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Posts Tagged ‘dividend growth stocks’

Targa Resources Can Produce 10% Distribution Growth in 2013

Targa Resource Partners (NGLS) is a buy recommendation for income investors.  The MLP has a current dividend yield of 5.98%.  NGLS has a 5-year average annual dividend growth rate of 10%.  NGLS is a strong buy recommendation with a 12-month target price of $51.

Targa Resource Partners announced that the board of directors of its general partner has declared a quarterly cash distribution of $0.6975 per common unit, or $2.79 per common unit on an annualized basis, for the first quarter 2013.  The approved distribution represents an increase of approximately 3% over the previous quarter’s distribution and 12% over the distribution for the first quarter 2012. This cash distribution will be paid May 15, 2013 on all outstanding common units to holders of record as of the close of business on April 29, 2013.

First quarter 2013 net income attributable to Targa Resources Partners

was $38.9 million compared to $70.1 million for the first quarter of 2012. Net income per diluted limited partner unit was $0.16 in the first quarter of 2013 compared to $0.63 for the first quarter of 2012. The Partnership reported earnings before interest, income taxes, depreciation and amortization and other non-cash items (“Adjusted EBITDA”) of $132.2 million for the first quarter of 2013 compared to $145.4 million for the first quarter of 2012.

NGLS is a quality mid-cap natural gas processing and fractionation MLP that has an impressive array of fee-based expansion projects set to come into service over the next 18-24 months that should help to offset an over-supplied, and consequently, soft NGL pricing environment for the next three years. The key question regarding investing in NGLS is how the fee-based operating margin from the expansions will offset the drag from likely NGL over-supply. We believe that NGLS’ recent emphasis on fee-based operations will allow it to continue providing its unitholders distribution growth well above the sector average. Given the increasing percentage of fee-based projects, NGLS’s mix should improve to near 55% by the end of 2013 and 65% by the end of 2014. NGLS reiterated its guidance of 10%-12% distribution growth for 2013 and is comfortable having 0.9x coverage for the first half of the year which improves as the year goes on and as expansion projects are completed. Management is guiding to an average of ~1.0x for FY2013. We are modeling high single digit distribution growth for the next several years.

We are holding our three-year distribution growth forecast of 9% CAGR. NGLS’s 4Q results give us confidence that the growing fee-based portion of its business (Logistics, Marketing, Badlands) could support distribution growth despite a challenged NGL pricing environment for the next few years.

We are making minor changes to our outlook with DCF/unit adding $0.03 to $2.97 in FY2013 on lower assumed equity issuance, though EBITDA drops $23mm to $623mm after the 1Q miss and re-setting our commodity price deck. NGLS reiterated its $595mm-$655mm EBITDA guidance for 2013 and 1.0x distribution coverage for 2013 overall.

Microsoft May be Worth a Look Here

Windows 8 has gotten bad reviews, its mobile push has stalled and it’s facing a murky market for corporate software.  But despite all those headaches, Microsoft Corp.(MSFT) has seen its stock rising.  The software giant’s shares have jumped 14% over the past three months.  The stock has a current dividend yield of 2.82% and is a regular 15% per year dividend increase stock.  The Company will unveil the new X-box next month.  The worst may be behind this software giant.

Microsoft reported Q3 results of $20.489 billion in revenue and EPS of $0.72, compared to consensus of $20.497 billion in revenue and EPS of $0.68.

Microsoft reported March quarter EPS and operating margin ahead of consensus expectations with increased expense controls, while revenue was essentially in line with consensus expectations—with Windows, Microsoft Business Division, and Server & Tools sales falling slightly below estimates and the Online Services and Entertainment & Devices divisions exceeding forecasts. Although the PC market continues to put pressure on Windows and Office revenue and server shipments have been slow, Microsoft effectively managed expenses during the quarter and reported improving growth in OSD and Windows Phone.

Going forward, although PC shipments are expected to remain weak in the June quarter, we expect the combination of more attractive price points, the ramp of new chipsets from Intel, and greater adoption by OEMs of touch screens for ultrabooks and laptops to drive greater adoption of Windows 8 devices in the second half of 2013 and into 2014 than the market appreciates (particularly in the business user segment with the eventual release of Surface Pro 2). Furthermore, we expect the end-of-life of Windows XP in April 2014 to drive growth in the professional PC segment.

