For generations or ever since the mass production of the Model T by Ford, an easy and profitable investment was in the oil companies. In the early days of the oil business, John D Rockerfeller through Standard Oil controlled the oil industry from production to refining and made himself the richest person in America. For those who own Standard Oil and then the company was split in the 7 sisters, it was an easy investment in your portfolio. The biggest portion of Standard Oil eventually became Exxon and it was the largest generator of dividends in the world. BP or British Petroleum made 7% of dividends in the UK. The wealth that came from the oil companies was great and return on investment was terrific. Then can the pandemic.

The world is slowly moving to non fossil fuels, but slowly and in some places kicking and screaming, but change is coming. In an article by Clifford Krauss of the New York Times News Service, the first change is Exxon – the company reported it lost $22.4 billion compared with a profit of $14.3 billion the year before. Much of the loss came from a write down of assets of $19.3 billion. Exxon bought lands that have natural gas at a higher price, the price dropped and the write down reflects the lower price of natural gas.

BP reported it lost $5.7 billion, its first lost in a decade. (the last time it lost money it had to made payments for the oil spill in the Gulf of Mexico). The company is cutting jobs and selling $25 billion in assets.

Exxon offers hope for the 2021, as chief executive Darren Woods says there is opportunity. Exxon’s share price has climbed from the $31 in November to the mid $40s because oil prices have increased. Oil prices have increased due to winter conditions and demand for oil and natural gas for heating and Goldman Sachs is predicting the price could increase another $10 a barrel to $65 in July. That is much lower than the $140 a barrel a decade ago.

It has to be noted, President Biden will be passing the Green New Deal and GM will try to be on batteries by 2030 ish. The $140 barrel is not likely to come back.

Linking to dividend paying stocks, big oil has a role to play in the economy, most of us who heat our homes with oil or natural gas still need oil or natural gas. Most vehicles are more fuel efficient than a decade ago, but they are still the internal combustion engines, it will take time before the big change over. Big oil was an easy investment for dividend paying investors, they will still make money just not like before, alternatives include utilities to ensure the power to drive the batteries.

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

If you think about advertising and the dollars that are allocated by firms around the world, the number one place they send those dollars to is Alphabet or Google. Google generates more revenue from internet advertising than any company globally and advertising revenue accounts for 81% of the the $56.698 billion in the 4th quarter sales.

In an article by Paresh Dave and Munsif Vengattil of Reuters, chief executive officer Sundar Pichai updated the company’s 4th quarter performance. If you think about the pandemic and the biggest advertiser deal with travel and entertainment, but in many areas they were very limited as restaurants closed, people were encouraged to stay home. In that environment, Google’s sales rose 23% from last year. The retailers who were driven online made up the difference, because once you have an online ability, you need to tell the world that you exist and people can buy from your site.

Analysts were expecting an increase of 15.31% or $53.129 billion, but Alphabet made $56.698 billion.

The company is not perfect, similar to Microsoft and Amazon, Google is on the cloud, unlike the other companies, Alphabet is losing money, they lost $1.24 billion in the quarter. Cloud sales were $3.831 billion for the quarter or $13.059 billion for the year which meant an increase of revenues of 46%. The loss over the year increase 21% to $5.6 billion.

Overall, the company’s quarterly profit rose 43% to $15.2 billion or $22.30 a share, compared with the estimated $10.895 billion or $15.95 a share. Revenue which has been consistently growing at 20% a year decreased to a still healthy 12.8%.

Linking to dividend paying stocks, when you look at Alphabet it makes its money through advertising through search engine,YouTube and the cloud and one expects in 2021 as the economy opens across the country and the world the travel and entertainment sectors will be spending money on advertising. Much of it will come through the Alphabet company. When you examine your investments you should see core holdings of where revenue will be made through any cycle and hope for the future, because every company can execute better.

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

If you think about China, the country was not wired with land line phones so when cell phones became available people bought them. People communicated more than ever, but adding technology soon meant apps were available and Alibaba was one of the most popular. The app has continued to be the most popular in China as the number one e-commerce sites. When you have a large market share, it is time to branch out to over products and services and Alibaba branched out. In fin-tech, Alibaba came out with Ant Group which has become the number fin-tech in China.

In an article by Julie Zhu and Brenda Goh of Reuters, Ant Group became a threat to some of the commercial banks which incidentally some governments and their agencies own. The banks complained to the regulators and more importantly to the Premier Li. He waited until Ant Group was going to go public before sending in the regulators.

Recently Ant Group has agreed to the restructuring plan with Chinese regulators under which the fin-tech giant will be turned into a financial services holding company. Bloomberg News reported this will potentially a major step toward easing founder Jack Ma’s regulatory woes.

This means the fin-tech will have similar capital requirements than banks have and should allow the banks to compete against Ant. The company Ant has been a leader in China for small loans of $100 or more. When the regulatory structure is in place, if and when Ant Group becomes a publicly traded company, the valuation between a fin-tech and another banking company will be lower.

