All of us know, during COVID retailing has changed, people are not going to the local shops to look, try on and buy clothes. If they are buying they are using e commerce and most established retail chains did not have a great e commerce setting. There were very good reasons, the numbers of users were relatively low and for the most part buying clothing people want to touch the fabric.

In England, 2 major chains collapsed in the space of 24 hours, putting 27,000 jobs at risk and raising concerns the wave of store closing is not finished.

In an article in the Globe and Mail, Paul Waldie wrote, Debenhams which is a 242 year old chain with 124 stores and employing 12,000 people announced it will wind down operations. The company had been in bankruptcy protection since April and was hoping to merge with JD Sport.

The other chain that collapsed was the Arcadia Group which had 2,5000 stores in 14 countries including brands such as Topshop and Dorothy Perkins. Some of their shops were inside Debenhams.

The Center for Retail Research has estimated almost 21,000 stores will close this year and 200,000 jobs lost.

In terms of shopping malls which clothing stores are large users, at least 3 shopping malls have gone into receivership and one of England’s largest mall owners, Intu Properties filed for bankruptcy protection in June.

Debenhams was founded in 1778 in London’s West End and by the 1950’s was the largest department store in Britain. In April 2019 the chain filed for bankruptcy protection, closed down 50 stores and letting go 13,000 people. 5 years ago, Debenhams was the 6th largest clothing retailer in the UK, now it is not in the top 10, said Chloe Collins, a senior retail analyst at GlobalData Retail. At the moment the top retailer in the UK is John Lewis.

Linking to dividend paying stocks, there were multiple reasons why the department store is leaving, but given its long years in the public eye, people have a connection to the store. Similar to most department chains, times have changed and in the case of retail, we all know chains have a problem but there is something in us that makes want to survive. Sometimes you think about the assets it has, can they be enhanced, if management was changed or new investments would that do it, but if you were an investor in the retail world, once the chain is not long the “it” store, it is time to find alternatives

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

The rise in Tesla’s stock price and the fact the company would be included in the S&P Dow Jones Indices has pushed the price even more. There is much hope for the car company, but is it too much. If you compare the value of Berkshire Hathaway in early December to $542 billion to Telus’s $555 billion.

Cash-rich but slower growing companies such as Berkshire have lost favor to rapidly growing business with disruptive technology and the potential for market dominance.

According to an article by Ian McGugan, when Tesla joins the next index it will be the 6th largest component. What does that mean? Index investing is about 40% of the market and in the long run, index investing is a very good thing to do. The reason why it is good because the index drops the losers and add winners, doing that over time will make the index go higher.

Chistopher Bloomstran, President of Semper Augustus Investments in Colorado questioned how any rational investor can put similar values on Tesla and Berkshire. Berkshire generates more in profit than Telsa’s entire revenue. At last count, Berkshire had $145 billion in cash and cash equivalents.

Telsa has tapped the stock market for $8 billion in new funds. The car maker requires a dollar in new capital to produce a dollar in incremental revenues. Tesla cannot finance its growth. It MUST borrow or sell more shares if it is to grow.

Berkshire trades at less than 16 times the company’s earnings. Tesla goes for 1,200 times profits.

Linking to dividend paying stocks, the ideal is to buy a company similar to Berkshire which generates cash flow and have some index funds on the side. Index funds are a great long term investment because of how they are structured, however with all things moderation or diversification is a good thing. If you want the portfolio to grow an index is worth having, but a company similar to Berkshire can ensure you have no trouble sleeping at night.

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

COVID 19 has been a major challenge for air travel as the business class which is the most profitable sector has moved to virtual with Zoom and Webex and other platforms. For tourists, it did not make sense to fly, quarantine in a hotel for 14 days then travel, fly back and quarantine again. One needs a long time to be away and most tourists have a set time for holidays. The issue for the airlines how to make flying as safe as possible.

Rome’s Fiumicino airport will run COVID 19 tested flights between Italy and the US and will be the first airport in Europe to offer the service on transatlantic flights.

Accoring to an article in Reuters, the passengers can be tested for the virus 48 hours before departure and on arrival at the airport to avoid the mandatory 14 day quarantine Italy imposes on incoming travellers. This extra testing, hopefully it is the test that produces instant results allows the airport to open up and the airlines to begin to offer flights to other cities in Europe and around the world.

As we move towards the vaccines becoming available, in all likelihood to fly means someone has to be vaccinated and maybe tested for the next quarter.

Linking to dividend paying stocks, on one hand as a person you want to the economy to open up, on the other hand you do not want to many restrictions, the more restrictions, the less people are involved. Similarly when you buy a stock you want fewer companies involved or moats or near monopolies to ensure you receive a regular dividend. As a dividend stock buyer you see the difference but you enjoy receiving the dividend.

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

In 2019 two planes crashed and the problem was determined to be in the software which helps fly the plane. All over the world, aviation regulators grounded the Boeing Max 737 and Boeing spent over a year not only fixing the problem but gaining the regulators trust to fly the planes again. It is long process and illustrates what happens when major problems happen and the effort to fix it again.

