In history, for generations the rule of monarchy is the crown is given to the first born male. After the first born becomes the son of the first born, the rule allows the blood line to continue and the family to rule the country. There is nothing in the bloodline to say the first born is the most capable and competent leader. In Medieval England, when France was the dominant country of Europe, King Philip IV was tired of going to war with England and decided to marry one of his daughters to the son of the King, this would ensure peace. Edward II married Isabella and life was supposed to go on. That was the plan, however life threw the plans a curve ball as outlined by Alison Weir in her book Queen Isabella published by Ballantine Books, NY, 2005.

The curveball was Edward II was gay and preferred men, once he became King he did his duties to continue the bloodline but the King and Queen had separate bedrooms for a reason. The King’s first lover was Piers Gaveston however he abused his powers and did not seek to ensure the Barons were placated. The Barons decided to eliminate him. After Gaveston was killed, the King sought revenge on the Baron who killed his lover.  Unfortunately, the next person the King took to his bed more than likely used him for Hugh le Despenser lusted after power. A general rule is those that lust after power usually do not make good rulers. Hugh was someone who knew how the system worked and enriched himself and took power from the King for his own benefit. The Queen escaped to France, tricked the King into sending their son Edward III to her, built up a power base of people who did not like Hugh’s rules. After a few years, the Queen  returned to England to easily beat the King’s army, as Hugh had treated everybody badly. Hugh ended on the hangman’s noose. Edward II was not terribly disappointed not to rule; the Queen stepped in to run the country until Edward II was old enough to become King and the country was run competently for all.

Linking to dividend paying stocks, leadership is always an interesting subject. If you work for a boss, you wonder how did he get his job and keep it. If the business is run at a profit and you are reasonably well rewarded, you can overlook many things. Once the company begins to lose money, then the habits and expenses of the leadership is carefully examined. Therefore, it is easier to invest in companies that consistency make money and can raise their dividends. Then you can leave the soap operas to TV or the history books.

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

Robert Tattersall of the Saxon funds went to a conference in early April and offered advice to the individual investor. The conference was for the institutional investors – pension funds and money management firms. The first thing is pension funds are receiving 1 to  3%  on their fixed term investments because of low interest rates, they need to generate 4 to 5% to maintain their funded status. They are looking at more riskier investments such as infrastructure projects, junk bonds, and the like. It is suspected the infrastructure projects will not be that generous in returns because of the lack of supply.

One large pension fund official asked all the investment managers of his portfolio to lower their fees by 10%, most did. Shopping for lower fees is something we all can do and should do – either funds companies or ETFs. If fees are being lower, then it is better to buy a fund or the investment manger? now it might be better for the fund.

When a large pension company makes an investment, because of its size it is hard to move the asset size with one investment. As an individual with smaller assets, it is possible to move the assets with one or two investments. You have an advantage over pension plans particularly with smaller companies – pension plans may or may not be buying them but you can follow them, read their financial reports as they are released and outperform pension plans.

Linking to dividend paying stocks, with pension plans they have to maintain returns to keep their funded status; you should have a good idea of what type of returns you need or want. In terms of fees, fees have been lowered for many funds which means you keep more. There is no reason not to discuss fees. Individuals have some advantages over institutions, but it is good when institutions are helping you.

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

On April 27th, the US Federal Communications Commission will lift a ban on the telecom companies engaging in merger talks. Once they engage, they can do and Wall Street analysts are betting there will be mergers. According to Reuters article written by Liana Baker and Anjali Athavaley the companies in play will likely be T-Mobile, Spring and Dish. One should note the companies are trading at 31 times forward earnings versus the S&P 500 telecom services index at 18. Just because Wall Street is looking to the 3 above companies, all the companies in the index could be a buyer or seller.

The reason for the ban on mergers talk was the companies who bought spectrum rights had to hold onto them for about a year. They could not be bidding for other companies and T-Mobile and Dish won the bulk of the spectrum rights making them more attractive to other companies. If you consider your habits and those that you can see around you, more people want to do more on their mobile and to do more a company needs to have the infrastructure so people can do more. The advantage is to the larger company.

