In the investing world there is a great deal of looking backwards because we do not know the future but we can project some knowns from the past. If you believe in cycles, eventually the market will go higher and lower, when it will happen is the tricky part. If you are investing for the long term, looking at past history for profit companies that can and did pay dividends for years and decades and some cases generations is a very good thing to do.

In an article from Reuters, one of those companies that paid dividends and the stock also outperformed the market was GE. The lightbulb was the consumer aspect of GE, but it was active in many subsidiaries that went put together rose to be the most valuable US corporation and global symbol of American business power. The GE company was a spot in the Dow Jones Industrial Average for more than 100 years.

In 2008, the high-flying GE Capital was loaded with both leverage and mortgage bonds and when that market tanked to be pennies of the dollar, GE was worth pennies rather than dollars. Before 2008, the CEO demanded all divisions either be 1,2 or 3 in market share or be sold. To reach the level, risk was taken, sometimes risk is wonderful, sometimes it is awful.

The new CEO was put in and is still Larry Culp and it has taken almost 15 years to turn the company around. Mr. Culp focus has been on paying off debt by selling assets and improving cash flows by steam lining operations and cutting overhead costs. The company is smaller and leaner as compared to before 2008.

The company has broken the company into 3 which all trade on the stock exchange, GE, GE Vernova – the aerospace and energy business and GE Health Care. CEO Culp has slashed more than $100 billion in debt and quadrupled its free cash flow since 2018. Its market cap was grown from $100 billion to $192 billion.

Linking to dividend paying stocks, with these stocks you will like the fact they can pay dividends on a consistence basis and for the most part you really only look at them a couple of times a year. The point of this column is when companies get into trouble, it will take years to return to their formal balance of power. While the company is transforming itself, it will take years to regain its traditional stance in the markets ratings. Perhaps it would be easier to watch the development while you see alternatives. Love people, company stock you can buy and sell.

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

If you were going to eat fish at a restaurant or grill on the BBQ, one of the choices you might make is salmon. When you consider the good elements of the food and the other things with salmon, you can eat well and feel fit in your choice. Salmon are one of the meat-eating fish or it consumes smaller fish and there are multiple reasons why it is everyone’s favorite fish. The issue which comes up is salmon still good for you now that it is primarily sourced from farmed fish? A book called Salmon Wars by Douglas Frantz and Catherine Collins published by Henry Holt and Company, New York, 2022 would suggest otherwise.

For generations salmon was the fish that was born in a small stream, grew up and went to the ocean to come back to ensure the new generations are born on the small stream up river from the ocean. How it knew where to come back is a mystery, but it is does. The fact that it had to come up river meant millions of fish would come back and to be a fisherman meant fishing during spawning season was a good thing and would ensure no one went hungry, later in the year.

For every commodity, once it becomes popular the mystery behind it falls and someone will try to domesticate the commodity to what are known as industrial farms. If all the animals are healthy, then profits are to made in the industry and very good profits will be consistent.

The downside of industrialization of animals is the manure or waste of the animal. What happens to it and how is it treated. The first years of the industrial farm the land can absorb the wastes, by the third year there is saturation of wastes and the wrong bugs come in to harm the animals. In the case of salmon, it is lice. Then to battle the lice, new chemicals are used until the lice adapts, the new chemicals are not so good to humans.

To keep the salmon in the nets in the fish farms, the waste falls to the bottom and is not treated. At first it is dumped to the other side in the hopes the currents will wash it away, and in reality some will be, but much will not be and the food system begins to break down.

From the governments side, fish farms seem to be a good employment opportunity and there are some jobs created, but government subsidies for the jobs tend to be quite high. Rather than giving millions to companies, would it be better to give it to the people in the area and they will have higher standards of living? Politicians like cutting ribbons, so it is easier to give to companies.

In all industries, the use of technology and artificial intelligence to help produce and sell the commodity is being used. Perhaps technologies will make fish farming less harmful to the environment. Can the smaller scale examples be scaled up to meet the consumer demand?

