As the season turns to spring, one of the many things you will begin to see is more people enjoying beer. With the warmer weather, the beer companies are gearing up to have their best ads to stimulate beer consumers to buy their particular brand of beer. From the outsider point of view, there are only a few brands with a national reach and  likely. at the end of the year the percentages of market share will be about the same as they are before the season, but things change. Sometimes ads become the ads of the summer adopted in the culture and drive sales of brands higher. If you work in the consumer goods strategy, there are not many books written about every type of consumer goods, but there are books written about beer and the selling of it. One such book that found its way into a library is read called Lager Heads by Paul Brent,  HarperCollins, Toronto, 2004. This book is about the Canadian market where two beer companies have most of the market share and the book gives a history of two companies trying to read the market, using the best creative minds available (ad agencies), and fighting to ensure the market share they have is the one they continue to have in order to reap the profits.

Linking to dividend paying stocks, consumer companies which pay a dividend are in competition but the competition tends to be among 3 or 4 companies with two of them seemingly having the upper hand. As you own the shares, you can watch the ads to see if they motivate you or do you believe the ads motivate the target market? In the case of beer companies the age between minimum drinking age to 25 is the heaviest users and the ads tend to be aimed at them.

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

In the Globe and Mail on Wednesday, March 5 John Heinzl (jheinzl@globeandmail.com) wrote a wonderful article about Coca-Cola on reasons why the stock is a keeper for the long run. For any stock which you own or are looking to buy it is worthy of looking at the following reasons why Coca-Cola has long term value.

1. The dividend keeps rising – Coke has raised its dividend for 52 years.  Their past history is to payout 55% of earnings from their healthy cash flow.

2. It is well diversified company – Coke earns money in every country and 82% of its operating profit comes from outside North America.  Coke has something that every company would love – 17 brands with sales of over $ 1 billion. Those brands include: Coca-Cola, Diet Coke, Coca-Cola Zero, PowerAde, Sprite, Minute Maid and Fanta. This means incredible advantage in distribution, marketing and ensuring the competition is not too powerful in the shelf space of any store.

3. Results were better than they seemed – if you compare 2003 when Coke had net income of $4.35 billion to 2013 of $8.58 billion it is doing something better.

4. The stock is fairly priced. – Coke trades around its historical average of 19 times price to earnings.

5.  The company is not standing still – Coke is spending $400 million on marketing this year, it is continuing to test new products, new lines and when one is successful a global market rollout can easily be done.

Linking to dividend paying stocks, Coke is wonderful about paying a dividend and every year the dividend increases. The article is added because of the reasons Mr. Heinzl gives. As you do your homework on the stocks that you wish to buy – go through the 5 reasons – does it pay a dividend and how long? what is the outlook for the company and its strategic advantages? how are the financial results? is the stock fairly priced? was is the company doing to ensure that results continue into the future?

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

The cutting of trees for pulp and paper and other uses is a multi-billion dollar business and any area with seemingly lots of trees has economic activity related to cutting the trees down. If you think back in terms of when your part of the country was settled, part of the job in settling the  was to remove trees to build a home and cultivate lands to grow food. As time goes on the use of the chainsaw and now machines cut the trees as efficiently as possible. There are very good reasons to use the machines, however the downside was the ability to cut more trees than needed to grow so in 30 years plus the trees can be cut again. Beyond the Beauty Strip by Mitch Lansky, Old Bridge Press, Camden East, Ontario 1993 looked at what was happening in the state of Maine. The state of Maine has a very active forestry industry and many are doing the very best they can.

As a government the State of Maine leans to the forestry companies for their interests in keeping the plants running and the goodwill to ensure that while 90% of Maine is forestry, there remains a healthy forestry industry for years to come. Mr. Lansky argues very effectively, the practices of the forestry companies in Maine, at least up to 1993 leave a lot to be desired. Many attributes offered by the forest companies are not as good as they seem to be. n fact many attributes seem not to help anyone but the forest companies for the short run. When people live in an area, they are torn between what is great for industry and what is great about living in the region. Since their income is invariably linked back to the forestry companies the forestry companies have a great deal of leeway or goodwill behind their names and ability to sign cheques.