Linking to dividend paying stocks, many companies will have specific relationships which tend to help them or protect them against the competition. As a shareholder, you will want to know what regulations the government should keep and which ones allow your investments to prosper. Removing regulations maybe a good political saying, keeping the wolves away from your investments is a better strategy for you.

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

 

As an adult, most of the time when a book is desired, it comes from the adult section of the library or the book store. Recently time was spent in a public school with grade school books. One of those books was about Wheels and the pictures and the story was if you look closely at mechanical objects around you, they are not as complex as they look to be. The basic building blocks often are wheels. If you look towards the basic building blocks of machines, you can understand how they work and maybe even fix them.

Linking to dividend paying stocks, similar to everything else in this world, subjects can be complex. There are reasons for the complexity, but to understand is to bring back to the basic. How does the company make money? What is its margin? How consistent does it make money? As you understand how the company makes money and can it continue to make a profit, then investing becomes easier. There are basic building tools for every industry, with investing there are basic rules and one of them should be try not to lose money. One easy method to try not to lose money is to invest in companies which make money and continually raise their dividends.  Companies which make money are more valuable than ones that do not, and it is good to have a couple of measuring sticks – can the company raise its dividend? yes keep, no look for alternatives.

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

 

One of the most important countries because of its location between Russia and the Middle East is Turkey. The country has a long history and for generations controlled much of Middle Asia in the Ottoman Empire and people throughout the empire were known as Turks. Most people including me know a little about the region and a book such as Sons of the Conquerors – The Rise of the Turkic World by Hugh Pope published by Overlook Duckworth, NY, 2005 helps.

To understand the country of Turkey, even though the capital of Ankara is an old city, the dominant buildings belong to the military. In Turkey all males must join the army for a few years, then they are allowed to marry and begin what is a normal life. The military besides being one of the biggest employers of people; its people pay rock bottom prices to their bases, hotels and holiday camps; the military retirement fund controls one of the biggest holding companies in Turkey; the military budget is at least 10% of the budget (perhaps higher)  of the country and for the most part the elected politicians have little say in it. It is not surprising Generals run the country.

The books discusses other countries within the Turkic World and they have their strengths and some have oil and gas.

Linking to dividend paying stocks, every company has some underlying premise or strength which helps you understand the company and its directions. In the example of Turkey understand the long history of the military means you will begin to understand how it generally reacts to events. Consider what is the underlying strength of the companies you own? Does it still use that asset?

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

In early March one of the richest countries both in resources and people credit rating was downgraded to junk status by S&P. The country which was downgraded was South Africa and the status relies heavily on current President Jacob Zuma. In his years of being President, every year he becomes a little more corrupt. It started slowly, first the Presidential compounds became more lavish; then it was a select group of people who essentially do the work of government and collect its taxes which made his friends wealthy. However, in all governments there are usually bodies or people which can offer a different viewpoint and keeps the government reasonably honest. In late April, President Zuma crossed the line with regards to ousting his finance officials for delaying or not implementing his desire to be or live like a billionaire.

The new Finance Minister who previously had little administration authority in the Cabinet, was telling the press he did not think a downgrade was going to happen, cabinet had been purged of opponents before. It turns out Minister Malusi Gigaba either did not understand what the President has been or trying to do with the South African economy or was overly optimistic.  South Africa’s economy will be stories in the future.

Linking to dividend paying stocks, governance matters. Good administration matters. Any fool can loot a treasury, it takes ability to ensure it does not happen and the company makes a profit and can pay a dividend. When your annual report comes out watch for the top executives, how much pay did they receive and are they worth it?

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

 

In April many things happen, the weather is warmer and the early yearly events held in spring happen. In Kentucky, there is a special horse race; in basketball and hockey – playoffs start and in golf the Masters is held. Typically, spring is still a little cool to be outdoors all day, so watching sports is done. In thinking about the Masters which was held in Augusta, Georgia in early April, Cathal Kelly wrote about golf is not for the average person anymore. Golf started off as a playtime for the wealthy, but over the many years it changed to cater to the middle income plus could play. For a golf club to make money, it sold real estate around the course so technically one could walk from their home and play golf. Realistically, outside some errand golf shots, the golf course was similar to living beside a park – no development on it.

