PDF Core List Quarterly - Wells Fargo Advisors

April 25, 2022 John L. Sheehan, CFA, Equity Sector Analyst

Global Securities Research

Core List

Quarterly Review ? First Quarter 2022

Core List Overview

The Core List is comprised of blue chip, industry-leading, companies that we believe can withstand the test of time. The objective is to provide a list of high-quality stocks that can be used to build a well-diversified portfolio or can be used to supplement an existing portfolio.

Performance Summary

The Core List outperformed the S&P 500 by roughly 110 basis points (100 basis points equals one percent) during first quarter 2022. The benchmark S&P 500 generated a -4.60% total return for the first quarter, while the Core List returned -3.53%. The Core List benefited from relative outperformance within the Communication Services, Energy, Financials, Real Estate, Health Care and Information Technology sectors. In terms of weaker industry sectors, the Consumer Staples, Consumer Discretionary, Industrials, Materials, and Utilities sectors weighed on Core List performance as companies within these industries generated weaker returns versus the benchmark during the quarter.

Source: FactSet, Wells Fargo Advisors. Performance numbers are through 3/31/2022. Past performance is no guarantee of future results. An index is unmanaged and not available for direct investment.

Please see pages 11-12 of this report for Important Disclosures, Disclaimers and Analyst Certification

Investment and Insurance Products: NOT FDIC Insured NO Bank Guarantee MAY Lose Value

Core List ? First Quarter 2022 Quarterly Review

April 25, 2022

The first quarter 2022 Core List performance was positively impacted by larger allocations to Energy and Health Care along with a roughly equal weighting to Financials and smaller allocations to Information Technology and Communication Services. Conversely, the relatively larger allocation within Consumer Staples and a smaller allocation to Materials were detractors to Core List performance. With respect to security selection, companies within Communication Services, Financials, Health Care, and Real Estate were positive contributors to performance. On the negative side, security selection within the Consumer Discretionary, Consumer Staples, Energy, Industrials, and Utilities sectors detracted from Core List performance.

Additions & Removals

There were no revisions to the Core List during first quarter 2022.

Returning Value to Shareholders

We favor large companies that are considered industry leaders and, in addition, companies with strong cash-generating potential that may have established policies of returning value to shareholders either in the form of share buybacks or dividend policies that have withstood the test of time. Although it is not a requirement for inclusion in the Core List, many well-established industry-leading companies have historically been consistent dividend-paying companies.

We believe the Core List stocks continue to be on-target returning value to shareholders in the form of dividends and/or share buybacks. Dividend increases (as a percent increase over the dividend paid the previous twelve months) for Core List stocks averaged roughly 13.9% for the twelve months ended March 31, 2022. The dividend percentage change excludes one-time special dividend payments. When comparing common dividends paid by Core List companies in the twelve months ending March 31, 2022 to the common dividends paid in the twelve months ending March 31, 2021, we note common dividends for 48 companies have increased and there were no common dividend reductions.

The common dividend growth calculations include a large common dividend increase by TJX Companies Inc. (TJX - $62.71). The increase was due to the company reinstating its common dividend in March 2021. On March 30, 2020 TJX Companies disclosed that due to the significant economic uncertainty resulting from the COVID-19 pandemic, the company did not intend to declare a common dividend in its fiscal 2021 first quarter; in May 2020 the company also indicated it did not intend to declare a common dividend during its fiscal 2021 second quarter. However, in December 2020 TJX Companies announced the reinstatement of its common dividend beginning with the common dividend payable in March 2021 and TJX Companies has paid four additional common dividends since that time. The dividend reinstatement resulted in TJX shareholders receiving one common dividend in the twelve months ended March 31, 2021 and four common dividends in the twelve months ended March 31, 2022.

The table on the following page details common dividend changes for Core List companies during the twelve months ended March 31, 2022. The calculations do not include Mastercard Incorporated which was added to the Core List following the end of first quarter 2022. Excluding the unusual TJX Companies common dividend growth, the average common dividend increase for the Core List for the twelve months ended March 31, 2022 would have been 8.3%.

