When the writer was younger, there were 3 streams in high school to go after graduating – university, college or work. The first choice for many was either work or university with college further down the list. As the economic slowdown has remain in neutral, many people are discovering colleges offer challenging and interesting programs. Reading over an insert about colleges, it seems the bias of colleges further down the list remains. There can be many reasons, one is university graduates tended to become policy makers and their bias is university (there are more grants for universities than colleges)  If you end up with a good paying job, it is not surprising a bias exists. However, people are learning with a college degree, you can end up with a good paying job too, maybe make even more money than those with a university degree.

Linking to dividend paying stocks, we all have biases. In the above case educational bias, we have hometown bias, regional bias, and even our source of income. That is okay, and on many levels it is good thing to have. Wherever you are from, you will be exposed to certain industries more than others, that is good and it is to your advantage that you see opportunities. In business, the balance sheet and income sheet remain the same, wherever you are from, a business needs to make a profit. For this blog, if the stock trades on a market, paying dividends is the next stage and if they are consistent over the years so much the better.

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

Over the years many people have gone to IKEA to purchase furniture and fixtures, making IKEA the world’s number one furniture retailer. Among the extras at the furniture store is a restaurant and play area for the kids. In the last week, the little meatballs that are in the restaurant in the European stores, have tested as pork, beef and horse meat. The stores in non European countries are supplied by a different supplier and are unaffected. However, they are affected because most consumers will not know, they will see the headline of horse meat in the meatballs and automatically believe that their IKEA is affected. The issue for IKEA will be how does it communicate and ensure that horse meat is not part of any of its products? and why was horse meat included in the first place? In the IKEA example, the sale of meatballs is a very small percentage of the business, but when you add the phrase Swedish meatballs and link it to IKEA the Swedish company, the issue does not seem so minor after all, the issue is connected to IKEA’s brand awareness.

Linking to dividend producing companies, while most of the time the concentration will be on growing market share, ensuring high margins, profitability and paying the dividend, it is important to ask how does or how did the company deal with its problems? These days, just about every phone comes with a camera, people use them. Prior to cameras, many issues were dealt with differently, now companies have to deal with the issues openly. When consumers feel the company did them wrong, the camera is used. How companies deal with complaints and problems is an important consideration for investing in a company.

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

There are many wonderful examples of companies whose business has made consumers lives easier. An example is Garmin which specializes in GPS for all kinds of uses. For many generations, many people had only a little sense of direction on their journeys for they did not either read or bring a map. In retrospect that may be part of the more interesting journeys. Then Garmin invented the GPS for your car and a host of other uses. The car use was the biggest category for the company and had the highest profit margins. The company expanded to many other uses and now you can even buy a watch with a GPS. All was good, exciting, profitable and then came the smart phone. . As more and more people have smartphones or they become the standard (cell phone companies make more money from the data then people talking on the phone) the app is downloaded and used. Are revenues the same as before, not surprisingly they are less. Does Garmin still do lots of things with GPS, yes, but changes abound for it and companies like it.

Linking to dividend producing companies, we all get use to receiving services one way, until there is a change and then wonder how we did it before? When there is a change to make life better or easier for consumers, there tends to be an affect on a company or group of companies. Those companies have to adjust, to concentrate on higher margin products or increase the volume on lower margin business to sustain itself. If the company is attuned to the consumer, then the stock has a legitimate opportunity to rebound and continue to be a holding. However if you are changing, then others are also changing, and sometimes it may be better to watch from the sidelines from seemingly more stable companies.

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

In one of the magazines, the writer likes to read, there is an article by Sir Richard Branson head of the Virgin group. Recently Business Stripped Bare by Richard Branson Virgin Books, 2008 was read. Mr. Branson writes about about reputation and brand. On the operating side, he says Virgin has never let a company go bankrupt, even though there were times that would have been easier. Virgin pays its debts, wrapped up operations and moved on. Moving on is easy to say, harder to do and that is why you need honest people around you.

Mr. Branson gives credit to the many people working with and for him for Virgin’s success. Part of the moving on is Mr. Branson gives people leeway to ask questions and make mistakes (as long as the mistakes have not broken a serious rule or damaged the brand) mistakes are expected and learnt from. One method to move on is transfer people to other areas of the company. Another method is to encourage people to continually ask questions – what if? what could be? what should be? can we enlarge our corporate footprint? does it make sense and what would be the results? All those questions are half full questions – is the glass half full or half empty? all the answers could go one way or the next. There always is opportunity, but execution has to be done on a daily basis. Finding the opportunity is only the beginning, possibly an exciting beginning but only the beginning. Then the work begins.

Linking to dividend paying stocks,  a company consistently earning dividends can become complacent in the marketplace, one of the things on your list as an investor is to see how the company handles its mistakes. While the first step is to ensure enough money is made to keep paying the dividend, several steps down is the need to continually update the company. There are always many choices – you may remember Beta or VHS. Instinctively you know every once in a while the company will throw good money at in retrospective was a bad idea and will waste it resulting in write offs. How does the company handle it? How does it move on?

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

In one of the magazines, the writer likes to read, there is an article by Sir Richard Branson head of the Virgin group. Sometimes it is nice to pick up a book that was published a couple of years ago to see how things turned out, recently Business Stripped Bare by Richard Branson Virgin Books, 2008 was read. Mr. Branson focuses on the Virgin brand, at this stage, most of us have heard that we are our own brand. Whatever you do should reflect your brand, Mr. Branson writes about the Virgin brand and how Virgin functions. The groups are put together in usually smaller companies (less than 100 people); an important element is to always assessing the downside risk and ensuring the downside risk will not affect the total group; and to target industry groups where both a monopoly like condition exists and the customer is treated badly. Virgin believes and has demonstrated in a variety of industries it can consistently provided better service and make money. One of the methods is to ask a lot of questions about the industry and bring the reasons to enter it down to the simplest equation. Then ensure the people have fun, work hard, and consistently celebrate great customer service.

