maintained by the commercial banking system.

But even this system is confusing. Most people don’t hold Federal Reserve notes anymore; they hold money in checking accounts or use their credit cards to buy things. This is electronic fiat money, stored on the servers of banks like JPMorgan Chase and Bank of America.

This type of money is a great medium of exchange. Because the state mandates the acceptance of fiat money by all commercial actors, you can pay everywhere with dollars and, as a bonus, the prices of consumer goods seldom change more than a few percent per year.

Other attributes that make the dollar useful as a medium of exchange are its divisibility, recognizability, and indestructability—at least in electronic form—and the ease with which it can be exchanged.

However, there is a problem with the dollar as a medium of exchange over time. Since the creation of the Federal Reserve in 1913, the dollar has lost about 95 percent of its purchasing power. This devaluation is hardly visible over the course of days, months, and even years, but it is painfully felt over the span of decades.

So it’s hard, if not impossible, to exchange the same value over time with the U.S. dollar, and investors need to expose themselves to other assets to protect purchasing power. This is a general problem of fiat currencies and bank money, which are both prone to mismanagement by the state and banks, mostly because they can be reproduced at will. More dollars chasing the same amount of goods leads to rising prices.

This is the reason why people have traditionally resorted to gold to protect themselves from monetary inflation. Gold is also easily recognizable, divisible, durable, and concentrates a lot of value in little space. One troy ounce now costs about $1,250.

However, its uses as legal tender have been limited since the demise of the true gold standard at the beginning of the 20th century, and it is not easily transferred in physical form like the electronic dollar. Furthermore, its price is relatively volatile when measured in dollars in the short term, and the IRS collects tax on gains in dollars, making gold even less exchangeable.

But gold cannot be replicated at will and therefore is a better way of exchanging value over time. One dollar bought almost 20 bottles of Coca-Cola in the 1930s. It now buys less than one. One ounce of gold bought 700 bottles of Coke in the 1930s; it now buys almost 800.

Once one understands that money needs to be able to exchange value in time and space, it is easier to see why bitcoin is so attractive.

Although it cannot handle as many transactions as the banking system, it is relatively easy and cheap to transfer. Hundreds of thousands of businesses and individuals voluntarily accept bitcoin as payment. Its mathematical properties are recognizable, infinitely divisible, and indestructible.

As a medium of exchange, mainly because of legal tender laws, bitcoin is not as widely accepted as the dollar or other fiat currencies, but it is easier to transfer than gold and it is also subject to taxation.

In the long term, bitcoin has similar properties to gold because it cannot be replicated at will and the number of coins is limited to 21 million. This means that bitcoin is better than the dollar for transferring purchasing power through time. It is similar to gold, although gold has a far longer track record.

Its decentralized management is another factor making it attractive for people who distrust fiat currency and the banks.

Given that bitcoin is better than gold in the short term and much better than the dollar in the long term across the dimensions we have described, it’s not surprising that people chose to diversify their money holdings into this independent currency due to frustration with the mismanagement of fiat money and manipulation of gold prices.

There is another reason why bitcoin is attractive as a currency. Despite its record high in dollar terms, it is still cheap in aggregate. All Bitcoins are only worth $43 billion. All gold ever mined is worth around $7.5 to $10 trillion, although estimates vary. As for the U.S. dollar, just the M2 measure of bank money, including checking accounts, puts its worth at $13.5 trillion.

If bitcoin were to establish itself as an alternative currency and store of value alongside gold and the dollar, a total valuation of $1 trillion would not be inconceivable. That’s $47,600 per coin.