Based on these dynamics, we believe that the rate of decline in PC shipments is bottoming, and with continued better-than-expected cost controls, improving OSD and Windows Phone revenue, a new Xbox cycle on the horizon, and solid long-term competitive positioning and near-term product launches in MBD and S&T, we expect Microsoft’s recent outperformance to continue.

Our fiscal 2013 estimates are adjusted to revenue of $78.812 billion and EPS of $2.68 from revenue of $81.514 billion and EPS of $2.78.

We maintain our Outperform rating and our target price of $38. At a 9.7x NTM P/E multiple, Microsoft trades at a 33.8% discount to the S&P 500.

Look to this Shipper for High Yield

Investors looking for a high yield stock may want to check out Ship Finance International Ltd (NYSE: SFL).  The stock boasts a 9.59% dividend yield with EPS projected to grow 16% in 2014.  With 2 analysts upgrading the stock, SFL looks like a potential high yield stock that can sustain its EPS and dividend.

On February 25, Ship Finance International Ltd.’s fourth-quarter earnings jumped 69% as the tanker company benefited from a cash sweep agreement and a one-time gain from a sale.  Ship Finance, which owns and charters out large vessels that transport crude oil, in recent years has been diversifying its assets to include areas such as dry bulk and container ships. Though Ship Finance had seen a soft tanker market, the company said that the crude oil tanker market remained relatively firm.

Ship Finance is actively reviewing investment opportunities across its main market segments, while also closely monitoring the performance of its chartering counterparties in light of the “prevailing soft spot-market in some of the shipping segments.”  Ship Finance reported a profit of $51.1 million, or 60 cents a share, versus $ 30.2 million, or 38 cents a share, a year earlier. The latest period included $ 12.1 million from a cash sweep agreement with Frontline Ltd. and a $21.5 million gain on the sale of vessels.

Total operating revenue rose 2.1% to $77.7 million.  Analysts polled by Thomson Reuters most recently forecast earnings of 33 cents on revenue of $89.9 million.

First Call consensus has Ship Finance earning $1.71 in FY 2014 which is 16% above 2013 EPS.  First Call has a buy rating on the stock with a 2.2 rating.  The stock trades at a PE of 7 and 1.4 times book value.  Ship Finance has a 12-month price target of $18.70.

On April 20, 2013 Columbine Capital Services, Inc. upgraded SHIP FINANCE INTERNATIONAL LTD from NEUTRAL to FAVORABLE.

On April 12, 2013 Ford Equity Research upgraded SHIP FINANCE INTERNATIONAL LTD from HOLD to BUY.

This Lodging Stock is a Stable Growth and Income Play

RLJ Lodging Trust (RLJ) is a self-advised, publicly traded real estate investment trust focused on acquiring premium-branded, focused-service and compact full-service hotels.  The Company’s portfolio consists of 145 hotels in 21 states and theDistrict of Columbia, with a total of more than 21,600 rooms.  RLJ is a great growth and income stock as it is projected to increase EPS by 19% in 2013 while paying a steady 3.6% dividend yield.

The Company recently announced that it acquired the historicHumble Oil Buildingcomplex in downtownHouston, for a purchase price of$79.5 million, or approximately$151,000per key based on a combined forward room count of 528 keys.

The Humble Oil Buildingis a three-tower complex that occupies an entire city block in downtownHouston. The complex consists of an 82-unit apartment tower that will be converted to a 166-room SpringHill Suites and two existing hotels, the existing 191-roomCourtyard Houston Downtown Convention Center(“the Courtyard”) and the 171-roomResidence Inn Houston Downtown Convention Center(“the Residence Inn”). The purchase price represents a forward capitalization rate of approximately 10.1% for the Courtyard and 9.5% for theResidence Innbased on each hotel’s projected 2013 net operating income and applicable purchase price allocation. The Company purchased this portfolio of assets with its revolving credit facility.

“Our ability to execute this off-market transaction required the expertise, experience, and relationships that are unique to RLJ,” commentedThomas J. Baltimore, Jr., President and Chief Executive Officer. “Acquiring theHumble Oil Buildingcomplex represents a value-add opportunity. Both existing hotels have notable upside potential and our extensive experience managing complex renovations will enable us to deliver another conversion property that will help drive economies of scale.”