The backstory is Boeing and Airbus have a duopoly in the passenger airline market – if you fly you were on one of the 2 planes. Most airlines have both planes in their fleets, although some carriers like one or the other a little better. For Boeing the Max 737 was going to be their cash cow for the next 10 years plus as the airline met a number of requirements the airlines were looking for. Less cost to operate, higher fuel efficiency, easy to clean for quick turnaround flights and relaxing to fly for the passengers.

In an article by Eric M Johnson of Reuters, at Grant County International Airport in the Seattle area, 240 jets are being rolled in for maintenance and upgrades of software and systems as mandated by the US Federal Aviation Administration (FAA). The inventory according to a report by the investment firm Jefferies is worth more than $16 billion.

The work at the airport is the cornerstone of a global logistical and financial strategy under way at Boeing to clear a backlog of more than 800 mothballed 737 Max jets. Around the globe, Boeing people are working on delivery schedules and financial terms with airlines that had to scale back schedules and fly old aircraft because they lacked the aircraft to meet strong demand as the Max grounding took longer than expected. Now the marketplace is not good, but hopes for 2021 are better. Airlines are looking to 2022 for major deliveries.

It takes about 2 weeks to ready each plane. Boeing is in discussion with all the airlines around the world.

Linking to dividend paying stocks, the Boeing example of Max 737 is a great example of how logistics runs a company and to be successful means the company has to get it correct on a daily basis. The only good news is Boeing had the ability to weather the crisis through its other product lines and government help, but the special circumstances is not going to happen every year. When you examine your investments, how do they do the logistics?

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

For any commodity market, there are forces of supply and demand and you can look at the stock market in the same fashion. For the past decade, there has been a decline in the volume of new shares available to buy, this meant buying was done on the existing shares and that helped power the market’s longest bull run. During the pandemic, companies stopped buying back shares and list equity instead to shore up balance sheets.

In an article by Sujata Rao of Reuters, total share offerings have surged to $700 billion raised worldwide in January-September according to Refinitiv. Although share buybacks dropped, M&A volumes and debt-funded buyouts have increased which typically removes shares from the exchange.

Global net supply share issuance adjusted for delistings and buybacks – totalled $320 billion in the first 10 months of 2020 or an expected $380 billion for the year noted JPMorgan Chase analyst Nikolaos Panigirtzoglou. Last year the net supply was $450 billion,

For years, the biggest buyers of US shares were companies themselves – a trend that spread to Asia and Europe – but global 2020 buyback volumes have fallen to $250 billion or less than an third of 2019.

Linking to dividend paying stocks, when you purchase a stock there are many factors going into the price increasing and one of the factors is the number of shares outstanding. In corporate finance there are times when companies sell shares and there are times companies buyback the shares, it is a normal thing to do. The same is true with debt, traditionally rates do not stay low for years at a time they move up and down. Decreasing the number of shares increases the earnings per share which increases the multiple the shares can trade at. As long as the company is profitable and doing a good job, your total return increases and that is a good thing as you patiently hold the shares.

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

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In a report issued by investment firm Janus Henderson, dividend payouts by the world’s biggest firms in 2020 will fall by 17.5 to 20% or about $263 billion. However in 2021 they could rise 12.2%.

In an article by Marc Jones of Reuters, Janus Henderson noted dividends are a major source of income for public and private pension funds, but companies trying to cope with COVID cut dividends by 11.4% or $55 billion in the 3rd quarter after a $108 billion in April and June. Janus Henderson says in the best case, they see a fall of $1.20 trillion on an underlying basis.

Some companies which cut their dividends earlier this year, have now increased them on the expectations of 2021 being a relatively normal year. The biggest cuts not surprisingly has come from the travel, leisure and retail firms. However, pharmaceuticals, food producers and food retailers all produced higher dividend payouts.

Britain’s banks and oil firms meant payouts were down 42%

Australia’s government ensured banks saw a 40% drop.

US dividends were down 3.9% with the greatest impact on share buybacks.

Japanese payouts were down 16%; Chine had a 3.3% rise and Hong Kong firms were up 10%.

The world’s biggest dividend paying firm is now a tech company. as of December 1, it raised its Q4 dividend 10% and is now the biggest dividend payer.

Linking to dividend paying stocks, the economy continues to evolve if you were to go back 10 years you would see the big oil companies were the biggest dividend payers but now the big tech companies are throwing off so much cash, your portfolio has hopefully changed. Fortunately none of the changes had to be done overnight but over the decade. With dividend paying stocks, you have the ability to use patience as your guide.

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

It is now official that Janet Yellen will be become the new Treasury Secretary under President elect Joe Biden’s administration. With every appointment, a search for how the person handle past crisis and past comments which could affect policy. Generally, most public figures do not say a great deal unless they really want to, the speeches have been vetted for reaction plus and minus and then the speech is made.

