Those of us who live in the northeast tend to have a sweet tooth and we can blame it or be thankful for nature. One of the trees that grows in the region is the Maple tree which is known for its leaves turning color in the fall. In relationship to the sweet tooth, it was discovered many years ago, before the buds change to leaves, the tree is dormant and when the temperature climbs up in the day time and freezes at night, the sap will run and it is possible to make maple products including syrup. The book The Maple Sugar Book written by Helen and Scott Nearing of Galahad Books, New York City, 1950 outlines the history and the tasks involving Maple Sugar. The tasks involve boring a hole in the tree putting in a sprout and attaching a pail. Then when the sap is running, to collect the sap and boil it down to become syrup or liquid gold. Up until 1865, the producers of the north-east dominated the sweets market, then sugar from cane came along and prices fell for sugar. The first choice of the population was sugar unless the family lived on a farm in the northeast where maple syrup was made.

In the old days, families collected the sap, deposited in larger container which the horses pulled to the sugar house and the sap is boiled. Now days, it is much easier to do the operation with plastic pipelines to bring the sap to the sugar house. If you wish to do sugaring on a smaller level, all you need is some maple trees and remember the kettle should be about 3 times  the size of a batch. Gather the sap and boil and soon you will enjoy the syrup. For many farmers, the land around the maple trees is used for raising cattle in the summer; but in late February early March when the sap is running, the syrup can be made for home use and as a cash crop.

Linking to dividend paying stocks, with maple trees as long as the farmer treats his trees well, they will provide sap for many years to come. Ideally you invest that way, the return will provide dividends over many years as well as capital gains as profitable companies are worth more to everyone and trade at higher multiples.

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

In the developed countries, they had an infrastructure for rotary phones, in the developing countries only a few had rotary phones. Then cellphones were invented and soon everyone in the country had access to cellphones. The good news is early entrants into the market could become giants and generate billions of dollars. In India with a population over 1 billion, two of the giants are Vodafone and Idea and in mid March they agreed to a merger which will result in 40% of the market share or 400 million customers. In most sectors, the companies with a 40% market share can set prices, has a loyal customer base and should be able to generate profits. Investors generally vote yes to mergers like this.

The story in India is different, because one of the competitors is Reliance Group’s Jio Infocomm which has a 4G mobile broadband network . Jio is owned by the India’s richest man and he has been offering free services for months. Free means that every cellphone holder in India has examined switching to the Jio network and the competition has to be competitive which sent prices falling making margins thin and profits lower. There maybe a good reason why Reliance is free, the Group could be using the cellphone customer base to cross sell other features; the owner could be upset with the competitors; the owner could be partially acting for the government’s interests (Reliance has infrastructure operations as well as finance and entertainment subsidiaries). Whatever the reason, Reliance has changed the cellphone market in India.

Linking to dividend paying stocks, the ideal for dividends is a monopoly like conditions where prices can be influenced upwards, not set but generally be raised to cover costs and protect margins. In India it was possible to disrupt the cellphone market, which means if the competition has access to capital it can; generally it does not. The ideal dividend stock can help set prices upwards and keeps margins healthy for profits to be made and dividends to be distributed. Change sometimes means new entrants into the market who see those fat margins.

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

In mid March it was reported by Reuters there is a scandal in the meat industry in Brazil. The scandal involves meat packers paying bribes to politicians and meat inspectors to overlook practices involving processing rotten meat and shipping exports with traces of salmonella. The President of Brazil Michel Temer said the probe involved only 21 of the 4,800 meat-processing units. The issue for Brazil is agribusiness and the export of meat is a multi billion dollar business with most of the meat going to China and South Korea.

When the average consumer buys meat, they expect the meat was inspected when the beef and poultry was alive; when the animals went to stockyards to be killed; at the meat packaging plant to ensure it is fresh; at the distributor and finally at the supermarket, where it is available at a competitive price. That is a number of inspections and the supply chain has been managed to exceed expectations for the average consumer. When a scandal happens, the worst companies and the best companies are put in the same category because the average consumer rarely asks did the meat come from a specific meat packer? they ask what country is involved?  The immediate reaction is the supply chain will be slowed or stopped and the world’s largest poultry producer BRF SA stock price went down. Other companies including JBS also had declines in their stock price. The government of Brazil is in crisis mode to protect the exports and to ensure the other competition does not move in. The other competition would be US, Canadian, Australian, Argentina and other producers of poultry and beef.

Linking to dividend paying stocks, in every industry there is competition waiting for the other side to shoot themselves in the foot. Brazil’s meat industry shot themselves in the foot for trying to ship less than 100% confident meat and to fix the problem means the meat industry will be under the microscope for the next year. After a week of negotiations, the shipments were allowed to continue to China, however Brazil and the meat packaging industry lost something to the competition.

