Dividends and Higher oil prices help Saudi Aramco earn $88 billion in 1st half

The most profitable company in the world is an oil company, but it is not headquartered in the US, its office is in Saudi Arabia – the company is called Saudi Aramco.

In an article by Aya Batrawy of the Associated Press, the company went public with 5% of its shares traded on the Saudi stock market. Profits jumped 90% in the 2nd quarter when compared to the same time last year. Similar to all oil companies, the company had a down year in 2020, but higher commodity prices allows for profits to flow. The company reported half year earnings of $87.9 billion.

The company will pay a dividend of $18.8 billion for the 2nd quarter shareholders as its has promised to do since its debut on the stock market. The Saudi government is the main shareholder of Saudi Aramco.

Aramco President and CEO Amin Nasser expects oil demand to continue to grow for the rest of the decade. OPEC expects world oil demand to rise to 3 million barrels a day to average a 100 million barrels a day.

Linking to dividend paying stocks, in the case of Saudi Arabia, it continues to own vast oil reserves which are among the least expensive to produce in the world. Every time the oil price goes up or is stable, the company will make money. It is almost impossible not to make money. As an investor you like those numbers and owning shares can be a very long term hold.

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

Dividends and Boeing makes 1st 787 Dreamliner delivery since May 2021

One of the biggest contributor to the export sales figure in the US manufacturing number is the production and sale of airplanes. The industry is dominated by 2 companies – Boeing and Airbus. If you went into the airport and saw planes take off and land, they were highly likely one of the 2 companies. Boeing has many planes but the new ones or the latest in the showroom are Max and Dreamliner. The Max 737 is for domestic flights, for international flights the Dreamliner because it holds more people. For decades the production plants in Washington State and South Carolina hummed with activity until Max 737 crashes in 2018. When COVID shut down very few people flew and now lots of people are flying. Boeing is behind and unlike car model recalls, it takes a long time to fix the issues and equally important have the safety regulators approve the fix.

In an article from Reuters, Boeing delivered its first Dreamliner since May 2021 to American Airlines. This is the first for American Airlines CEO Robert Isom expects to receive 9 more this year.

Boeing says it has 120 787’s waiting delivery, while American Airlines has 42 planes on order.

In July, the FAA (Federal Aviation Administration) approved Boeing’s inspection and retrofit plan to meet certification standards.

Linking to dividend paying stocks, all companies say they are safety orientated, but most will default on the side of getting the order out of the door, this is why very few companies pass 100% on their health and safety procedures. Some companies have them as plausible deniability built in, in case they are inspected someone can point to the official procedures. Then real life happens and the company has to do something. Generally profit making companies have better safety records than non profit making companies because they have the flexibility of time. If you are aware that the items sell as long as people believe they are safe, then safety is equally important. If the item is get on the shelf or it will come back and be going to landfill, then the attitude is something else. In your investments try to have more of your companies both trying and doing safety first.

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

Dividends and Rivers slowing to a trickle as drought poses hazard to German industry

For generations, the Rhine River in Germany has bringing in goods to the German cities along the route (the closest American example is the Mississippi River). Cities grew up along the river and river transportation has a competitive advantage over trucking and railways. The economic lifecycle depends on the Rhine River. If you have seen European weather coverage this year there are droughts and wildfires.

In an article by Daniel Niemann and Frank Jordans of Associated Press, the water levels are reaching critically low points which means the larger cargo ships can not make the journey, smaller cargo ships are needed. In the world of economics, smaller ships costs more for shipping, for example normally a 2,200 metric tonnes of cargo could be transported, the lower levels means transporting 600 tonnes.

In Germany, unlike other European countries, transporting goods by inland waterways in more important, which means headaches for German factories and power plants.

Linking to dividend paying stocks, all of us are dependent on nature to be reasonable stable and when it is we typically do many things taking nature for granted. Adjustments can be made, but they often take time and money.

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

Dividends and iPhone assembler Foxcomm begins to feel sting of slowing smartphone sales

Apple smartphones are designed in the US, the advertising campaign is headquartered in the US but the phones are manufactured in Taiwan. One method to understand how well sales in the cellphone market are is to hear from the company which manufacturers the cellphone.

In an article by Yimou Lee and Sarah Wu of Reuters, Foxcomm gave a cautious outlook for the current quarter after posting results that exceeded expectations.

