Last week while walking in the downtown area of the urban area where I live, there was an opportunity to view all types of clothing people wear in the summer. On one particular clothing was the slogan “Stray Off the Path” it should not be hard to figure out which athletic company it was designed for. Similar to every good slogan it has more than one meaning – it could mean by wearing the shoes, you can move to set your path to achieve your destination. It could mean the regular paths are too crowded and by straying off the path, you can pass the crowds to get to your destination faster. Of course, there are valid reasons why people go on the same paths – if you walk on the sidewalk, the vehicles are not likely to be on them or it is safer. If you travel on the trade paths that were built over generations of use, there likely will be supports on them – hotels, rest stops, policing, people that will look out for you or it should be safer. In investing, there are many paths to travel, some will do better than others. At some point in time, going on alternative paths may lead you to great profits.

Linking to dividend paying stocks, the alternative paths may lead to wonderful gains, but often after wonderful gains, there comes a big drop which if you had not sold (and most people will have not) the average gains over the years comes near the rest of the pack. If you bought and sold on inside information then you should have a larger than normal gain. If you are not privy to insider information, the best path to take is follow those companies which are already successful and remain successful. One method to determine them is do they pay a dividend? If yes, then you know the company is generating enough income to both invest in the business and to pay the shareholders and you can eliminate the other companies. If the company is not generating enough to invest in the business, then it will slide or its financial books will begin to show myth rather than reality. There are no guarantees in investing, and we do have a culture of individualism, however one of the tried and true methods to continue generate good returns year after year is buying into successful companies which also pay dividends.

There are more questions than answers, till the next time – to raising questions.