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

After the utilities group, one of the common feature of banks should be their safety and long term values. If you move into a neighborhood, one of the features you are looking for is the bank. As long as the amount of loan loss is low, the bank should easily make money, which means for dividend investors it is hard not to have a bank(s) in your portfolio. Which banks are a relative bargain? Sean Pugliese of Wickham Investment Counsel wrote about banks in late March. His criteria:

banks in the S&P 500 index

dividend yield  – annual dividend divided by share price

debt -to -equity ratio – provides a safety feature and is total debt outstanding divided by shareholders equity. A smaller number means less leverage.

price-to-earnings ratio  is the share price divided by earnings per share. The lower the better relative to other companies.

earnings momentum is the change in annualized earnings over the last quarter. A positive number means the earnings are growing and ideally translates in higher share prices and dividend increases.

price-to-book ratio compares the stock price to the book or equity value per share. A lower number is good.

return-on-equity is the net income divided by shareholders equity. The number reflects profitability of the company and higher is better.

Company                     Mkt Cap    Dividend   Debt/              P/E     Earnings   P/B     ROE

(US$ Bil)    Yield %       Equity %                   Mom %                 %

People’s United Fin        5.7           3.6               39.4             19.2      3.3             1.2        5.8

Wells Fargo                   279.5           2.6             176.3            13.9       0.0            1.5        11.8

BB&T Corp                       35.6            2.5               64.4           14.9        3.0           1.8          8.8

Huntington Banc           13.8            2.3              116.4            14.1        -4.2         1.5         8.4

Fifth Third Banc              18.7           2.1             111.4             14.6         4.9          1.2         10.0

JPMorgan Chase           312.2            2.1             194.9            13.6          4.5          1.3         10.0

US Bancorp                       89.2          2.0            100.0            15.4          0.9          2.0        13.6

KeyCorp                             18.1           1.8               96.4            13.6           3.7          1.3          6.3

M&T Bank                          23.8          1.8               58.6            18.4         -0.9       1.6           8.1

Average  or divide 17                       1.9                94.4          15.2            3.2        1.3            8.0

The other banks covered were SunTrust, PNC, Regions, Citizens, Comerica, B of A, Citigroup and Zions.

Linking to dividend paying stocks, these stocks were ranked from the highest dividend yield, but you can easily rank them on other variables. Banks are the drivers of our economy because they give credit to businesses and families. If we have no credit, we pay our bills and not much else. With credit we can expand or think of the future. In investing in banks, you want to realize the profitable dreams. Examine the variables and realize often times you are picking between two or more reasonably equal companies. Each of the companies tend to service or gain the bulk of their business in one geographic area and you will want to know what your views are of the area.

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

 

 

 

A week or so ago, Paul Hoyda of Thomson Reuters examined opportunities to invest in defensive stocks which have a track record of maintaining dividends. The emphasis is on defensive stocks and Mr. Hoyda’s critera are:

market capitalization of greater than $20 billion

dividend yield of greater than 5% and a record of increasing the size of the dividend

Company                                  Market Cap           Dividend       5 year Avg         12M  Total Return

(US $ Bil)               Yield               Div Yield              (incl Div)

Energy Transfer Equity          20.170                       6.1%                   5.2%                         180.0%

Plains All American Pipe       21.252                        8.4                      6.7                              45.6

Enterprise Products Ptn         58.352                       5.8                      5.3                                21.6

Las Vegas Sands Corp              43.804                      5.2                       3.7                               11.4

Welltower      Inc                        23.928                     5.2                        4.9                                  4.2

Linking to dividend paying stocks, under Mr. Hoyda’s criteria only 5 companies made the list. The idea of research is to define the criteria which makes sense for you and then narrow the field, and hopefully all will good. In this case, given the history of paying dividends, the total return may change, but the dividends should continue for some time to come.

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

A few weeks ago Peter Ashton of Recognia examined Material Stocks or chemical and packaging companies. Companies which add value to raw materials, as the economy continues to grow one would expect volumes to grow. The more the volume, the less expensive it is to produce whatever they produce. Mr. Ashton criteria was:

minimum capitalization of $ 2.5 billion   (capitalization is number of shares x market price of stock)

companies with forward price to earnings (P/E) ratios of less than 18

companies with a price-to-sales ratio of less than 1.5

dividend yield of greater than 1.5%

Company                                   Market Cap                    Price/Sales             Forward            Dividend

(US $ Bil)                        Ratio                        P/E Ratio            Yield

LyondellBassell Ind                 35.7                                 1.19                            9.6                        3.7

International Paper                  20.8                                1.04                          15.4                        3.5

Huntsman Corp                            5.3                                0.47                         14.6                         2.2

Eastman Chemical                    11.3                                 1.23                          11.7                          2.5

Dow Chemical                            77.3                                1.44                          17.6                          2.9

PolyOne Corp                                2.7                               0.79                          16.0                          1.5

Graphic Packaging                       4.1                              0.91                           17.8                           1.9

Cabot Corp                                       3.6                             1.3                              17.3                           2.0

Linking to dividend paying stocks, all the stocks pay a dividend and what is easy for your research is by varying the criteria you will either add or subtract companies from your list. The materials companies are very dependent on price of the raw material, so you may wish to factor that into your analysis, however they tend to dependable in generating constant revenue streams. All stocks go up and down and perhaps there could be some of these types of companies in your holdings.