In an article by Rita Trichur, Janet Yellen as the Chair of the US Federal Reserve in October 2014, delivered a speech on income inequality that raised eyebrows in central banking circles. Ms. Yellen challenged policy makers to consider how the trend between the rich and the poor was affecting the financial well being of most American families.

Ms. Yellen left the US Federal Reserve when President Trump did not reappoint her, but President elect Biden wants to address the issue of income inequality.

In the past 40 years, the richest households have increased their share of the country’s total income. In 2019 the top 10% earned 45.4% of pre-tax national income, while the bottom 50% shared 13.5%.

In the past 40 years while the wealthier have been getting wealthier, the lower-income earners generally spent most of what they earned from their paycheck. 25% of Americans have no wealth.

While one solution is to start over again, because the tax system is very complex and generally benefits those that have wealth. Joe Biden has proposed an increased tax on those that make over $400,000; and possibly increasing the inheritance taxes. (in a country that stresses the best and brightest go the top, it does not make sense that if you inherit money you are 3/4’s of the way before the lowest income starts). Biden has also stated the minimum wage should rise to $15 a hour, but unless it is written into grants from the federal government, it may be wishful thinking on behalf of the President.

Linking to dividend paying stocks, there will be greater taxes but the world will continue because the economy of the US is dependent on people shopping and more people will have resources to spend money. If some of the ideas proposed by President Biden and more people move from spending every pay check to actually have savings that is a good thing, it is the reason why one wishes to invest in dividend paying stocks.

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

Soon President elect Biden will be the new President and one of the 4 items on his agenda is the Green New Deal. The Green New Deal is about emitting less carbon and for many organizations it is about reducing energy costs – the alternatives are less expensive. Even though President Trump did not encourage solar and wind energy, they have developed as costs in the manufacturing decreased which means many utilities will benefit from the Green New Deal. In the era of President Trump, the President may have loved coal, but many utilities have changed to natural gas to save costs. Most utilities have a divisions which does solar and wind energy, but there are some purer plays.

In an recent article Scott Clayton of TSI Network examined the field to find strong dividends from renewable energy stocks poised to move higher. His criteria was:

US power generators and Canadian provers with significant US operations

TSI uses a point system to help eliminate companies there system is:

1 point for 5 years of continuous dividend payments – 2 points for more than 5 years

2 points if the company has raised the payment in the last 5 years

1 point for management’s commitment to dividends (President’s letter is often the source)

1 point for operating in non-cyclical industries

1 point for limited exposure to foreign currency rates and freedom from political interference

2 points for a long term record of positive earnings and cash flow sufficient to cover dividend payments

1 point for being an industry leader

Company Div Sustainability Points Div Mkt Cap 1 Yr Ttl Recent

Rating Yld % ($ bil) Rtn % Price $

Algonquin Power Above Average 9 3.9 12.6 19.1 21.39

NextEra Energy Above Average 9 1.8 148.9 39.3 77.54

Brookfield Renewable Partn Above Average 8 3.1 23.4 34.5 77.36

Xcel Energy Above Average 8 2.3 38.7 24.3 74.69

Clearway Energy Above Average 7 4.3 6.1 55.9 30.64

Innergex Renewable Energy Above Average 7 3.0 4.2 45.9 24.18

Linking to dividend paying stocks, sometimes if you your investments and government policy should dovetail into each other perfectly. If you own the above types of stocks and the Biden Green Deal is announced, then the emphasis for more to be done and easier permits should be the result. As long as manufacturing costs continue to fall, these types of stocks can be held on for years.

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

President Trump for 4 years talked about turning inward and making America first. This was a change of policy since WW II when the US lead in rebuilding Europe with the Marshall Plan and during the cold war the US was considered the policeman of the world. It had the greatest military and it exercised its power all over the world. President Trump, until President elect Biden takes over and rejoins the Europe alliance, will be carrying on the inward stance.

The inward stance is not new, in the 1400’s China was on the verge of the greatest nation in the world but turned inward for 500 years. England was once the dominate country of the world at its height 2/3 of the world’s population was under the British crown. In 1947, India was given its independence and Britain has not been the same since.

The issue is always if the US turns inwards, what country is taking its place by turning outwards? Is that in the best interests of the US?

In an article by Nathan Vanderklippe of the Globe and Mail, President Xi Jinping told a gathering of diplomats in Beijing’s Great Hall of the People to adjust their thinking. He said, “Look around the world. We know we are facing unprecedented change not seen in a century.” The phrase means China is peering out on an opportunity to advance its own interests.

Linking to dividend paying stocks, when you own a consistently profitable company which can pay dividends it tends to be a leader, whether the market is monopoly or monopoly like, the President of the of company is a leader. What he or she does and does not do is a signal to the competition. If a company is not going to lead, it will be following the competition. As you examine your investments, ask yourself how does this company remain in a leadership position. If it has been a leader and you do not see it continuing, it is time to find alternatives.

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