Linking to dividend paying stocks, in an ideal world the companies you invest in have a monopoly like market share. If they have a strong consistent earnings stream then you are confident the companies can be a long term investment. The harder part is to ensure even though the company has monopoly like conditions, the company focuses on ensuring all customers are treated fairly and do not want to switch to someone else. Virgin went after a number of dividend paying companies who were treating their customers badly. If the company you have invested in, besides paying a dividend is also rated high in the customer rating surveys, then as an investor you have less to worry about.

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

If you were to write a speech of 5 -7 minutes, the key for any topic is to narrow the field and talk about 3 main points. While humans are complex, apparently we tend to remember 3 topics, after that the majority will begin to gloss over. The narrowing of the field means for any subject that can be found, there is much to be said about it. Hopefully, the reason you picked the topic is you are passionate about the topic, your listeners may not be, so you must narrow your topic without diluting the importance of it. Next you would pick 3 points you wish to leave with the audience. Your sincereity, word selection, enthusiasm, and voice will let your audience know how much you care about the topic.

Linking to dividend paying stocks, there are many methods to pick stocks that pays a dividend. To narrow the field even more according to John Heinzl of the Yield Hog (jheinzl@globeandmail.com), Donald Taylor,  investment manager for Franklin US Rising Dividends Fun uses 3 tests – each stock have raised its dividend in at least 8 of the past 10 years; have at least doubled its dividend of the past 10 years; and be trading in the lower half of its 10-year price to earning range. Note within the tests is the variable the company has been paying dividends longer than 10 years. If you take the companies that pay dividends, which most companies on the exchange do not, then take those that have been paying for longer than 10 years, it narrows the field even more. 5 companies Mr. Taylor likes are Chevron, Pentair Ltd, Air Products and Chemicals Inc, Dover Corp and United Technologies.

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

The older a person gets, the more they turn their attention to one of the most important parts of the newspaper – the obituaries. If you read them, you will read about very interesting people, one or two you may even know or know of. Today Jerry Buss the former owner of the Los Angles Lakers was highlighted. Over the years reading about his team and once in a while about the him, lead me to read the obituary. Although there are standard formats for writing the obits and for high profile people in the local community the papers has a piece ready to be updated; for the average person, the family writes the article and their sincerity is reflected in the piece. Each of us affects people who may only see a small part of their lives. The ones that are truly missed tend to affect everyone in the same positive manner and were role models for everyone else.

Linking to dividend paying stocks, one of the attributes of a company besides paying a dividend, is that the company should be a good corporate citizen. When it is a good corporate citizen which includes earning a profit, the company treats its employees fairly, tries to make the world or its part of the world a better place by solving problems related to its clients. However you rank companies, when you add in the good corporate citizen for the long term, your investment will pay off year after year with increasing dividends.

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

Everyone knows about spies, particularly working for governments. All governments have spies to figure out what other governments are doing particularly the ones they do not consider to be friendly. It is an accepted and expected practice. The practices the spys do for the government are very similar to the work done for corporations. While corporations can be any size, all the larger ones have ties into the espionage world. There are very good reasons to have these ties – millions or billions of dollars can be made or lost with knowledge. In North America, fortunately much of corporate information is public and has to be pieced together, but it can be found. Eamon Javers wrote an interesting book called Broker, Trader, Lawyer, Spy – the secret world of Corporate Espionage, harpercollings, 2010. There are many interesting stories in the book and one story is an aspect to all public companies is they have to report their quarterly results and everyone is invited. There are folks listening and watching to see if the body language and wording of the senior executives concerning the results and the future of the company are truthful. Everyone wants to know if good results will continue or will a decline happen, money can be make if the stock goes up or down in the short term, which way should the money be invested?  Another story and there should be no surprise to it is prior to the headlining deals being made, all aspects of the deal both financially and for senior executives, personally, are investigated to see what the investment community and competition should do.Using former spies is a key to having good intelligence.

Linking to dividend producing stocks – as a shareholder, your level of investigation can and should be done on a much lower level. Unless you have millions at stake, your investigation can be to ensure the company is a great corporate citizen, maintaining wonderful margins and paying the dividend. It is easy to understand corporate espionage goes on, but you do not have to go into that area to make money. Investing for the long term in good companies that pay dividends is the key.

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

When the majority of us invest in the stock market, we believe we are picking good companies who will outperform the indexes. If we buy a fund, the pros who run the fund believe that they will be able to pick stocks that outperform the market indexes. The reality according to many surveys is half the companies on the exchange will under perform the index and one third will lose money in any given year. There are many potential solutions to the problem, one is to buy the index and not worry. Another recently offered method by John Del Vecchio is the Forensic Accounting ETF is to rate the companies according to their accounting methods. In accounting, there is the generally accepted method, then there are grey areas which are not technically illegal, but close. Theses areas in which companies have more leeway are revenue recognition practices, treatment of inventory, and material changes to operating expenses. Reading the notes in the annual report are important. This particular idea would rate the accounting and those with less than a passing grade would not be invested in. Hopefully, this fund will be successful and more investment companies will ignore shoddy accounting practice companies allowing for accounting practices to improve.

Linking to dividend paying stocks, a higher percentage of times, the accounting practices of dividend paying stocks will be higher than a passing grade. One reason is these companies tend to make money on a consistent basis and have less need to stretch into the grey area. Just because a company pays a dividend does not mean superior performance, but it tends to mean the company will not go into a free fall and have a loss of stock market value. The values the stock market places on the company for both growth and dividend protection will tend to be more realistic.

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