The Republican Presidential nominee will be Donald J Trump which means all the books we has written or co-written will be examined closely. One of those book he wrote was Think Like a Champion published by Vanguard Press, NY, 2009. If you read the quotations and stories you can easily hear Donald Trump speaking – he uses consistent phrases. The book is the normal and time honored elements of living that all of us love to here and can likely with reflection offer your version of the advice. The headings in the chapters include: The Importance of Being a Team Player; Learning is a New Beginning; Learn to Think on Your Feet; Building Connecting Thoughts; Keep it Short, Fast and Direct: Learn from Setbacks and Mistakes; Tell People about Your Success; Keep the Big Picture in Mind; It’s Not Personal, it’s Business; Set the Standard; Go With Your Gut; Know Your Audience; Building Your Reputation and The Harder I Work, The Luckier I Get. If you were to be asked about the topics – it all likelihood you could have examples the same with Donald and the real estate group he heads. Some of his stories tend to be more high profile. (If Donald stuck to these topics, he may make a good President – unfortunately the solutions for the problems, which he understands, do not seem to match yet.

Linking to dividend paying stocks, this book offers the normal ways to life a good life and it tends to be relatively simple. Simple can mean complex because it sounds simple although at times it feels complex with the different forces upon you. The simple in investing is to use compounding. The compounding is over time money will compound upwards without you doing anything. Unfortunately, it generally takes time to generate income to make the compounding work great for you. The rule is your return divided by 9 is the number of years to double. The higher the return, the less the years and the trick is minimize the risks. If you do that you are well underway to achieving financial independence. One of the great methods in the stock market is to use the dividends as part of the total return of your investments and to make compounding work for you.

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

Sean Pugliese of Wickham Investment Counsel examined US dividend companies with a focus on safety and value. One of his metrics is Free Cash flow to Enterprise Value (FCF/EV)

He started with companies with a market capitalization of greater than $ 1 billion.

The FCF/EV had to be greater than 0.5. (FCF is the cash left over for investors after all the expenses. reinvestments and capex. EV is a measure of the company’s value excluding cash)

The dividend yield has to be greater than 4%

Payout is less than 100 ( the dividend payment divided by earnings. A lower number is preferred for it could mean dividends could be raised.)

Earnings momentum is the change in annual earnings over the past quarter. A positive number indicates earnings are rising, a negative means to check other signs for possible dividend cut.

Debt to equity ratio of less than 150. A smaller ratio indicates a lower debt.

Company                  Mkt  Cap         FCF/EV       Dividend      Dividend            Earnings    Debt/

($ bil)                                      Yield %     Payout Ratio %    Momentum  Equity

AT&T                          241.68              0.06              4.93              77.96                   -3.43               104.90

Verizon Comm        210.28             0.07              4.47               53.36                      1.01                546.59

Ford Motor                  53.39             0.39               4.91               64.76                   21.10               474.48

Lyondell Bassell       35.22             0.10                 4.07              32.65                 -2.40               142.93

Valero Energy            26.39           0.12                  4.42              56.77                   -10.33             34.12

L Brands                      19.74           0.06                 5.86               22.80                      6.97              0.0

Internat’l Paper      17.68            0.06                 4.18                 53.32                       -2.68          220.07

Macy’s                        10.13             0.08                4.26                 20.66                   -4.18              179.57

Gap                               7.49             0.11                  4.84                 42.99                  -7.29             68.02

Staples                       5.54               0.10                 4.68                92.31                     29.39             19.22

Source: Bloomberg

Of the ten above. Mr. Pugliese believes L Brands and Staples look the most interesting.

Linking to dividend paying stocks, there are many metrics to be examined and eventually you will need to focus on a few. Lists similar to this one helps focus or narrow the companies to a few depending on your selection criteria. Buying when the stock is declined as long as your believe they are still doing their business plan and can pay their dividend will mean in the long run you will be better off through total return.

