If you watch crime family movies, because it is easier to use this example, you will notice crime families occasionally join together at weddings. The idea is to use the offspring to cement relationships and that way the two families can work together rather than kill each other for territory. The premise has been used by Kings and countries for centuries. When President Regan helped end the cold war, American companies were encouraged to do business in Russia. Given Russia has some of the biggest oil and gas fields in the world, it is not surprising to see Exxon Mobil doing joint ventures with Russia’s Rosneft. Things were going well for Exxon until Russia for political reasons try to influence the US elections and the Senate imposed sanctions on Russia. It was relatively easy to pick individuals, but the Senate also want to impose sanctions on economic activity. This is when it gets more difficult, earlier the same government encouraged economic activity with Russia. Now they want less.

In an article by Ernst Scheyder and Vladimir Soldatkin of Reuters, in 2012 Exxon and Rosneft were expecting to spend up to $500 billion in developing oil and gas in the Arctic and Black Sea. The sanctions are to on lands within Russia as it does not include the Sakhalin project off the eastern coast of Russia. In lands north of the Arctic Circle, the joint venture announced a major discovery which was to developed in 2019. Depending on how long sanctions are to be imposed, Exxon may be back in Russia proper, but for now Exxon took a $200 million dollar loss on their operations in Russia.

Linking to dividend paying stocks, when times are good politicians love to embrace the success of companies. When things change, sometimes politicians reverse their love which means the company has to be diversified to wait till the wind blows the other way. Exxon Mobil is the largest oil company in the world and has its operations in many countries where oil can be and is found. Shareholders should be used to politicians using oil and gas as tool for political gain or loss.

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

This blog recommends how you can use the many things in your life to invest. Once you have the ideas down, you will need to do homework and today’s information can help. Tiffana Paulrajah at Inovestor Inc used the her data base to come up with some companies for you to play defense by. At the same time, the company’s dividends and growth rates help give you a consistent return on your investment for low risk.

Her criteria was to start with the S&P 500

a) Dividend Yield of at least 3%. (the chart was down at the end of Feb)

b) An economic performance index or EPI (Return on Capital divided by the Cost of Capital) above 1.

c) Return on capital equal to or greater than 10%.

d) Beta of less than one.

e) Positive earnings-per-share growth rate

f) An economic value-added (EVA) figure that is positive. For investors the higher the better.

g) Positive free-cash-flow-to-capital.

Company                 R/C        EVA per   EPS Growth    FCF/     EPS   Mkt Cap    Beta  Dividend

%             Share        Rate %       Capital %         (US $ Bil)              Yield %

Altria                      24.9         n/a              5.3                  9.6        3.2       127.114   0.65       3.6

L Brands                20.9         3.8               3.3                  3.8        3.2          22.794  0.65        5.6

Campbell Soup     20.3          2.7              3.5                  8.6        3.2           16.638  0.4          3.0

Verizon Comm      17.6         5.3              7.4                  3.9         2.8      402.088    0.56         4.4

Kellogg                    16.4         4.3              3.7                  7.6        2.5           33.945  0.53        3.1

Public Storage        14.8       4.6               6.8                  15.0      2.1            38.423  0.46        3.8

AT&T                        12.2        3.5              4.8                    5.2      2.1        455.956    0.43        5.1

Nordstorm              12.2        2.0              2.9                    5.7      1.8           14.022   0.73         3.7

CenterPoint Engy  11.4        2.8              4.2                    1.3      1.8         24.935      0.62      3.8

Target                      11.2         2.4             4.8                   10.5      1.6          56.411   0.61       4.1

P&G                          10.4         0.9             3.9                     2.9      1.4        234.811   0.66       3.0

General Mills          10.2         1.0             2.8                    5.8      1.4           42.478  0.61        3.4

Tapestry                  10.1          0.9            1.1                    4.3       1.5          17.589   0.48       3.1

Linking to dividend paying stocks, a chart such as this helps you narrow the field to pick the best one for you. It also show you of the hundreds of choices, most will not fit your criteria of being defensive and good growth, but there are excellent choices in the above list. For a dividend paying stock, you want to take the advantage of time to increase your total return, take the advantage of time to make your decision. Remember when you opened your account, the advisor asked you what kind of investor are you? the above criteria can be changed to fit your criteria, but remember what you are trying to do, then do.

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

PS

In this case, Quantico is a book written by Greg Bear, published by Vanguard Press, NY, 2005. Quantico is the headquarters for the FBI and the book is a thriller having the agents track and stop an anthrax scare. If you add, that for a number of years anthrax was not on the radar of anyone and in the book the President is trying to change the FBI to something else. You have a sense of dedicated workers who are trying to piece together the puzzle pieces. With most thrillers, the action take place all over the US because there never tends to be one nerve center, just a bunch of moving pieces. The questions of what does this mean and what connection is to anything else are the prevailing ones. Add a number of interesting personalities and you will read a good thriller.