Page 2 of 12

Core List ? First Quarter 2022 Quarterly Review

April 25, 2022

Dividend Changes in the Last Twelve Months Ended March 31, 2022

Company

TJX Companies Inc Oracle Corporation Lowe's Companies, Inc. Abbott Laboratories Aflac Incorporated Landstar System, Inc. Parker-Hannifin Corporation Danaher Corporation UnitedHealth Group Incorporated BlackRock, Inc. Broadcom Inc. NIKE, Inc. Class B Home Depot, Inc. Microsoft Corporation Linde plc Accenture Plc Class A NextEra Energy, Inc. Procter & Gamble Company Stryker Corporation Starbucks Corporation Comcast Corporation Class A Medtronic Plc Omnicom Group Inc Raytheon Technologies Corporation Apple Inc. Illinois Tool Works Inc. CMS Energy Corporation Paychex, Inc. Merck & Co., Inc. JPMorgan Chase & Co. Chevron Corporation PepsiCo, Inc. Johnson & Johnson Becton, Dickinson and Company U.S. Bancorp Automatic Data Processing, Inc. M&T Bank Corporation Novartis AG Sponsored ADR* Sysco Corporation Kinder Morgan Inc Class P Cisco Systems, Inc. Coca-Cola Company Colgate-Palmolive Company Walgreens Boots Alliance Inc V.F. Corporation Chubb Limited Walmart Inc. Emerson Electric Co. Public Storage Alphabet Inc. Class A Salesforce, Inc. Walt Disney Company Average

Symbol

TJX ORCL LOW ABT AFL LSTR PH DHR UNH BLK AVGO NKE HD MSFT LIN ACN NEE PG SYK SBUX CMCSA MDT OMC RTX AAPL ITW CMS PAYX MRK JPM CVX PEP JNJ BDX USB ADP MTB NVS SYY KMI CSCO KO CL WBA VFC CB WMT EMR PSA GOOGL CRM DIS -

Market Cap (Millions)

$74.1 $203.3 $132.0 $211.1

$41.3 $5.7

$35.6 $189.4 $490.2 $100.6 $240.6 $203.4 $310.6 $2,055.2 $157.5 $196.9 $145.2 $386.9

$93.7 $89.7 $205.7 $144.7 $16.3 $150.1 $2,643.8 $63.6 $20.8 $47.4 $213.8 $372.5 $310.6 $238.1 $477.3 $72.6 $75.5 $94.0 $22.3 $199.4 $45.0 $43.4 $213.2 $282.2 $68.2 $39.3 $21.2 $87.9 $433.1 $55.6 $70.5 $1,584.3 $169.5 $215.4 -

Recent Price

Dividends Paid 12 Months Ended 3/31/2022

$62.71

$1.04

$76.21

$1.28

$197.06

$3.00

$119.64

$1.82

$63.37

$1.39

$152.92

$0.96

$277.07

$4.12

$264.56

$0.84

$520.94

$5.80

$662.94

$17.27

$586.95

$15.40

$129.07

$1.13

$300.11

$6.85

$274.03

$2.36

$309.72

$4.35

$310.80

$3.70

$73.95

$1.58

$161.25

$3.48

$248.31

$2.59

$77.92

$1.88

$45.38

$1.00

$107.80

$2.47

$79.01

$2.80

$100.49

$2.04

$161.79

$0.88

$203.35

$4.72

$71.76

$1.77

$131.35

$2.64

$84.59

$2.64

$126.81

$3.80

$160.95

$5.44

$172.15

$4.30

$181.54

$4.24

$255.04

$3.40

$50.83

$1.76

$223.52

$3.83

$172.41

$4.60

$89.21

$2.17

$88.80

$1.86

$19.15

$1.08

$51.36

$1.48

$65.25

$1.68

$81.10

$1.80

$45.54

$1.90

$54.58

$1.98

$206.10

$3.18

$156.86

$2.20

$93.60

$2.04

$402.36

$8.00

$2,392.71

$0.00

$171.43

$0.00

$118.27

$0.00

-

-

Dividends Paid 12 Months Ended 3/31/2021

$0.26 $0.96 $2.30 $1.53 $1.17 $0.82 $3.52 $0.72 $5.00 $15.02 $13.70 $1.01 $6.15 $2.14 $3.95 $3.36 $1.44 $3.16 $2.36 $1.72 $0.92 $2.28 $2.60 $1.90 $0.82 $4.42 $1.66 $2.48 $2.48 $3.60 $5.16 $4.09 $4.04 $3.24 $1.68 $3.66 $4.40 $2.09 $1.80 $1.05 $1.44 $1.64 $1.76 $1.86 $1.94 $3.12 $2.16 $2.01 $8.00 $0.00 $0.00 $0.00 Average

Source: FactSet data & Wells Fargo Advisors. Prices and data as of 4/22/2022.