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

 

 

 

At the end of every quarter, 45 days later, large institutional investors have to reveal their holdings to the Securities which are made public. From the reports all types of lists are made public including what is happening with the well known investors, the list is examined to see what the “smart” money is doing and it was revealed that George Soros – a billionaire investor has taken a shine to gold. Other folks include Stanley Druckenmiller, David Einhorn accumulated gold in the expectations the price might rise. The information was in Ian McGugan of the Globe and Mail column Investing gurus take a shine to gold.

Gold pays no yield and is very attractive to investments which offer next to no payout. Typically gold prices will fall if rates on bonds and bank accounts were to increase. This leads to the US economy and will the US Federal Reserve raise rates?

If the so called “smart” money is looking at gold, it may be worth looking at, but since the reports are filed 45 days after the quarter, the positions may have increased or decreased in the meantime.

Linking to dividend paying stocks, there are many methods to invest in gold including gold companies on the exchange some pay dividends as their debts have been restructured. The issue today is the reports the large institutions file are to be looked at, examined but try not to make a final decision on them because they are at least 45 days old. However they do offer ideas of what is going on with institutional investors.

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

 

Rob Carrick of the Globe and Mail wrote about companies that have consistent dividend growth.

Stocks of the S&P 100 index  were looked at (or the bigger companies in the S&P 500 index)

The 1 year and 5 year dividend growth rates were compared.

To make the cut, stocks needed growth rates of above 9.5% each for the 1 and 5 years. And no more that a 7% difference between the 1 and 5 years.

Who made it:

Company                                      1 Year Dividend Growth                5 Year Dividend Growth

Walt Disney                                        23.5 %                                            28.8%

CVS Health                                         21.4                                                  27.7

Boeing                                                  19.8                                                 21.0

Lowe’s                                                 21.7                                                  20.6

Microsoft                                             16.1                                                 17.6

Nike                                                       14.3                                                15.6

Honeywell                                         15.0                                                  12.3

Allstate                                              10                                                        9.5

The difference is these companies generate consistent dividend growth each year. Some companies are not that consistent for example

HP                                                       70.                                                     27.8

Dow Chemical                                9.5                                                      25.1

Wells Fargo                                    1.3                                                        26

Linking to dividend paying stocks, the charts (and you can change the criteria) show it is very possible to buy solid companies that consistently raise their dividends with limited risk to you. The companies that consistently raise their dividends are generating profits which helps ensures the stock price rises and your total return to increase. The companies have gone through the economic cycle and doing things very well and as they are rewarded you are rewarded.

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

 

Yesterday was Memorial Day and it is odd to write about genocide because it involves death and no hope. However there are lessons to be learned in ensuring genocide does not happen again. If you read the book in that vein then it is worthwhile reading. The book Genocide was written by Jane Springer published by House of Anansi Press, Toronto, 2006. In the book there are listings of many of the genocides of the past centuries, for it is not new to our age. There are 8 stages:

1. Classification:  People are separated into us and them.
2. Symbolizations: Names and symbols are given to the classified people
3. Dehumanization: The other group is treated as non human.
4. Organization: Special army units or militias are trained, killings are planned.
5. Polarization: Groups are driven apart by extremists; intermarriage or social interaction between groups is forbidden.
6. Preparation: Targeted people are physically separated from each other
7. Extermination: Mass killing of people begins
8. Denial: The perpetrators cover up the evidence, deny the crimes and block investigations into the crimes. They need to removed from power by force.

Genocide happens because people believe their part will have no consequences and they see people as less than equal.

Linking to dividend paying stocks, while companies are seen as competitors, the idea is not to totally wipe them out for them other rules will come into place. The desire for a consistent long term profits is a desire to have near monopoly conditions as well as meeting customer satisfaction levels. When customer satisfaction levels fall, other alternatives are found. Maintaining the customer satisfaction level helps ensure long term consistent profitability. Discriminate by customer, not by people.

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

 

 

 

While at the local library Season 1 of the Musketeers, a TV show produced in England (BBC) was picked up. Many people will know of the Musketeers – all for one and one for all. The TV show was shot in the Czech Republic fronting for France in the time of the 17th Century Paris. There are a number of episodes and one of them concerned a plot to overthrow the King. The Musketeers are known as the King’s Guards as opposed to the Red Guards which was controlled by the Cardinal or the Church. With every King or Queen there are people that prefer not to have them or would want the positions for themselves. In one episode, the plotter teams up with people who for various reasons do not like the King. Those plotting to overthrow the King were used to create a diversion and the usual response to protect the King; for the of the plotter’s real plans to steal the King’s jewels or robbery. It is always relatively easy to see plots to overthrow, but often they have a twist and that twist is a simple robbery.