Linking to dividend paying stocks, these companies make money to continually pay dividends and in the long term the stock appreciates over the years. Ideally as an investor you look to the long-term for how companies do their operations, the more sustainable, the better. There are downsides for industrialization of commodities, hopefully your dividends encourage the company to continually use technology to improve and lessen the downsides or by higher priced cuts of meat that are sustainable.

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

If you ever seen the movie The Founder about growth of McDonald’s from a regional restaurant to a national and worldwide dominance, the cost of the hamburgers was 15 cents. At that price, all income groups flocked to the restaurant and Roy Kroc could have dreams, ambitious, and the ability to grow. Over the years, prices increased and many could easily remember the advertisement 2 can dine for $5. Now days that does not buy much food. What should executives do?

In an article by Waylon Cunningham of Reuters, the increasing prices at fast-food restaurants have made people skittish down the income level, and executives said they worry about losing business from those on tight budgets.

Roughly a quarter of low-income consumers, defined as those making less they were eating less fast food and about half said they were making fewer trips to fast-casual and full-service dining establishments, according to polling in February by Revenue Management Solutions, a consulting firm.

A recent census Household Pulse Survey showed half of people earning less than $35,000 a year had difficulty paying everyday expenses, and nearly 80% were moderately or very stressed by recent price increases.

An example was a person who used to stop by McDonald’s to 2 double hamburgers, drink and fries. As prices rose the lady switched to 2 cheeseburgers and dropped the drinks. When prices rise she asks can she justify the spending?

About 1/3 of Black American households, and 21% of white American households, earned less than $35,000 in 2022, according to the latest available US census data.

For fast-food companies that often promote an image of affordability, low-income consumers are a significant portion of the customer base and a bellwether for longer-term trends. But they are typically the first to cut back spending and the last to come back.

But now, chains may be less likely to chase customers as hard as they have in the past because even with a drop in traffic, sales have remained consistent supported by increased prices.

Fast-food companies are not in a hurry to take traffic over profit as they were in a decade ago, says Mike Lukianoff, chief executive of SignalFlare,ai.

In 2008, Subway introduced the $5 footlong which became the poster sandwich for the Great Recession.

In 2016, McDonald’s after a prolonged slump in sales, introduced a bundle deal in called McPick2 allowing customers to pick 2 items for $2. Within months, Wendy’s offered 4 for $4.

Now, instead of across-the-board menu slashes and broad discounts, industry analysts say chains are being more selective, aiming them at specific demographic or limiting them to specific meal times or channels, such as its app or only through delivery.

The battleground is certainly with that low-income consumer or those earning less than $45,000 said McDonald’s CEO Chris Kempczinski.

For major fast-food companies, loyalty apps are the go-to-strategy among major brands to increase retention and the average amount of money spent. The upside for chains is they capture more transaction data and demographic data about the consumer, noted David Henkes, senior principal with Technomic.

Linking to dividend paying stocks, for all consumer companies reaching out to their customer base is a continuing challenge. For companies that try to appeal to all income groups, how to capture at least some of the purchasing power of lower- and middle-income groups is a function of value, how to give value and how the consumer feels value is shown. For the chains, as long as the next income group constantly goes to the chain, they can make profits. If you read about retail strategies, there seems to be no one answer. As an investor, you have to make a decision if you believe the company is giving good value. If no, you will need to find alternatives.

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

If you think about the holidays, any holiday there are some wide spread traditions to them and people continue to do them because they seem to go with the holiday. For example, one of the many traditions with Easter is eating chocolate. Whatever the next holiday is you may or may not eat chocolate but Easter has lots of chocolate attached to it. This year when going into the shops to buy chocolate, it seemed the prices had increased.

In an article by Francis Kokutse and Jessica Donati of the Associated Press, there was a good reason for the increase. About 3/4’s of the world’s cocoa, the main ingredient in chocolate comes from Ghana, Ivory Coast, Nigeria and Cameroon, all countries in Africa. The cocoa grows on cocoa trees. This year the sand from the seasonal winds off the Sahara desert blocked sunlight needed for the bean pods to grow. Last year there was too much rain which spread a rotting disease.