Linking to dividend paying stocks, as investors you are trying to put together moving parts of a puzzle to determine is my investment at a low risk and will give me a high return? The answer is maybe if conditions remain what they are, but will they? With dividend stocks, the idea is most of the puzzle is already fixed and as investor you just need to fix a few pieces. Did the company remain profitable? if yes, half of the puzzle is done. Can the company continue to pay its dividend? if yes a large portion of the puzzle is done. Will its people continue to execute the business plan? if yes, almost all of the puzzle is done.

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

Earlier a book The Silk Road examined the trading patterns of the “road” from China to Europe in Macro Polo’s time. A thousand years later, in the year 2000 it is vastly different. China is spending $900 billion dollars on roads from the Baltic Sea in Russia to the Yellow Sea in China; it is also spending billions on rail transportation both high speed for passengers (cutting a 40 hour trip to 8 hours) and more importantly rail to move goods from the factories to consumers around the world. When most of us think about China, we think of the big coastal cities of Beijing, Shanghai, and Hong Kong and the surrounding countryside. In the world of electronics and the biggest hydro dam in the world look to this city of 8 million in the middle of China.

China is big country and decided Chongqing is the place for electronics and after making the Acer computers – they need to be shipped out. At first they took the trip on the Yangtze River but that is too slow. Then railways to send the goods to the Shanghai area, but afterwards the ships must go around South Asia which takes a month. Now days railways have been built, the goods can go to Duisburg Germany in two weeks, however it costs twice as much as by ship. Part of the problem is the railways in Kazakhstan are a smaller gauge than China. This is good news for Khorgos – this dry port has great railway cranes one typically sees at ocean ports. An You Tube video on the Silk Road will show some of the engineering feats and the potential outcomes from building the road.

Another solution which China is working on is a road and rail corridor towards Gwadar Port in Pakistan from Xinjiang, China. This will shorten the shipping time. It also changes the geopolitical world.

Linking to dividend paying stocks, infrastructure can change cities and companies opening new sales territories and opportunities. While the geo-political concerns are for others, the road offers opportunities to be taken advantage of.

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

There has been a number of mass shootings in schools, but somehow this one is different. What is different is the reaction from the students at the Parkland, Florida high school – it is more than a week in the press, perhaps it was simple as saying – politicians have given us no solutions, we call that BS. Wherever you are on the spectrum of owning to opposing guns, a limit is coming. The organization at the center is the NRA or National Rifle Association. They have made their voices heard and given money to politicians to have an open gun policy. (elections that are reasonably well funded have a better chance of winning). Similar to every organization, they try to offer discounts for members who hopefully use the services of the companies.

After the Florida shooting, the President of the NRA doubled down on his position, while the rest of the public said no, something needs to be done. Since the position of the NRA was harden, companies reading the tea leaves or the winds of change have said we are no longer offering discounts to NRA members. According to Newsweek the companies include: Hertz, Alamo Rent a Car, Avis, Allied Van Lines, Bestwestern, Chubb Insurance, MetLife Insurance, Delta Air Lines, First National Bank of Omaha (issued the NRA credit card) and others. If you look at typical corporate decisions, they take time to make. All these companies decided it was not worth the effort to maintain a relationship with the 5 million members and the President of the NRA. If the NRA changes its tactics or stance, the companies may come back to be involved with the association.

Linking to dividend paying stocks, all organizations try to partner or associate themselves with other organizations to increase sales or goodwill. Sometimes they are non profit, help fundraise for causes they like, but at times the organization needs to be changed. The public decides after a number of years it is better to not be associated with the group rather than be associated with it. The process is interesting to watch, how quickly it can unfold. Hopefully the values of the companies you buy stay within the public’s approval for a long time.

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

 

In mid February Walmart report that rather than earning an expected $5.13 for the year, it would earn between $4.75 and $5.00 a share. On the face of it, that is a good thing, but as a growth stock that is not good and its shares fell 10%. The reason the shares fell is the alternatives and they start with Amazon. If Amazon is still growing, why is not Walmart? In an article by Matthew Boyle titled Walmart online sales slow, according to CFO Brett Biggs Walmart was a bit lower than plan. This is important because Walmart’s online shoppers tend to spend twice as much than the bricks-and-mortar customers including buying more higher-priced items.

According to Neil Saunders of GlobalData Retail, young people and professionals do not associate Walmart with online so they default go to Amazon. Sales at Walmart e-commerce unit rose 23% but compared to previous quarters it was half the pace.

Gross profit margins contracted by 50 basis points, however Mr. Biggs does not see that level of decline continuing. Sales were up in food, apparel and toys.