Linking to dividend paying stocks, on the stock market one often reads or hears about undervalued stocks and some are. There will be various reasons but sometimes when a stock is under takeover, the opponents real reason for objecting was there have not been offered enough money. These players will own thousands of shares which means an increase is a big issue; if you only own 100 then in means a $100 or so. When you do your evaluation, there are big pictures and smaller pictures and simple greed. One method to participate is buy valuable companies which earn profits and are valued for their ability to make profits on a regular basis. If you are a small shareholder, you can collect your dividends as you wait for the institutional companies to push up prices.

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

Every company under the sun believes it offers great service to keep and grow from its customers. It is simple equation and answers two questions Q: why is customer service important? A: If customers are happy, they’ll come back and be will be successful.  Q: What do you want your customers to know? A: We want our customers to know we care about them so that they will keep coming back.  If everyone knows the questions and answers why it is so hard to do? That is what The Ken Blanchard Companies have been trying to help answer and  his book  Legendary Service – The Key is to Care by Ken Blanchard published by McGraw Hill, NY, 2014. Eventually they came up with ICARE.

Ideal Service      – Meeting the customer’s needs on a day-to-day basis by acting on the belief that service is important

Culture of Service  – Fostering an environment of focuses on serving the customer

Attentiveness  –  Knowing your customers and their preferences

Responsiveness – Demonstrating a genuine willingness to serve others as you fulfill their individual needs

Empowerment  – Taking the initiative to implement the service mission

Although ICARE sounds simple, it does have many moving parts and it takes people to do. With moving parts, for example legendary service means consistently delivering ideal service that keeps customers coming back and results in a competitive edge for your organization. Consistently means day in day out and very few people are upbeat every day they are at work. People go through moods and various pressures of the business including those implemented from their boss. In reality, people will look to see who and how people are promoted and will mimic their behavior. In other words, if you are the boss everyone watches how you do or how you do not react to the people below you. This is particularly true of the classic case of vice president meeting clerk. The reaction will do more than the ICARE words.

Another moving point is attentiveness or knowing your customers and their preferences. Are all customers the same? do people try to treat them as the same?  Each moving part has many variables – which people can learn and do better if they are inclined to or actually care to improve.

Linking to dividend paying stocks, in another 50 years the ICARE will be exactly the same for its people that implement them. People are motivated by many things, if the company can motivate its people to care then they will have an advantage and as a customer you can look at the company and do their people do the ICARE? If they do not, then it is relatively easy to ask do they have a really strong competitive reasons why they will continue to make money? If they do not, look at the company falling in revenues for it for people will  seek alternatives and the lower the customer service the more the alternatives will come.

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

Every once in a while, the name of Julian Assange’s name comes in the news in connection to the WikiLeaks and releasing of information. Everyone in the world knows something, sometimes they want the world to know, sometimes they do not. Every company knows something and equally they sometimes want the world to know and sometimes they do not. Governments are the same sometimes they want the world to know the results and many times they do not. Julian Assange through WikiLeaks believes the world should know more and then can decide for itself. The more we know, the better citizens we can be for somewhere there are governments deciding what is in the best interests of its citizens. As a citizen, it can benefit us or it might not, but who should decide? With the growth of the internet, it can be all of us rather a select few. Many words and posts have written about WikiLeaks and one of the books is WikiLeaks by David Leigh and Luke Harding published by the guardian, London, 2011. If you deal with the government, you will know they have various levels of secrecy and what is a classified document. Before the internet it was not impossible but much harder to know what is classified and what is not. With the internet came hackers not just their ability to get into many systems but what do you do with the information? The solution of WikiLeaks was to release the information to the public and they will do it with as they see fit. Is their government really telling the truth? or just part truth?

