Dividends and Cuba sanctions

Off the coast of Florida is the island of Cuba and for many years, the US had not really known what they should or should not do. A former President Teddy Roosevelt led a group of horse riders up one of the hills to help capture the state and essentially make it an American colony. After 50 years of reign, the last few involving gambling, the mob and poor government, Fidel Castro lead a group which over threw the government and essentially made most of the economy under state control. Prior to this action, American companies owned large holdings or held interests in Cuba. President Kennedy’s sent people to overthrow Castro but ended badly and then US put on sanctions for Americans to visit Cuba except for the military base they control.

Since Americans could not invest in Cuba, because of sanctions for Cuba did not wish to pay any money for the assets they seized, other countries moved in. The Soviet Union propped up the economy and Britain, France, Canada, and Spain send tourists and have companies involved in the economy.

Since 1996, the US has passed or kept on the books to renew the Helms-Burton Act, this has been going on every 6 months when the statue is up for renew. According to an article in Reuters, President Trump extended the Title III exemption to 30 days. The idea being to put on pressure on Cuba for supporting Nicolas Maduro’s government in Venezuela.

Linking to dividend paying stocks, often these companies have foreign operations besides domestic operations. The companies try to stay on the right side of the law in the foreign land and whether it is for manufacturing or sales tends to have higher margins in the country. The downside of having foreign operations is the government can change the rules of business. When you consider investing, while foreign operations are valuable, they come at risks of currency and governments changes. If you believe the government will change, try and stay with domestic companies.

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

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