Linking to dividend paying stocks, the regulators are important to every industry but sometimes management tends to skirt the laws until it needs them to beat the competition. Government has regulations and most companies have lobbyists to help ensure the competition is both fair and stable and when the rules change, companies run to the regulations and try to change them for a fair playing field. Regulations matter.

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

One of the best companies to own as a dividend investor is P&G, sales are very good, they have over 20 billion dollar brands and they have raised their dividend for years. The company is also doing things to capture the consumer market whether that is at home or hopefully when we are all able to move around again. Sometimes the company is lucky and sometimes the company has the resources and ability to make a pivot or change and still make profits.

In an article by Joseph Pisani of Associated Press interviewed Marc Pritchard, P&G chief brand officer.

The lucky part was Microban 24, the company had been working on the product for years and they launched right when the pandemic hit. Sales have been very good.

The launch of Dawn dish soap that sprays? The idea came from observing consumer behavior and seeing people wash one dish at a time. How do you make it easier? The product makes the process easier, you do not need to scrub, you just spray it and then either wipe or rinse off.

P&G is using less plastic and less water in their products? People care about the environment and P&G is changing.

Linking to dividend paying stocks, P&G constantly changes, although the brands are still very popular which means P&G invests in consumer research and putting capital dollars to change the processes to match consumer demand, which is a balancing act for management.

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

If you talk to young people and ask them about footwear, many of them will know the brand Doc or Dr. Martens because the boot is fashionable in the music scene. The reason the boots are fashionable is they air-cushioned boots with the distinctive yellow stitching. If you are a runner and see the air cushioned running shoes, you understand the air cushioned boots.

In an article by Pan Pylas of the Associated Press, Dr. Martens was founded after WWII in Germany by Dr. Klaus Maertens. He had a broken foot and teamed up with a mechanical engineer Dr. Herbert Funk and designed a shoe with an air-cushioned support. The big buyers in the early years were older women.

In 1960, a British firm Griggs bought an exclusive license to the company and added the yellow stitching. The music industry discovered the boots along with factory workers.

The company was sold to private equity firm Permira who installed new management and restructured the company. Chief Executive Kenny Wilson said the company which sells about 11 million pairs a year in 60 countries has room for expansion. Permira is selling 35% of the equity.

Linking to dividend paying stocks, many companies go through cycles, but if the company has consistent sales and offers potential there will be people who want to own the company. In the case of Dr. Martens boot sales are consistent and the owners were satisfied with constant sales, but many things can be better, but the key is consistency of revenues.

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

Every once in a while, you will read or hear about the frothy market or a potential downturn is and will happen, maybe soon. In the stock market the only perfect information is the information that has already happened, no one knows why the market will go down, although if the Federal Reserve does raise interest rates that would be a positive sign markets will turn – alternatives will be available. For now, you can hope markets will continue to go up, but by being cautious or prudent it is necessary to look at traditional alternatives which defend your portfolio from the downside.

For dividend investors, one of the reasons to like utilities is they have a monopoly and regulators tend to increase the prices every year, however the issue is which company or companies to invest in?

Gary Christie Head of North American research at Trading Central offered some ideas:

He used his Trading Central Strategy Builder to search for US utilities, his criteria was:

minimum market capitalization of $10 billion which tends to lead to well-established companies and ideally less volatility in the stock price.

select stocks with a P/E Ratio at or below the S&P 500 index which at the time was 30.

dividend yield better than the average of the S&P or higher than 1.6%

want companies with a positive average dividend growth rate over the past 5 years

low debt-to-equity ratio or low leverage, understanding utilities need debt to build capital improvements

Company Mkt Cap Div 5 Yr Div Debt/ P/E Ytd 1 Yr Recent

$ bil Yld% Yld % Eq. Perf % Per % Price

Algonquin Power 10.2 3.7 9.4 0.9 20.6 2.8 11.2 21.71

Public Service Ent 28.5 3.5 4.4 1.1 14.9 -3.3 -6.2 57.54

WEC Energy Group 28.7 3.0 9.3 1.2 23.8 -1.3 -8.0 90.86

Atmos Energy Group 11.4 2.8 8.0 0.7 18.6 -4.8 -21.9 91.29

Exelon Corp 40.0 3.7 4.0 1.2 16.9 -2.8 -14.2 42.52

Sempra Energy 34.6 3.5 7.9 1.3 18.5 -5.9 -24.4 122.84

Evergy Energy 12.0 4.1 7.0 1.2 18.9 -5.0 -27.0 54.14

Consolidated Edison 24.0 4.3 3.1 1.3 17.7 -1.0 -24.2 71.32

Alliant Energy 12.2 3.3 6.2 1.2 18.3 -4.9 -17.1 49.45

Ameren Corp 18.6 2.7 3.6 1.3 22.0 -3.8 -7.3 75.57

Linking to dividend paying stocks, utilities are a favorite for dividend investors because they generally are dependable over the long term, you may want to start with the company you pay utilities to, then move across the region and country. With utilities you can check their highs and lows of the stock price and buy the companies for the dividend.