In a world of supply and demand, when supply is decreased and demand grows, prices rise. On the New York Futures Exchange, prices have risen from $5,000 to $10,000 per metric ton.

Farmers say the increases are good, but they are not enough to cover their expenses because the yields are lower and higher production costs.

For the companies with the names on the back of the box, Hershey Foods increased their net profit margins to 16.7% up from 15.8% in 2022. Mondelez International which owns Cadbury and Toblerone brands, net profit margins increased to 13.8% up from 8.6%.

Mondelez raised prices 15% last year, Hershey increased prices and may raise prices again according to Michele Buck, Chairman, President and CEO of Hersheys.

The National Retail Federation expected Easter spending on chocolate bunnies and eggs to be $3.1 billion down from $3.3 billion a year ago.

Switzerland is home to the world’s biggest consumers of chocolate on a per capita basis, eating about 10.9 kilos per person. The company behind the golden bunny Lindt & Sprungli, increased profit margins to 15.6% up from 15% a year earlier.

The business model once again proved to be successful in financial year 2023, the company noted. Price increases accounted for most of the growth in profit margins.

Linking to dividend paying stocks, in a commodity linked firm, owning the company that has the highest margins is better than buying companies that produce the raw material or commodity. In investments there are many choices, finding companies that can raise prices and maintain margins is worthy of your homework.

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

In the world of politics, it is helpful to by a little cynical even though you want to accept the information at face value. When a person becomes a leader of a country, one of the many duties is to ensure the economy works well for the people of the country. To do this, the person meets with influence makers and decision makers who can direct investment into their country. The leader must put on the face of being independent and having a variety of options, but in reality, the country is going to be in the US, Russia or China orbit. One or more of those countries is willing and able to direct infrastructure resources and all countries hope the host country citizens will buy the consumer goods made by their country.

In an article from the Associated Press, Premier Xi Jinping met with US business leaders to discuss ongoing US investment into China. Premier Xi emphasized the mutually beneficial economic ties between the 2 countries and encouraged the US to continue to invest.

To be cynical, China’s economy is a tailspin and needs all the assistance it can to stop the decline and grow again. Part of the reason was 1/3 of the Chinese economy was based on real estate value increasing and at the moment it is decreasing.

The people the Premier was meeting with is the US-Chinese Business Council, whose leaders include Stephen A Schwarzman, the President of Blackstone, Tim Cook of Apple, and Craig Allen of the Washington based Council. The Council noted it was honored to have a dialogue with the country’s top leader to discuss our concerns over the decline in trade, investment, and business confidence as well as our desire to help improve engagement and commercial exchange between the 2 countries.

Linking to dividend paying stocks, the President of the company because of the reach of the company tends to automatically sit on various Boards and Councils designed to ensure access for the company. Some of the Boards and Councils will be to ensure good relations with political leaders, if the need arises for their company, having a relationship and access is a good thing no matter what political stripes the person is. In the case above, you need to be cynical to say China’s economy is not growing, China needs help, or they are open to new investments. Perhaps the company wants to increase its market share in China, this maybe a good time to do it. In an economic downturn, part of running a profitable business means it can make investments with extra government incentives to lower the risk to itself. Eventually that will be good for shareholders.

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

When people came to the US, they started from the coasts and some moved inland, but most remain along the coasts. The jobs were on the coasts and many like the views of the sea. As cities grew ports grew and infrastructure to move goods and services grew along the way. Bridges in cities are important to move things efficiently as the bridge provides access companies located near to ensure the access. There were seemingly logical reasons why a city develops the way it did, but then something happens and the cry comes develop it back.

In an article by Sinead Cruise, Jonathan Saul, and Carolyn Cohn of Reuters, in late March a cargo ship hit one of the support systems of a bridge and the bridge collapsed. The bridge was the Francis Scott Key bridge in Baltimore, Maryland. The costs to insurance companies could be $4 billion.