Linking to dividend paying stocks, if you go to a Walmart it will be busy, the question is how much of the shoppers wallet are they getting? The company will continue to make money, but in 5 years will it be bigger? If you buy the stock, what is your horizon?

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

 

If you enjoy marketing one of the best companies to study is Coca-Cola. How did the drink (cynically known as sugary water) come to dominate the world’s beverage industry? It is an interesting story because particularly North American and European customers have been switching to less sugary water alternatives. Coca-Cola has an large offering and thanks to the teas, coffee and vitamin water Coke reported higher sales and profits. According to an article by Sangameswaran S of Reuters, Coke made more money.

As a global giant, Coke has money outside the US and will be bringing back at least $7 billion to pay down debt. Its latest research and development product of Diet Coke Zero Sugar, Diet Coke in flavors of ginger-lime, feisty cherry, blood orange and mango along with Georgia coffee and Glaceau vitamin water were steps in the healthy lifestyle trend.

Net operating revenue fell to $ 7.51 billion from $9.41 billion as it refranchised its bottling operations. It did beat the analysts projection of $7.36 billion. Volumes in North America increased 1% and global volume growth was flat.

Linking to dividend paying stocks, ever since Coke ensure US service men in World War II had a bottle of coke nearby, Coke has been the soft drink of choice for millions of people. However the world changes, tastes slightly changes but attitudes do and Coke has changed with people to continually churn out profits in the drinks business. It is an credit to the continual abilities to grow the brand. The company is worth watching for that alone, and Warren Buffett owns a large share (one wonders does he continue with the cherry coke or moved to the feisty cherry Diet Coke?)

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

A few weeks ago, my travels stopped at a country store where they catered to the farming community and there were many clothing items with the green and the words John Deere. As John Deere goes so does the farming community. It is good to see Deere & Co boosted its sale outlook for fiscal 2018. In an article by Rajesh Kumar Singh of Reuters, Deere has been battling weak demand in the global marketplace for 4 years but now expects 2018 to be better. The company is expecting sales to up 29% including operations from Germany’s Wirtgen Group.

Equipment sales rose 27% to $5.97  billion in the first quarter. The figure should have been over $6 billion but there was supply chain and logistics delays in shipping products. Sometimes those are a good thing to have. The US is where the bulk of sales happen are expected to grow at 10%.

Linking to dividend paying stocks, even though most of us live in urban areas it is good news when the agri business stocks are expected to grow because their machines help feed us. If the farm community is doing better, than it is good news. In all industries there tends to be a market leader and seeing what they are doing helps you to do further analysis of whether you should invest or find different alternatives.

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

One of the world’s great trade routes was from China to Constantinople (Istanbul) – the myth is great goods moved on caravans around the great mountains (Himalaya Mountains) and Deserts (Taklamakan) across the Steppes (Plains) eventually the goods made it to Europe. The term silk was used because coinage was heavy (there were very few banks and lines of credit) but silk bolts came in a standard package and was lighter than coinage, so silk bolts was used as money or the ability to exchange for goods and services. In the book, Silk Road by Valerie Hansen published by Oxford University Press, New York, 2012, the author examines the archaeology evidence of how average people living in the towns along the road lived their lives to determine the effect of the road.

The author points out there was trade along the Silk Road but most of it was local. Those who farmed continued to farm, similar to most small scale farmers, they can make a living but not necessarily need luxury items. The most important and the most influential people moving along the Silk Road were refugees. Waves of immigration brought people fleeing from war or political conflicts in their homelands. When people move their knowledge and skills move with them and technologies for manufacturing paper and weaving silk were transported out of China at the same time the techniques or making glass entered China.

The first migrants came from what is now called Afghanistan and Pakistan. They brought with them their skills and beliefs and some were Buddhists. The most prominent migrant community in Western China was the Sogdian from what is now called Uzbekistan.

Each community in the Western Regions hosted multiple migrant communities many whom continued the religious practices of their homeland. Sometimes they left because they felt they had no choice, sometimes people left to study, and sometimes  teachers left to find students and teach. In a cave near Dunhuang – the Buddhist librarian-monks saved texts collected in their religion as well as other religions – Manichaeism, Zoroastrianism. Chistianity, Judaism, and Buddhism. The Diamond Sutra is one of the world’s earliest dated printed book. Historians are fortunate that the weather in the cave was dry and for many years the cave was sealed until 1895 when it was discovered and books were sent to museums in Paris and London.

Linking to dividend paying stocks, we all benefit from a knowledge base of refugees even though in most countries around the world, there is a desire to restrict immigrants. For generations when people are threatened by war and political infighting they tend to move to a friendlier location. That has not changed nor will likely change in the future, it is always possible to embrace the immigrants. Some will contribute to new technologies to make wealth for a company and as shareholders we tend to like that.

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