At present due to the loyal and relatively affluent customer base, Foxcomm believes rising prices will only have a limited impact on the mid-to high-end smartphone demand in the rest of the year.

Chairman Liu Young-way said on the whole, we are slightly more cautious but we could see growth. Both Foxcomm’s net profit and revenue for April-June quarter rose 12%. Mr. Lui said our customers, and ourselves, we are all large global technology companies and have relatively strong supply chain management abilities. This advantage allows us to minimize the impact of any materials shortage.

Linking to dividend paying stocks, the strengths of Foxcomm selling iphones is the loyal and relatively affluent customer base along with being a global player. If you can find companies which have the same strengths, there are worth looking into.

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

Dividends and Ukraine faces key test on debt-freeze plan in bid to avoid $20 billion default

Prior to Russia invading Ukraine, the analysts who examine the countries finances likely did not have a hard job, Ukraine is a large producer of grains among other aspects in the economy and the grains had a ready market across Europe and Africa. The the war happened and is still going on, the finances coming into the country’s coffers has gone down drastically and expenses to fight the war have gone up.

In an article by Jorgelina Do Rosario and Karen Stochecker of Reuters, Ukraine’s Finance Minister has asked bondholders to defer payments on the international bonds for 24 months.

The war is costing Ukraine $5 billion a month and on September 1 a US $1 billion bond is due.

Ukraine’s Finance Minister Sergii Marchenko said the country had explicit indications of support from some of the world’s biggest investment funds including BlackRock, Fidelity, Amia Capital and Gemsstock.

Luiz Peixoto, emerging markets economist at BNP Paribas said we do not know what kind of shape the Ukrainian economy will be but investors are preparing for a debt restructuring.

Some of the dollar denominated bonds trade at deeply distressed prices, some as low as 17 cents on the dollar.

Linking to dividend paying stocks, there are many companies where the expectation is they will continue to do well no matter what happens in the economy. The companies tend to have reasonably well diversified products and services which people need and that is what investors expect. Sometimes a curve ball happens, and you need to decide to do nothing or seek alternatives, which is why it is important to do your homework to determine what alternatives are attractive to you.

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

Dividends and Switzerland boasts underground hydropower facility

In August, the Senate and House passed a bill to fight climate change and one of the many features will be ideas to generate more green energy. There will be plenty of ideas proposed and some of them will be financed, but the ones that are financed hopefully will enhance existing systems in the environment. An example is in Switzerland.

In an article by Denis Balibouse of Reuters, if you think about Switzerland one of the images you could have is the Swiss Alps or Mountains. In the canton (county) of Valais, a new underground hydro plant came on line with costs in the area of $2.9 billion.

The 6 turbines are in a cavern 600 meters below ground between 2 existing reservoirs – Emosson and Vieux and has a capacity of 900 megawatts. During peak demand, Nant de Drance produces electricity from hydropower. But when output from sources exceed demand, the plant stores surplus electricity by pumping water into the higher Vieux Emosson reservoir. Alain Sauthier, a director at the facility said the yield is very good or 80% efficiency. It takes about 5 minutes to switch from full pumping mode to full power generation.

Linking to dividend paying stocks, typically hydro utilities are a wonderful dividend stocks because after the initial capital investment to build the facility, only some maintenance is required and the rest of the time electricity is generated to be sold into the grid. Hydro dams have a long life cycle, think about the Hoover Dam in Nevada. The issue on the new Climate government money is there will be more proposals than are financially feasible and doable, saying no is a good thing to hear.

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

Dividends and Bank financing Musk’s Twitter deal unlikely to be able to help him walk away

If you were going to buy a house, before meeting with the buyer you would have gone to the bank to arrange financing or a pre approved mortgage. Then you would discuss with the buyer and their realtor how you were going to pay when the buyer agrees with your price. The same process happens at a much larger scale in business. Typically the company which wants to buy the other company goes to their investment bankers who determine how to finance the deal. Talks happen, the other side agrees and money moves around the table.

In an article by Anirban Sen and Greg Roumeliotis of Reuters, in the case of Twitter Elon Musk can not just walk away because he wants to. Mr. Musk by all accounts is one of the wealthiest people on the planet and he could afford to buy Twitter if he wanted to. However similar to many wealthy people, not all his money is in cash, much of it is in stock and some of that is pledged to his various companies.