Adjusted FFO for the three months ended December 31, 2012, increased $13.4 million to $50.7 million, representing a 35.9% increase over the comparable period in 2011. For the twelve months ended December 31, 2012, Adjusted FFO increased $43.5 million to $185.6 million, representing a 30.6% increase over the comparable period in 2011. Adjusted FFO per diluted share and unit for the three and twelve months ended December 31, 2012, was $0.48 and $1.74, respectively, based on the Company’s diluted weighted-average shares and units outstanding of 106.8 million and 106.6 million for each period, respectively.

Net income attributable to common shareholders for the three months ended December 31, 2012, was $13.7 million, compared to a loss of $1.3 million in the comparable period in 2011. For the twelve months ended December 31, 2012, net income attributable to common shareholders was$41.3 million, compared to$11.3 million for the comparable period in 2011.

First Call consensus has the company producing $2.08 in EPS in 2013 which is a 19% increase from the prior year.  EPS are projected to be $2.34 in 2014 which is a nice 12% increase from 2013.  First Call Analyst currently have a buy rating with a 2.0 rating.  RLJ has an equity summary score of 7.2 out of 10 for a Bullish outlook.  The stock is currently trading near $22.50, 10.8 times 2013 EPS and 9.6 times 2014 EPS.

This Company is Broadcasting Significant Growth and Income in the Next Year

Television broadcasting company Sinclair Broadcasting Group (SBGI) is experiencing a significant amount of success as it continues to grow its broadcasting network through acquisitions and strategic partnerships.  The Company is trading near 52 week highs following news the company has reached an agreement with DirecTV on a new retransmission consent agreement. It has also entered into a short-term extension of its existing agreement. As a result, DirecTV will continue to carry all of Sinclair’s stations.  This comes a day after saying it will pay$370 million to buy 18 stations from Barrington Broadcasting Group, and comes only days after the purchase of Cox Media Stations.

While the stock is up 54% in the past year, Sinclair Broadcasting is trading at a price earnings (PE) ratio of 10 compared to an industry PE of 17.5.  This is a cheap stock considering First Call is projecting a 78% increase in EPS next year.  The First Call consensus is for $2.35 in EPS next year.  Based on the current PE of 10, this indicates a target stock price of $23.50, a 30% increase from current levels.  First Call consensus is a strong buy with a 2.0 rating.

Sinclair Broadcasting has a dividend yield of 3.33%.  The company increased its dividend 25% in the past year.  On December 14, 2012, the Company paid a$1.00per share special dividend and a$0.15per share quarterly cash dividend to its shareholders. I expect the dividend to increase in the future as SBGI continues to increase EPS.

Sinclair Broadcasting Group had an increase in 4th quarter 2012 earnings of 161% and full year 2012 increase in earnings per share of 89%.

The Company reported diluted earnings per common share of$0.73for the three-month period ended December 31, 2012versus diluted earnings per common share of$0.28in the prior year period.

Net broadcast revenues from continuing operations were$920.6 million for the twelve months ended December 31, 2012, an increase of 42.1% versus the prior year period result of$648.0 million.  The Company had operating income of$329.3 million in the twelve-month period, as compared to operating income of$225.6 million in the prior year period.  Net income attributable to the Company was$144.7 million in the twelve-month period, versus net income of$75.8 million in the prior year period.

The Company reported diluted earnings per common share of$1.78in the twelve-month period ended December 31, 2012versus diluted earnings per common share of$0.94in the prior year period.

The Company expects first quarter 2013 station net broadcast revenues from continuing operations, before barter, to be approximately$251.9 million to $254.9 million, up 32.0% to 33.5% as compared to first quarter 2012 results of$190.9 million.  This assumes approximately$0.4 millionand$2.5 million in political and Super Bowl revenues, respectively, in the first quarter 2013, as compared to$3.6 millionand$0.1 million in the first quarter 2012.  The 2013 first quarter net broadcast revenue estimates assume$62.6 million related to the Acquisitions.