Percent Change

300.0% 33.3% 30.4% 19.0% 18.8% 17.8% 17.0% 16.7% 16.0% 15.0% 12.4% 11.9% 11.4% 10.3% 10.2% 10.1% 10.1% 10.0% 9.8% 9.3% 8.7% 8.3% 7.7% 7.4% 7.3% 6.8% 6.5% 6.5% 6.5% 5.6% 5.4% 5.1% 5.0% 4.9% 4.8% 4.6% 4.5% 4.0% 3.6% 2.9% 2.8% 2.4% 2.3% 2.2% 2.1% 1.9% 1.9% 1.5% 0.0% 0.0% 0.0% 0.0% 13.9%

Sector

Consumer Discretionary Information Technology Consumer Discretionary Health Care Financials Industrials Industrials Health Care Health Care Financials Information Technology Consumer Discretionary Consumer Discretionary Information Technology Materials Information Technology Utilities Consumer Staples Health Care Consumer Discretionary Communication Services Health Care Communication Services Industrials Information Technology Industrials Utilities Information Technology Health Care Financials Energy Consumer Staples Health Care Health Care Financials Information Technology Financials Health Care Consumer Staples Energy Information Technology Consumer Staples Consumer Staples Consumer Staples Consumer Discretionary Financials Consumer Staples Industrials Real Estate Communication Services Information Technology Communication Services -

*Novartis' dividend reflects a 15% foreign tax withholding and 35% Swiss withholding tax; current gross dividend is $3.34 per share (based upon 3/10/2022 CHF/USD exchange rate).

Page 3 of 12

Core List ? First Quarter 2022 Quarterly Review

April 25, 2022

Core List by Sector

Company Communication Services (average) Alphabet, Inc. Comcast Corp. The Walt Disney Co. Omnicom Group, Inc. Consumer Discretionary The Home Depot, Inc. Lowe's Cos., Inc. NIKE, Inc. Starbucks Corp. The TJX Cos., Inc. VF Corp. Consumer Staples The Coca-Cola Co. Colgate-Palmolive Co. PepsiCo, Inc. Procter & Gamble Co. Sysco Corp. Walgreens Boots Alliance, Inc. Walmart, Inc. Energy Chevron Corp. Kinder Morgan, Inc. Financials Aflac, Inc. BlackRock, Inc. Chubb Ltd. JPMorgan Chase & Co. M&T Bank Corp. U.S. Bancorp Health Care Abbott Laboratories Becton, Dickinson & Co. Danaher Corp. Johnson & Johnson Medtronic Plc Merck & Co., Inc. Novartis AG Stryker Corp. UnitedHealth Group, Inc. Industrials Emerson Electric Co. Illinois Tool Works, Inc. Landstar System, Inc. Parker-Hannifin Corp. Raytheon Technologies Corp. Information Technology Accenture Plc Apple, Inc. Automatic Data Processing, Inc. Broadcom, Inc. Salesforce, Inc.

Symbol N/A GOOGL CMCSA DIS OMC N/A HD LOW NKE SBUX TJX VFC N/A KO CL PEP PG SYY WBA WMT N/A CVX KMI N/A AFL BLK CB JPM MTB USB N/A ABT BDX DHR JNJ MDT MRK NVS SYK UNH N/A EMR ITW LSTR PH RTX N/A ACN AAPL ADP AVGO CRM