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

In the 1960’s a senior executive of GM testifying before the Senate said to the effect As GM goes so does the US economy. For many years, that has essentially true because GM had a 40% market share. 5 different brands for each income tax bracket, their cars were leaders in style, performance and the public loved driving them. Then the public changed in the 70’s and 80’s and started buying smaller cars which GM did not want to build – they gave the market to Japanese and German automakers and GM has been trying to get back to the top of the mountain ever since.

Over the past couple of years, people have loved what Tesla is doing particularly investors who give high valuations to the Tesla stock. The other vehicle companies would love to have the valuation Tesla has and with a new President in office with a Green Deal, GM has changed to match the President.

In an article by Jeffery Jones and Eric Atkins, GM’s chief executive officer Mary Barra said GM will spend $27 billion over the next 5 years to be able to offer emission free light duty vehicles across its price ranges. GM will move towards the gradual phasing out of the gas internal combustion engines it has built for 113 years. The company employs more than 160,000 people.

The goal is to sell 30 electric vehicles in global markets and 40% of its US product line powered by batteries by the middle of this decade.

There will be a number of issues going forward – electric vehicles have fewer parts than internal combustion engines or fewer people in the plant will be required. There are different sources of materials in the electric vehicle, battery life and how far can one go before recharging is the issue. If it is about what you do in the internal combustion engine, people have to go to the gas station or recharging station, perception is important, then there maybe no real changes for driving habits. Tesla cars have a great deal of software attached to them, similar to the way Microsoft or Apple sends updates to your computer, Telsa sends updates to their cars. The vehicle’s software is important aspect of the car experience.

Linking to dividend paying stocks, if you look at a list of top market capitalized stocks over the years, the names tend to change. Sometimes the change is gradual, sometimes it is seemingly rapid when new industries come forward, there is change in the marketplace. How management deals with the change is one of the things as an investor you have to evaluate. If you like how they adapt, then holding the stock can be a very good thing, otherwise look at alternatives.

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

The largest manufacturer in the US is Boeing. When Boeing makes and sells planes it is the largest company in the export balance of trade numbers or Boeing sells a lot of planes. If and when you believe the COVID is over and people can fly across country and around the world, the shares of Boeing is one of those companies expecting to move upwards. However, there is always a however in the investing world, Boeing had a very tough year.

In an article by Eric Johnson and Ankit Ajmera of Reuters, Boeing took a $6.5 billion charge on its new 777X Jetliner, this past year it slashed production which meant thousands of jobs were laid off and it had to battle to change reputations concerning the 737 Max. Boeing’s chief executive officer Dave Calhoun said the 777X will enter service in late 2023 as opposed to 2022.

Mr. Calhoun said despite the difficulties, Boeing has sufficient liquidity to manage the downturn. In terms of the 737 Max, Boeing has delivered 40 planes from its inventory, by the beginning of 2022 it expects to produce 31 of the 737 Max a month.

Boeing unveiled $8.3 billion in operating charges including $468 million for abnormal 737 production costs, $275 million over KC-46 aerial refueling tanker production issues, and $744 million settlement with the US Justice over a fraud conspiracy charge.

The company’s net loss rose to $8.44 billion up from $1.01 billion a year earlier, taking its full year losses to $11.94 billion. Revenue fell 15% to $15.3 billion in the quarter.

Linking to dividend paying stocks, Boeing has a duopoly with Airbus in the manufacturer of planes and because of that situation it can afford to make one time big mistakes and still be considered a good investment. As people begin to feel comfortable flying and the pent up energy to go somewhere is released, Boeing will be one of the beneficiaries of this trend because airlines will need their planes. When you buy into a dividend producing stock, it does not mean it is a perfect stock – they all have their issues, but it does mean it has the ability to weather a downturn and still be a good investment. There is always risk, however being hopeful for the future is a good thing.

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

In late January, the company which pays the most dividends in the world reported on how it was doing. The company, not surprising is doing even better during the pandemic and there is no reason to suspect once the world changes, the company will not be doing well. Microsoft was late to cloud computing, Amazon’s AWS is the market leader, but Microsoft is growing fast. The division grew at 50% in the second quarter.

Microsoft owns other things such as Linkedin which saw a recovery in sales. The Xbox gaming business dealt with a chip shortage that has emerged, it is slowing down production of automobile vehicles, but Microsoft’s people secured enough chips that people were able to secure Xboxes.

In an article by Reuters, the cloud computing business grew at 50% beating estimates of growth at 41% and revenues reached $14.6 billion.

Revenues from Windows software and Xbox gaming consoles rose 14% to $15.1 billion beating estimates of $13.5 billion.

It is good when a big company such as Microsoft beats estimates because the pie is getting bigger, rather than stealing market share from its competitors. As the pie gets bigger, revenues can continue to grow and the world’s biggest payer of dividends will continue to pay dividends.

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