Buy This Monthly Dividend Payer for 2013

Home Loan Solutions Service (HLSS) is worth a look as a monthly dividend paying stock.  The company has exceeded earnings estimates for 4 straight quarters.  Home Loan is benefiting from the rebounding housing market as it focuses on servicing mortgages for fees.  The company has increased its monthly dividend by 63% in the past year.

While Home Loan Solutions is not what I consider a value play trading at 1.5 times book value, the company has 80% plus operating margins and generates $1.9 million in income per employee.  That is no typo, $1.9 million per employee.  This is a very enticing business model.

The risk to sales growth is an increase in prepayment rates but these have been lower than expected.  Also, the mortgage refi boom seems to be slowing so HLSS will likely purchase additional bundles of mortgages to service.

Home Loan Solutions received gross proceeds of $480.7 million from the December 24 follow-on offering of 25,300,000 ordinary shares at $19.00 per share. Proceeds from the offering and two new variable funding notes with a total commitment of $1.6 billion were used to acquire non-agency mortgage servicing assets from Ocwen representing mortgages with an unpaid principle balance of $34.6 billion.

Home Loan Solutions Service reported Q4 GAAP earnings of $0.44 per share, ex one-time items, versus the Capital IQ GAAP consensus of $0.39. Revenues were $61.07 million, versus the analyst estimate of $59.32 million.

“Reflecting on our first year of operations, I believe that we have delivered on our plan to provide our shareholders with earnings and dividends that are particularly attractive given the stability and low risk of our assets which the ABS markets are starting to reward,” said ChairmanWilliam Erbey. “I am pleased with the continued support of our equity and debt investors and look forward to further growth in 2013.”

“Our results in the fourth quarter exceeded our revised guidance as lower than expected prepayments reduced amortization expense,” said PresidentJohn Van Vlack. “We are pleased that the variations from our guidance in 2012 have all been positive. Additionally, strong executions in the ABS term note market are continuing to reduce our borrowing costs relative to our expectations.”

On February 7, 2013 the board of directors at Home Loan Servicing Solutions approved a dividend of 0.13 per share. The dividend is payable on April 10, 2013 to shareholders of record on March 29, 2013.  HLSS has a current dividend yield of 6.78% following a 63% increase in its monthly dividend in the past year.

HLSS is trading at $23 with a fair value of $27, a 17% discount to fair value.  First Call analysts’ consensus is for 2013 EPS of $1.75, a 12% increase from 2012.  The First Call consensus is a buy recommendation with a rating of 1.8.

Based in George Town, Cayman Islands, Home Loan Servicing is a mortgage investment company. Founded in 2010, the company together with its subsidiaries is engaged in acquiring mortgage servicing assets, mainly subprime and Alt-A mortgage servicing rights and associated servicing advances.

Health Care REIT Posts Stronger Rental Income

Health Care REIT Inc.’s (HCN) fourth-quarter earnings more than doubled as the company saw stronger rental income and resident fees and posted a significantly higher gain on sales of properties.  HCN will benefit from an aging Baby Boomer generation’s growing demand for assisted and independent living facilities in the coming years. With a significant presence in these property types, Health Care REIT is in a relatively strong position than most of its competitors.

Health Care REIT also announced 2013 dividend payment rate of $3.06per share, representing a 3.4% increase above 2012 payments.   The dividend payout is a current dividend yield of 4.84%. The latest cash dividend was the company’s 167th consecutive quarterly dividend payment.

With strong quarterly results, Health Care REIT is well poised to maintain its growth curves and simultaneously benefit the shareholders with steadily rising dividends.

In the fourth quarter, the company acquired 11 properties with Belmont Village for $530 million, 11 properties with Brookdale Senior Living Inc. (BKD) for $271 million, and five properties with Sunrise Senior Living for $265 million.

According to the U.S. Census Bureau, the elderly population (aged 65 and older) is expected to jump 36% from 2010 to 2020 to 54.8 million people. The latest acquisition by Health Care REIT, therefore, reinforces the buzz in the healthcare REIT industry, spurred by an aging Baby Boomer generation’s increased demand for assisted and independent living facilities.

Health Care REIT reported a profit of $107.2 million, up from $44.5 million a year earlier.  On a per-share basis, earnings improved to $0.35 from $0.15. Excluding gains on properties and other items, funds from operations fell to $0.85 cents from $0.91 cents.