Price N/A $2,392.71

$45.38 $118.27

$79.01 N/A

$300.11 $197.06 $129.07

$77.92 $62.71 $54.58

N/A $65.25 $81.10 $172.15 $161.25 $88.80 $45.54 $156.86

N/A $160.95

$19.15 N/A

$63.37 $662.94 $206.10 $126.81 $172.41

$50.83 N/A

$119.64 $255.04 $264.56 $181.54 $107.80

$84.59 $89.21 $248.31 $520.94

N/A $93.60 $203.35 $152.92 $277.07 $100.49

N/A $310.80 $161.79 $223.52 $586.95 $171.43

Market Cap (Billions) $505.4 $1,584.3 $205.7 $215.4 $16.3 $138.5 $310.6 $132.0 $203.4 $89.7 $74.1 $21.2 $213.3 $282.2 $68.2 $238.1 $386.9 $45.0 $39.3 $433.1 $177.0 $310.6 $43.4 $116.7 $41.3 $100.6 $87.9 $372.5 $22.3 $75.5 $232.5 $211.1 $72.6 $189.4 $477.3 $144.7 $213.8 $199.4 $93.7 $490.2 $62.1 $55.6 $63.6 $5.7 $35.6 $150.1 $620.8 $196.9 $2,643.8 $94.0 $240.6 $169.5

Dividend per

Share N/A

$0.00 $1.08 $0.00 $2.80 N/A $7.60 $3.20 $1.22 $1.96 $1.18 $2.00 N/A $1.76 $1.88 $4.30 $3.65 $1.88 $1.91 $2.24 N/A $5.68 $1.11 N/A $1.60 $19.52 $3.20 $4.00 $4.80 $1.84 N/A $1.88 $3.48 $1.00 $4.52 $2.52 $2.76 $2.16 $2.78 $5.80 N/A $2.06 $4.88 $1.00 $4.12 $2.04 N/A $3.88 $0.88 $4.16 $16.40 $0.00

Dividend Yield 1.5% 0.0% 2.4% 0.0% 3.5% 2.2% 2.5% 1.6% 0.9% 2.5% 1.9% 3.7% 2.5% 2.7% 2.3% 2.5% 2.3% 2.1% 4.2% 1.4% 4.7% 3.5% 5.8% 2.8% 2.5% 2.9% 1.6% 3.2% 2.8% 3.6% 1.8% 1.6% 1.4% 0.4% 2.5% 2.3% 3.3% 2.4% 1.1% 1.1% 1.8% 2.2% 2.4% 0.7% 1.5% 2.0% 1.5% 1.2% 0.5% 1.9% 2.8% 0.0%

TTM Revenues (billion)

$115.3 $257.5 $116.4

$73.0 $14.3 $64.1 $151.2 $96.2 $46.9 $30.4 $48.5 $11.6 $140.7 $38.7 $17.4 $79.5 $79.6 $60.7 $135.9 $572.8 $86.4 $156.3 $16.6 $39.5 $22.1 $20.3 $41.0 $124.5

$5.9 $23.1 $70.9 $44.5 $19.9 $30.3 $94.9 $31.8 $50.4 $51.6 $17.1 $297.6 $24.0 $18.5 $14.5

$7.2 $15.3 $64.4 $80.8 $56.7 $378.7 $15.7 $28.5 $26.5

Int'l Sales

36% 54% 22% 20% 49% 29%

8% 6% 61% 30% 21% 50% 40% 66% 67% 44% 56% 17% 15% 18% 28% 56% 1% 27% 70% 36% 30% 24% 0% 0% 50% 61% 46% 62% 50% 48% 54% 98% 28% 3% 32% 56% 54% 0% 37% 13% 47% 67% 58% 13% 81% 36%

Consensus NTM EPS Estimate N/A

$116.45 $3.54 $4.78 $6.65 N/A

$16.12 $13.43

$4.32 $3.39 $3.20 $3.51

N/A $2.49 $3.24 $6.65 $6.06 $3.73 $4.39 $6.77

N/A $16.02

$1.13 N/A

$5.22 $39.83 $14.74 $11.61 $14.31

$4.62 N/A

$4.33 $12.29 $10.30 $10.25

$5.79 $7.27 $6.14 $9.76 $22.44

N/A $5.14 $9.05 $11.00 $18.77 $4.78

N/A $11.25

$6.23 $7.15 $36.84 $4.66

NTM PE 15.9x 20.5x 12.8x 24.7x 11.9x 19.1x 18.6x 14.7x 29.9x 23.0x 19.6x 15.5x 20.8x 26.2x 25.0x 25.9x 26.6x 23.8x 10.4x 23.2x 12.6x 10.0x 16.9x 12.5x 12.1x 16.6x 14.0x 10.9x 12.0x 11.0x 19.1x 27.7x 20.7x 25.7x 17.7x 18.6x 11.6x 14.5x 25.4x 23.2x 17.4x 18.2x 22.5x 13.9x 14.8x 21.0x 23.4x 27.6x 26.0x 31.3x 15.9x 36.8x