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

In the world of investments, there are many sources of information which investors can read, learn and help them make decisions. In other fields there is information but it is not so easily put together. One example is a book called One Good Turn – A Natural History of the Screwdriver and the Screw by Witold Rybczynski published by HarperCollins, Toronto, 2000. The author writes his editor asked him to write a story for the New York Times about the best tool. At first Mr. Rybczynski comes back with eyeglasses except for his editor wanted a story about a tool you would find in your toolbox. Of all the tools in the toolbox  or workshop which one is the best?

The author explains various tools but tends to wean some of them out because they have been used by people for generations. From the perspective of someone who has tools and knows little about the background, the stories of how the tools came to be are very interesting. The author eventually settles on a tool which almost every household has – the screwdriver and the screw. They were late additions because of technology but their acceptance was easy and our lives are better for it. If you ask whether a Robertson or a Phillips is better? you should be prepared for good conversation. There are stories behind our tools – sometimes you need to dig into the history books to find the answers.

Linking to dividend paying stocks, on all subjects information can be gained, however for your stock investments every year information is easier to access. At one point in time, you needed a ticker tape machines now the “tape” or quotes comes across the business channels and other easily to access internet websites. Information is easily to receive but judgement still remains or what you do.

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

 

 

 

 

 

 

 

In the book The 7 Hidden Reasons Employees Leave by Leigh Branham published by the American Management Association, NY, 2012, Mr. Branham outlines the reasons why people leave. based on what over 20,000 people who were asked by their companies said. In terms of management, by having better management or good management which translate into low w turnover, no matter the industry and sector, the company saves money. If it has a high turnover, it wastes both money and people.

Reason 7 Loss of Trust and Confidence in Senior Leaders

Most employees are not senior ones, but senior employees make policies for the workplace. Everyone has 3 questions when it comes to senior leaders.

1. Will these leaders steer the ship to success? Regardless of the situation, talented employees want to know whether they have hitched their wagons to a star that is brighter or burning out.
2. Can I trust them to do what they say? Do senior leaders back up their words with action?
3. Do they have trust and confidence in me?

Possible solutions

Inspire confidence in a clear vision, a workable plan, and the competence to achieve it

Back up words with actions

Demonstrate trust and confidence in your workforce

Linking to dividend paying stocks, the purpose of writing about the reasons for turnover is for you to consider it as one of the metrics when evaluating companies.  The reality is the baby boom generation is and will be retiring and there are fewer people to take those jobs. It is possible to see job shortages in places, but in a couple of years, there will a shortage of people to do jobs and companies will have to pay more to keep those people. One of the important numbers you want to know is what is employee turnover in the company? Can the company save money by having less turnover? Does the company support coaching? There is still is time to change but as more people retire, the window of opportunity to change is running out.

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

In the book The 7 Hidden Reasons Employees Leave by Leigh Branham published by the American Management Association, NY, 2012, Mr. Branham outlines the reasons why people leave. based on what over 20,000 people who were asked by their companies said. In terms of management, by having better management or good management which translate into low w turnover, no matter the industry and sector, the company saves money. If it has a high turnover, it wastes both money and people.

Reason 6  Stress from Overwork and Work-Life Imbalance

For generations in the past, people had support systems in their surrounding towns then as we all became more mobile and spread out, one of the consequences is our support systems narrowed. When in was reasonably possible for one member of the household to support the household, the stress was in the household. Now we have everyone trying to make a living, the stress is both in the home and the workplace. Given the do more for less, the hours became longer and the results for people questionable.

Possible solutions

Initiate a culture of giving before getting. If you are going to do this the CEO has to have a sincere passion for taking care of their employees as people.

Ask questions such as what benefits and services can we afford to give that will allow us to attract and keep the talent we need while allowing our employees to lead a fuller and healthier life outside work?

Tailor the culture of giving to the needs of the key talent. Know Your Workforce! Understanding the needs of the workforce for example SAS saves $67 million per year in avoided turnover costs because it maintains a 3% rate in an industry that averages 20% turnover.

Build a culture that values spontaneous acts of caring

Build social connectedness among coworkers

Encourage fun in the workplace

Linking to dividend paying stocks, the key thing to learn is if the company is saving money on turnover costs then it must be doing something right. If they are doing it right, then profits continue to be made.

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