Mr. Musk did go to the investment bankers at Morgan Stanley, Bank of America, Barclays, Mitsubishi UFJ Financial Group, BNP Paribas, Mizuho Financial Group and Societe General and arranged $13 billion in financing.

If Mr. Musk walks away from Twitter, he owes Twitter a billion dollars and Twitter is in court suing for it and the case is in the courts in Delaware Court of Chancery.

The banks have limited options if the court says the deal must go forward, and most of them are not good for the banks. If the court said the deal must go through, the banks would have to finance it but since Twitter does not make profits, they would have to write of bad debt. Another negative is Mr. Musk owns companies which need investment bankers on a regular basis would he stick with them or go to new bankers?

To get out of the deal, Mr. Musk would have to he used his best efforts, according to the terms of the Mr. Musk’s deal with Twitter but the banks refused to deliver. The perils is would the information in the emails and texts show any other information?

Linking to dividend paying stocks, profitable companies grow by mergers, they are part of the normal course of action. Mergers tend to have a normal playbook that has evolved and all parties tend to play by the same playbook. When people or companies deviate from the normal playbook, lawyers and courts are involved to settle the disputes. The settlement process takes time away from regular business activity and as shareholders, you might want to seek alternatives until the dispute is settled.

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

Dividends and Zimbabwe unveils gold coin to help bolster collapsing currency

Every quarter large organizations and governments introduce new products to deal with a problem and the organization believes a solution is offered. However, it will be clear to everyone but the policy makers, the solution was not the best solution because people at all levels can see right through it.

In an article by Jeffrey Moyo and Geofrey York of the Globe and Mail, the government of Zimbabwe has many problems including a collapsing currency and the world’s worst inflation rate. The policy makers introduced a 22 carat gold coin costing $1,800 US.

In the article, the reporters asked ordinary people if they were buying or had seen someone using the coins. The answer was no. The official inflation rate in Zimbabwe was 257% in July, according to Steve Hanke, a US economist the real rate was 595% a year.

The gold coins are bought by wealthy investors and speculators because the coins can by bought in Zimdollars at the official exchange rate, far below the street rate. Traders change their US dollars into Zimdollars on the street market (the unofficial rate is 800 to one US dollar, up from 400 to one), use the Zimdollars to buy gold coins and then sold the coins to banks for US dollars for easy guaranteed profits. What was the solution the government was trying to solve?

Linking to dividend paying stocks, there are a great many good ideas that come everyday, there are also ideas that do not work but make it through the process. The reality is everyday people will determine if an idea is good, speculators will see if the idea can be exploited and unless someone has decided which one is more important, the customer will decide whether the idea is good or should be discarded. Ideas come through the decision making process for many reasons, hopefully with your investments, there are more genuinely good ideas.

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

Dividends and Newly minted meme stock AMTD Digital plunges 40% after rally

In every market there is many types of investors and to have a functioning market there needs to be a variety of different players. Some investors are buy and hold (buy a profitable company and hold it for years – allow dividends to increase your total return), some are looking for value, some are momentum players (what stock is moving upwards and catch a ride), and the combinations are endless. What works for you is whatever you decide.

In an article by Bansari Mayur Kamdar and Medha Singh of Reuters, there has been a stock which has risen 21,000% since its IPO of $7.80. The stock is in the thousand dollar range, but be careful because it had dropped 40% in one day. The stock has since fallen to $201 a share and will likely go lower because the hype is gone.

AMTD Digital has been the stock of choice on Reddit.com, the social media platform central to the meme stock craze of 2021 or GameStock and AMC. AMTD Digital is a fintech firm based in Hong Kong and provides loans and services for fees. The company said it had no material change or event related to the company’s activities.

Linking to dividend paying stocks, owning a stock with a 21,000% return is winning the lottery if you sell, some or all of your shares and not reinvest. Consider someone who sold something, then bought and lost 40% of the value, it takes a great deal to achieve a 40% gain, if the stock does not have the abilities of a mega capital stock such as Google or Apple. (those companies went down by now they are back up) with a AMTD Digital ever go back up? The market is made up of many players all trying to make money or increase their wealth, if you are a dividend player you consider the long term and total return on your money. There are many movies where the character bets it all and loses only to walk away what they originally had.

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