Consensus L-T EPS Growth Estimate 16% 17% 15% 43% 4% 19% 5% 22% 15% 9% 99% 34% 6% 8% 5% 7% 6% -2% 2% 7% 17% 34% -1% 6% 6% 12% -1% 14% 5% 9% 6% 7% 12% 4% 9% 11% 5% 10% 13% 11% 11% 11% 5% 11% 16% 13% 13% 12% 14% 14% 18%

Date Added to List

N/A 8/11/14 3/26/19 4/1/20 4/10/08

N/A 1/7/93 7/6/06 8/2/16

1/16/18 11/10/09 11/10/09 N/A 10/21/92 12/29/97 10/21/92

1/6/98 10/21/92

7/13/93 10/21/92 N/A

8/9/06 8/12/14 N/A

6/4/97 5/21/18

7/9/20 3/28/11 3/28/11 3/28/11 N/A 4/10/08 3/30/07 8/18/05 4/10/08

7/1/15 10/26/09

1/31/07 10/23/19

7/6/06 N/A

10/21/92 8/9/06 7/6/06

7/11/17 8/18/05 N/A 11/10/09

7/1/15 10/21/92

7/11/17 12/22/20

Page 4 of 12

Core List ? First Quarter 2022 Quarterly Review

April 25, 2022

Company Cisco Systems, Inc.

Symbol CSCO

Price $51.36

Market Cap (Billions)

$213.2

Dividend per

Share

$1.52

Dividend Yield

3.0%

TTM Revenues (billion)

$51.5

Int'l Sales

41%

Consensus NTM EPS Estimate

$3.58

NTM PE 14.3x

Consensus L-T EPS Growth Estimate

7%

Date Added to List

6/18/98

Mastercard, Inc.

MA

$351.18

$344.2 $1.96

0.6%

$18.9

68%

$10.17 34.5x

21%

4/20/22

Microsoft Corp.

MSFT

$274.03

$2,055.2 $2.48

0.9%

$184.9

50%

$9.86 27.8x

16%

11/19/93

Oracle Corp.

ORCL

$76.21

$203.3 $1.28

1.7%

$41.8

54%

$5.06 15.1x

10%

7/1/15

Paychex, Inc.

PAYX

$131.35

$47.4 $2.64

2.0%

$4.5

1%

$3.97 33.1x

10%

9/15/97

Materials

N/A

N/A

$157.5 N/A

1.5%

$30.8

64%

N/A 26.1x

11% N/A

Linde Plc

LIN

$309.72

$157.5 $4.68

1.5%

$30.8

64%

$11.89 26.1x

11%

8/14/06

Real Estate Investment Trusts (REITs)

N/A

N/A

$70.5 N/A

2.0%

$3.4

0%

N/A 26.1x

8% N/A

Public Storage

PSA

$402.36

$70.5 $8.00

2.0%

$3.4

0%

$15.42 26.1x

8%

12/20/16

Utilities

N/A

N/A

$83.0 N/A

2.4%

$15.6

0%

N/A 25.8x

9% N/A

CMS Energy Corp.

CMS

$71.76

$20.8 $1.84

2.6%

$7.4

0%

$2.89 24.8x

8%

9/19/18

NextEra Energy, Inc.

NEE

$73.95

$145.2 $1.70

2.3%

$23.7

0%

$2.74 26.9x

9%

6/21/11

Core List Average1

N/A

N/A

$271.8

N/A

2.1%

$73.0

37%

N/A

18.4x

10%

12/30/07

S&P 500

SP50

$4,272

$71.5 $60.32

1.4%

$26.4

32%

$237

18.0x

13%

N/A

Source: FactSet, Wells Fargo Advisors, company reports. 1Simple average for market cap, dividend yield, revenues, int'l sales, date added. Harmonic average for PE. Median for EPS growth estimate. TTM = trailing twelve months, NTM = next twelve months, EPS = earnings per share, funds from operations used for real estate investment trusts, PE = price to earnings ratio, L-T = long-term

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