The losses of several product lines including property, cargo, marine, liability, trade credit and contingent business interruption. Marcos Alvarez, managing director for global insurance ratings at Morningstar DBRS believes the number is between $2 and 4 billion.

Ship liability insurance, which covers marine environmental damage and injury is provided through protection and indemnity insurance known as P&I Clubs.

The International Group of P&I Clubs insures about 90% of the ocean-going tonnage and member P&I Clubs mutually reinsure each other by sharing claims above $10 million.

The group holds general excess of loss reinsurance cover up to the value of $3.1 billion. It is expected that 80 different reinsurers provided that cover to the ship’s insurers.

The first layer of insurance was provided by AXA XL according to Loretta Worters of the Insurance Information Institute. The company Aon was the insurance broker for the bridge with Chubb Insurance the lead underwriter.

To replace the bridge according to economic software analysis company IMPLAN is $600 million, likely to be paid by the US government.

The closing of the port for one month would see a total loss of $28 million for the state of Maryland. To replace the bridge would likely take a couple of years. The good news is the first ship went past the bridge and that is a good thing.

Linking to dividend paying stocks, for all disasters, both small and large, insurance companies have a reasonable idea of the financial costs. There is no reason why it should come as a surprise to anyone in a company. All companies should have contingency plans for the movement of goods and services and if they do not, you should look for alternatives to invest in.

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

Many years ago, while reading an annual report from a small country insurance company, the Chairman wrote to the effect last year there was 10 barn fires and we had to pay out. This year there was 3 barn fires and we recorded a surplus. This year we always inspected the barns and put in preventive measures for barn fires not to spread.

The insurance company was doing risk management, it likely costs farmers more to insure preventive measures were in affect for lower insurance rates. In larger insurance companies, one of the most important departments is risk management or what rates should people pay that will ensure the insurance company makes money?

In an article by Patrick Cooley of the New York Times News Service, whether you believe in climate change or not, insurance companies are motivated to make money and they react to changes. In the last few years, because weather has been changing both drought and floods, the risk management people in the insurance companies have been hard at work. American farmers who grow fruits and vegetables are often finding crop insurance prohibitively expensive or even unavailable.

A 2021 study from researchers at Stanford University found that rising temperatures were responsible for 19% of the $27 billion in crop insurance payouts from 1991 to 2017.

About 85% of the country’s commodity crops which include corn, soybeans and wheat are insured, according to the National Sustainable Agriculture Coalition.

In contrast, barely half the land devoted to specialty crops such as strawberries, apples, asparagus and peaches was insured in 2022.

An example is Bernie Smiarowski who farms 700 acres in western Massachusetts. His farm is fertile and along the Connecticut River. Last year due to floods, he lost $1.25 million worth of potatoes. It was the 3rd straight year of challenging weather. His expenses are $2,000 an acre with yields from 20% to just breaking even.

One of the problems with the federal insurance system is that agents make more money insuring vast tracts of corn and soybeans. Most insurance plans cover a single crop, meaning specialty farms growing a variety of fruits and vegetables need to buy multiple policies.

Kristen Ward, regional V”P for crop insurance at Farm Credit Mid-America, said her company worked with farmers in 6 states covering barley to grapes. Premiums offered to farmers are based on risk, which is rated according for where the crop is grown.

More than 220,000 American farms grow specialty crops according to the American Farm Bureau Federation. However only 18,659 whole farm revenue policies have been sold in a decade.

Federal crop insurance started in the Great Depression, under the program the $18 billion program pays half a farmer’s crop insurance premium to guarantee a secure food supply. The current bill was extended to 2024, what comes next is anyone’s guess as there are many different points of view. For example, Sen Chuck Grassley, a Republican’s farmers benefit so he says leave the program alone.

For Mr. Smiarowski’s farm, he and others appealed to the Governor for help but his share only covered 20% of his losses. As a true farmer, he said when times are bad, you get what you can and you hope for a better next year.