Revenue jumped 30% to $500.7 million. Analysts polled by Thomson Reuters had forecast earnings of $0.28 cents, FFO of $0.84 cents and revenue of $498 million.

Rental income, the biggest top-line contributor, rose 20%.  Resident fees and service revenue jumped 46%.

The latest period included a $54.5 million gain on property sales, compared with a $4.6 million gain a year earlier.

The senior housing- and health-care-focused real-estate investment trust expects 2013 FFO of$3.70 to $3.80 a share.

The shares of Health Care REIT currently trade at 16x the Consensus Estimate for 2013 FFO, a 4.6% premium to the industry average. On a price-to-book basis, Health Care REIT shares trade at 1.6x, a 15.8% discount to the industry average. On a price-to-book basis, the valuation looks fairly valued.

Bottom Line: Health Care REIT (HCN) is a stable, growing dividend play with a fair valuation at this time.  Investors may want to add shares on a price pullback to $60 or lower.

HFC pays 8th Special Dividend and Boosts Regular Dividend by 50%

Investors looking for a regular helping of special dividends should consider HollyFrontier Corporation (NYSE: HFC). The company just announced its 8th special dividend since August 2011.  In addition, HFC just juiced its regular dividend by 50%.

Subscribers to my Get Rich Monthly Income Plan received $31.00 per share in dividends in 2012 with a yield on cost of 12.5% in one year.  In addition, subscribers received $1,690 in call premiums on each 100 shares of HFC stock in 2012.  The covered call premiums accounts for a yield of 68% as subscribers utilized a special income technique called the perpetual covered call.  In total, Monthly income Plan subscribers booked a total return of 219% on HFC in 2012 alone!

HollyFrontier Corporation (HFC) announced today that its Board of Directors approved a 50% increase in the Company’s regular quarterly cash dividend to $0.30 per share from the current rate of $0.20 per share. This is the fifth increase in the regular dividend since the merger in July of 2011, representing a total increase of 300%. The regular dividend will be paid on April 2, 2013 to holders of record of common stock on March 15, 2013.

The Company also announced today a special cash dividend in the amount of $0.50 per share. The special dividend will be paid on March 19, 2013 to holders of record of common stock on March 5, 2013. This is the 8th special dividend declared by HollyFrontier since August 2011.

HFC’s stock price is up 70% in the past year but still trades at a low PE of 7.5 which is a 60% discount to the industry average PE ratio.  HFC has an equity summary score of 9.8 out of 10 for a VERY Bullish outlook.

Mike Jennings, CEO and President of HollyFrontier, said, “Our Board of Directors remains committed to delivering value to our shareholders through both a growing regular dividend as well as special dividends. After today’s 50% dividend increase, our current regular dividend yield is 2.2%, and our trailing twelve month cash dividend yield stands at 6.1% relative to today’s closing price of $53.72. Including today’s announcement, HollyFrontier has returned almost $1.3 billion in capital to shareholders through regular dividends, special dividends and buybacks since the July 2011 merger.”

Icahn Enterprises Increases Annual Dividend by 185% – 5.86% Dividend Yield

Icahn Enterprises L.P. (NYSE: IEP) announced that the Board of Directors of its general partner has approved a modification to the Company’s distribution policy to provide for an increase in the annual distribution from $1.40, comprised of $0.40 in cash and $1.00 in depositary units, to $4.00 per depositary unit, payable in either cash or additional depositary units, at the election of each depositary unit holder.

The Board of Directors of the general partner has declared a quarterly distribution for the first quarter of 2013 in the amount of$1.00, which will be paid on or aboutApril 15, 2013to depositary unit holders of record at the close of business onFebruary 21, 2013. Depositary unit holders will have untilMarch 14, 2013to make an election to receive either cash or additional depositary units; if a holder does not make an election, it will automatically be deemed to have elected to receive the dividend in cash. Depositary unit holders who elect to receive additional depositary units will receive units valued at the volume weighted average trading price of the units on NASDAQ during the 20 consecutive trading days immediately following the election deadline. No fractional depositary units will be issued pursuant to the dividend payment.

The new annual dividend will result in a dividend yield of 5.86% at the stock’s current price.  Icahn Enterprises is up 55% over the past 52 weeks. Icahn Enterprises L.P. (NYSE: IEP) has an equity summary score of 10 out of 10 for a VERY Bullish outlook.

