Dividends and US plans to sell 32 million barrels of crude oil from 4 sites as part of stategic sale

When railroads were being built across the US in the 1800 and 1900’s, the way to ensure the bonds were sold was governments gave the railroads access to land. The railways ended up with millions of acres of land, at the time there were few people to take advantage of the land, but the railways held millions of acres of land which could be sold. As time went on and people went across the country to settle and make a living, the land became more valuable and it was possible to buy railroad stocks for the assets they owned as well as the movement of goods which was their reason for existence.

Governments often hold assets for years on a just in case basis. An example is the Strategic Petroleum Reserve (SPR). The US government owns oil which can be delivered to refineries to match supply and demand and try to keep gas prices at the pump from going too high. In an article from Reuters, the Department of Energy announced it would release up to 32 million barrels of oil from 4 sites which include Big Hill and Bryan Mound in Texas, West Hackberry and Bayou Choctaw in Louisiana.

Linking to dividend paying stocks, many companies that have been in business for a number of years have access to assets they held for business reasons but overtime the value has increased and could be sold for other purposes. In the case of railroads, they owned vast parcels of land in cities, sometimes they move tracks to expand and speed up deliveries, but what do they do with the land. It slowly is sold and every once in a while other income is important to the operations of the company. Part of your homework when you buy a company’s shares is to determine what assets are held on cents on the dollar that could be sold for full dollar. If the number is material to the company, then even if the shares go down there is value in owning the company’s shares. Land or another asset could be sold. Dividends held ensure stock prices do not go down too far because there are real assets holding up the value. What is the extra value in your shares?

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

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