In the article Mr. Kelly says President Trump while campaigning had no time to golf, yet as President he makes time and he is helping make golf an elitist sport again. It seems odd, a President golfing once a week would make the sport less popular, but during the campaign his remarks about the former President golfing were less than flattering and often said as President he would have no time to golf. As President, something has changed or the perception of golf has changed. As candidate, the President said golf is something people do who have extra time on their hands, busy people do not do it or rarely golf.

Linking to dividend paying stocks, if a market moves from a general one to an elitist market, then the number of participants will be fewer. It also means those companies which were trying to mass sell to the public will fail because the public may watch some golf on TV, but not as much as they use to. If the market changes, the companies will  have to change – merge, consolidate or go out of business as it caters to fewer buyers. The advertisers will still wish to advertise because the members of the public that remain either to play or follow the game tend to have the disposable income the advertisers desire. People and markets change every year.

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

 

In late March. Peter Ashton of Recognia examined consumer stocks or the companies who products people use everyday. Ideally, the consumer stocks are defensive if the market declines because people still use their products.

The criteria he used was:

market capitalization of $ 10 billion or more

forward price earnings ratio of 27 or less

dividend at 2% and a dividend growth rate of 4% or more

beta of 0.75 or less which means the stock has 75% or less of the volatility of the overall market

Company                               Mkt Cap      BETA      P/E             Div Growth             Dividend

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

Coca-Cola                             181.6             0.59         22.2                6.1                        3.4

Altria Group                        142.0             0.19         24.2                8.3                        3.3

Dr Pepper Snapple                17.8            0.46          22.0             10.4                        2.2

JM Smucker                            15.5            0.30           17.3               4.7                        2.2

PepsiCo                                 159.7             0.42          23.4                 7.1                       2.7

Kimberly Clark                      47.1             0.67          22.1                4.5                        2.8

The Hershey                            22.4           0.65            25.3                7.4                      2.2

Clorox                                        17.6           0.49            25.7               4.0                      2.3

Linking to dividend paying stocks, the above companies with products ranging from cola to cigarettes to chocolate are going to be bought and sold on a regular basis. For the most part whatever the economy, people will tend to buy the products. If you are doing the analysis you can change the variables and come up with even safer companies. Every year it is easier to do your homework and pick companies that will lose less money and more important will make money for you.

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

 

 

The nuclear industry is in chaos, one of the leading companies which built nuclear power plants has filed for bankruptcy – Westinghouse. Utilities are the end customer of the nuclear power plants for they only have a few methods to generate electricity – coal, oil, gas, water, and sun. The coal produced greater pollution, but is readily shippable; oil and natural gas at the moment are less expensive than coal so they are the favored option; water is only available in a few places and those places have long been dammed; solar is a great option as prices have fallen but it is seen as longer term solution; and nuclear while the cost to build the plant and the first kilowatt hour is expensive as the nuclear material works the costs fall to the lowest option.

Westinghouse Electric has been the go to company for nuclear for it seems generations and has been one of those leading edge tech companies. Now the nuclear plants under construction for SCANA Energy in South Carolina and Georgia Power which are both over budget and behind construction, there is a concern will they be built and at what cost? The executives at Westinghouse said they will focus on maintaining existing reactors and developing reactor designs, just not building new plants.

On another story, when electricity was invented by Edison he invented Direct Current (DC), George Westinghouse invented Alternating Current (AC).  The AC is much better to send over long distance for the DC loses the energy. Edison recognized this, but his solution was to try to make AC sound the worse and he tried to get death by electricity using AC currents. The reason was to beef up his holdings and then sell them profitably. In the end, AC current is what we use.

Linking to dividend paying stocks, our society puts great faith in technology and the leader in the nuclear was Westinghouse. Given the bankruptcy filing of Westinghouse, utilities may have to go all in towards green energy, which may be a good thing.

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