Linking to dividend paying stocks, vest financial interests are where to look for when examining issues. There may or may not be climate change, however insurance companies change their premiums because something changed, and they do not like reporting losses. Fortunately, many insurance companies are mandated by the government to have reserves or be able to use re-insurance to mitigate losses and report profits to pay dividends.

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

One of the most important revenues for Wall Street firms is the IPO or Initial Public Offering. The IPO is both speculation and vindication of a successful company. The speculation is based on other similar companies, what are they worth now and the future? the vindication is taking the company to the next level as companies have to change when they go from private to public. In every IPO, part of the job of the Wall Street firms who help the company go public is to ensure it has maximum media exposure or the general public knows about the issue, if they do some will or could be buyers.

In an article by Medha Singh and Yuvraj Malik of Reuters, in late March, an IPO meant all the criteria for a successful IPO. The company was former President Donald Trump’s company of Trump Media and Technology Group. The IPO happened, there was market demand to push the one day level to $79.38 a share but it closed at $57.99. If you take the price times the shares outstanding, the company was worth $8 billion that day.

Mr. Trump’s shares are locked up for 6 months before he can sell, which means on paper he was worth about $6 billion, but since the shares cannot be locked up or they cannot be pledge for a loan, it is paper value only. If the price stays high for 6 months, one would expect Mr. Trump to sell some of his shares on the market.

On Wall Street, the analysts examine the valuation of a company. People are buying the shares for a reason, but it is not financially rational. The company had an operating loss of $10.6 million for the first 9 months of 2023 on revenues of $3.4 million.

The biggest revenue area of the company is Truth Social and in February had 8.9 million sign-ups. Its competition including X has 238 million active users, Facebook has 2.1 billion users and Reddit has 73 million users. Investors are paying $1,000 per signed up user in Truth Social, $147 for Reddit, $80 for X and $46 for Snapchat.

If you are an investor, you must believe the numbers will go for Truth Social because all Social Media platforms are essentially advertising companies. The greater the number, the more advertising comes and the higher the rates companies are willing to pay for the spots.

Linking to dividend paying stocks, there are many reasons why a stock can go up, but to stay up for months and years takes a rational approach to its revenues and ability to make profits. For a company similar to Trump Media, it went up, but why would it stay there unless the sign-up level multiplies at levels it has previously not seen? It could happen, the present valuation of the company allows it to buy another one, but if the sign-up level does not change greatly over the short and medium term the company will be pennies on the dollar and an interesting story line.

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

In the business world having a lawyer or access to lawyers is a normal part of operations. There are many contracts to be negotiated and signed and firms are sued on a regular basis. Sometimes the suits are good, sometimes there are less than advantageous to the company, and sometimes the suits last for decades. Often times the ones that last for decades are when companies have near monopolies, and they can charge a fee for their services. Companies using the service will try to negotiate for a lower fee, but when is a fee too high?

In an article by Ken Sweet and Mae Anderson of the Associated Press, Vias and Mastercard announced a settlement that ended decades of litigation over fees. While many people own a credit card with either VISA or Mastercard, the real business of the companies is owning the wires every time a debit or credit card is swiped or tapped to the chip to connect.

The lawsuit means the fees will be reduced to 2030 then they will either go up again or be negotiated. The issue for the National Federation of Independent Businesses is Visa and Mastercard sets the interchange rates but small businesses have to pay the highest fees.

The interchange rate are calculated as a fixed fee plus a percentage of the sales total, typically from 1 to 3%.

After 2030, companies must negotiate the fees with merchant-buying groups. The law firm that announced the settlement put the value of the savings close to $30 billion. This particular lawsuit started in 2005.

Linking to dividend paying stocks, both Visa and Mastercard pay dividends and over the years have been a good investment to own. The bulk of the revenues come from owning the wires or connections for consumers to use a debit or credit card. Another source of revenue is from the interest on the credit card. Companies have started small but the heart of the business is the volume needed to generate revenues minus loan losses, if losses are low, it is a healthy business to be in. When you examine the companies you invest in, it is important to know where the majority of the revenues come from to generate profits. The easier it is to generate on going revenues the easier it is to invest in the company.

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