Similar to all large institutions sometimes the government wants or allows the information to be released, sometimes they do not. There will lots of reasons from political to state secretes to pending negotiations to not giving the opposition any more than they already have. When they do not want the information to be released, the intelligence agency comes into play or hackers with a government salary tracking down other hackers. What will people do with the information and how does it change whatever the road the government is on?  In the book, WikiLeaks was leaking information to journalists who then had to decided what can be printed, how do we check the information and what would happen if we printed, besides the other side not being happy?

Linking to dividend paying stocks, in the stock market companies are expected to disclose material information which could affect their stock price. Often this means if the company is being sued? or the results of sales are not as expected? something that an average investor would say this is good or this is bad. Similar to everyone in the world, releasing good information is easy and done with fanfare; releasing not so good information is designed to try to blend into a very busy news day and many may or not see it or will not react. If the information is not good, the price of the shares typically falls. While as a citizen you may like the idea of WikiLeaks for issues you are passionate about; often times you might say well that what they do as long as it does not directly affect you are okay.

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

 

 

 

In the mid 1990’s the hottest stock on the stock market was a gold company called Bre-X, its share price had risen from 28 cents or $280 for a thousand to $ 180 or $180,000 in less than 2 years. The premise was the company was sitting on the biggest gold mine in the world and the world was believing the story. Even if the mine was not the world’s largest it would be a working gold mine and the major mining companies were trying to get a piece of the action. It turned out the story was built on lies and salting of gold flakes, there might be gold but not enough to mine it. The stock collapse in price and the question was why did the price rise so much, if there was nothing there? Some of the questions are answered in the book Bre-X – The Inside Story by Diane Francis published by Key Porter Books, Toronto, 1997.

Part of the reason for the increase in price was some other very large proven mineral zones around the world had been found, places were people had looked but new and different ideas had found the minerals. Many of us have a belief that technology will benefit us in ways we have never used before and this is the same in the mining industry. We really do not know what is in the ground until drilling and looking at the ground which comes out. Every year, the major mining companies have a better idea of what is there and is not there, but they can not possibly drill everywhere. The chief prospector was suggesting the last company drilled in the wrong area, had they understood the geology of the area, they would have seen the gold was located in the southern section of the land.

Part of the reason was the internet, the internet played a bigger role in marketing the property or telling all the good things which was happening and often times the remarks accented the positive or stretched what was really happening. Now days we expect as much information to flow from the internet as possible, so those with a background in the field will be able to make their own conclusions and often either agree or disagree with what the company says or they are cynical enough to say what does that really mean?

Part of the reason for the success of the company, as the shares were rising in price people who had a long history in the mining industry were joining the company in senior roles which added to the attraction of the company. In many large organizations there are people on the Board who have seemingly direct access to decision makers in an industry or country where the assets of the company are. In the same vein, Bre-X was attracting senior people to its board who should have known. In addition, the industry group was giving the founders its highest awards. Similar to the sales conventions awards for making the company a lot of money, the industry was giving their awards and adding legitimacy.

We all depend on third parties to do their work and report. Part of the argument was there was an existing gold mine about 100 miles away and the geology is similar, there is no reason it might not be the same thing. With the price of the shares rising the larger companies wanted a piece of the action, including those that could help finance the building of the mine. The involvement of more senior firms in the industry leads to greater belief in the size of the underlying asset – it is a large deposit. As the senior firms emerge as players so do funds that try to stay away from small potential growth stocks and when they turn on the tap, money can flow into the stock price.

Linking to dividend paying stocks, there is a world trying to raise money for the next great thing, usually it does not happen which is why the risks are very high for 90% of the time money is lost or not made. It is the other 10% (although no one really knows what the 10% is) where the big money is made. For dividend buyers, we tend to stay away but if the company becomes a $25 stock rather than a 90 cent stock, it is worth investigating. At the point, it should had greater scrutiny from a wide variety of players and they bear watching. Bre-X paid no dividends but the size of the company put it on the stock indexes and that is where seemingly less risker investors would own some shares indirectly through the indexes. At the time of being included in the index, investors would believe more in the story and the price rose. It seemed the system failed and when it did all were affected.

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