Carl C. Icahn, the Chairman of Icahn Enterprises and the holder of approximately 93% of the outstanding depositary units, is known for his investor activist actions to increase the profit of companies that he buys large share positions in to sell when the value increases.  For those investors wanting to follow Icahn, it is best to purchase IEP rather than to buy into the stocks he invests in.

Mr. Icahn stated: “I’m very proud of the performance of Icahn Enterprises. Since Icahn Enterprises adopted an activist philosophy, the trading price of Icahn Enterprises’ depositary units has risen from $7.625 on December 31, 1999 to $59.95 on February 8, 2013, the last trading day before this announcement – an increase of approximately 817%, which translates to an annualized return of approximately 18% for those who owned the stock through that period (including reinvestment of distributions into additional depositary units and taking into account in-kind distributions of depositary units). Comparatively, the S&P 500, Dow Jones Industrial and Russell 2000 indices increased only approximately 32%, 66% and 116%, respectively, over the same period, which translates to an annualized return of only approximately 2%, 4% and 6%, respectively (including reinvestment of distributions into those indices).

Over the last few years, we have had substantial earnings and cash flow. We believe that our strategy will continue to produce strong results in 2013 and into the future, and that belief is reflected in the Board’s decision to increase our quarterly distribution. We believe that the strong cash flow and asset coverage from our operating subsidiaries will allow us to maintain a strong balance sheet and ample liquidity. We have provided unit holders with a choice between taking distributions in cash or in additional depositary units so that those who wish to increase their participation in the future of our business may do so.”

Best Income Stocks for 2013 – Wyndham Worldwide (WYN)

One of the world’s largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality products and services through its global portfolio of world-renowned brands. The world’s largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world’s best-known hotel brands, with over 7,340 franchised hotels and 627,400 hotel rooms worldwide.  Strong lodging demand, particularly among business travelers, has helped drive revenue higher in recent quarters for the operator of the Ramada, Howard Johnson and Days Inn hotel chains.

Wyndham Worldwide made the Goldman Sachs “Best Income Stocks” list for 2013.  In a recent note, Goldman Sachs Group Inc. pointed out a number of stocks that could provide some easy money for investors by virtue of what the Wall Street bank calls a “social contract” — a combination of earnings appreciation due to expected share buybacks along with dividend yields.  It could be easy money, provided shares remain stable or rise, for investors looking for as close to a guarantee as equities can offer.

Wyndham Worldwide has a potential 11.8% combined earnings accretion and dividend yield, according to Goldman.  Wyndham’s board recently raised its quarterly dividend to $0.29 a share from $0.23, an increase of 26%. Wyndham has a current dividend yield of 1.55% with a 5-year average dividend growth rate of 42%.

Trading near the $60, the stock’s 12-month price target is $75.

Wyndham Worldwide Corp.’s fourth-quarter profit improved 45% as the hotel company’s revenue was boosted by contributions from its vacation ownership and lodging segments.

Wyndham recorded a profit of $81 million, or $0.57 a share, up from $56 million, or $0.37 a share, a year earlier. Excluding acquisition and restructuring costs, and other items, per-share earnings rose to $0.63 from $0.47 a year earlier.  Revenue rose 9.4% to $1.09 billion.

The company raised its 2013 guidance, now expecting$3.57 to $3.70a share in earnings and revenue of$4.925 billion to $5.1 billion. Wyndham in October predicted$3.50 to $3.60a share and$4.9 billion to $5.05 billion, respectively.

Strong lodging demand, particularly among business travelers, has helped drive revenue higher in recent quarters for the operator of the Ramada,Howard JohnsonandDays Innhotel chains. The company late last year acquired Shell Vacations LLC, a vacation-ownership club and property management group, for about$102 millionin cash as Wyndham looked to expand its fee-for-service businesses.

The vacation-ownership business, Wyndham’s largest business by revenue, saw revenue rise 12% to$590 million. Excluding Shell Vacations, the rise was 6%.

Lodging revenue rose 19% to$223 million, benefiting from gains in revenue per available room. Vacation exchange and rentals revenue rose 0.6% to$293 million, but in constant currency and excluding acquisitions, revenue was flat from a year ago.

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