Linking to dividend paying stocks, many forest companies pay a dividend although their stock price fluctuates with the economy. Companies often site advantages of ensuring governments help them, some of the advantages are myths and those that will take a toll on earnings in the future. It is important to recognize what is a myth and what is reality and invest accordingly.

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

A few weeks ago a conversation was partly overheard, it went to the effect did you hear about Sue? Remind me who is Sue? She is the ex girlfriend of the James. No, I think she is the ex girlfriend of a friend of James. No, I am sure she dated James. I believe she is a friend of friend of and now they are no longer dating. Do I know her? I not sure? Then why do I care?

The above conversation, what little was heard, remindd me of the Abbott and Costello skit “Who is on first” The two comics were taking baseball, but that is about all they were communicating to each other. Each time one gave a valid reference point, the other side was gaining transaction of the unknown. When you are looking at the all the investment decisions one could make, it is hard to pick one. This could be well the  reason why Warren Buffett suggested you keep your investments as simple as possible.

Linking to dividend paying stocks, the evidence highly suggests to have a consistent return buy companies which pay a dividend because you will receive two possible earnings stream. One is the dividend, the other the capital gain. Over time companies that are profitable and can pay dividends. these company stocks will rise. Given the great amount of choices, if you start with dividends it means you are starting with making money as well the risk level to make money stays low.

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

Yesterday, Russia troops moved from across the border to parts of the Ukraine as the government and civil society was beginning to break down. Russia took a part of the country which gives it access to a year port and where its Navy is located. There were many reasons why it did what it did, including protecting the gas pipeline, however Ukraine being an independent country, they were not suppose to and thus there are potential international ramifications.

Linking to dividend paying stocks, if the stocks you own have operations around the world which is good as it helps to diversify the revenues of the company, invariably something will happen. This time it is one country operating in another country without their permission; other times it may be the weather; or it will be something else  – stuff happens. The key is for the stocks you own, either they have sufficient reserves to ride out the storm as things return to normal or have other operations which continue to generate the needed revenues. It is easier for being an owner or management if the company is well diversified and when things happen, the company can plan and execute resources to capitalize on competitors who do not have the same abilities.

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

Last evening was the biggest show in Hollywood for movies – the Academy Awards or the Oscars. Movies are part of the average person’s entertainment, education, enjoyment, recreation and billions are spent worldwide on them. Fortunately everyone has a story, often many stories, and more movies are made all the time. In some cities there are movie festivals every week on a different topic and that is wonderful, which means whatever your interest is, you can find movies. Often when you think of movies you think of Hollywood and the expensive movies to make and there is a need for those types of movies. At the Oscars, the stars of the movies were out, most did not buy their outfits, although some could afford them. Many jewelers and fashion designers offer the stars a chance to wear their outfits for the publicity it brings to the star or the other term is product placement. Some of the viewers could identify most of the stars, some only knew a few of them. Some viewers had seen all the movies, some a few of them and read about the rest. The people will the greatest knowledge will be those that have spent time or doing their homework in regards to the movies.

Linking to dividend paying stocks, the stock market would be all the movies made and released to the public, the dividend paying stocks would be the ones that make money. There is a difference between the two numbers, very likely the vast majority of movies made for release, the hope is break even or to find distributors in smaller markets which would allow the film to make money. When a movie makes money, it allows the director to make more movies. As an investor, it is hard business to know which movies will do well and which ones are still looking for a paying audience. On the stock market, it is easier, you start with those that have paid a dividend in the past and make your list from them. From that list you can bring the list down to the ones you believe are winners for the resources you wish to invest in.

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

In one of the free newspapers which are available throughout many big cities an interesting picture was in the paper. The picture looked like a baby giraffe or at least what one suspects a giraffe to look like, however its tail was off which read to the reading of the caption. A lady has the ability to bend her body backwards and allow her hands to rest on the floor; in this shape she had the idea if she extended one of legs it would be in the shape of giraffe. The lady, Beth Sykes from Featherstone in England teamed up with a friend and body art painter Emma Fay, to paint her body to look like a giraffe with Beth’s foot as the face. According to the team it took about 6 hours to do the painting. It likely took many more going from yes it could look like a giraffe, to finding the correct colours, and the other aspects which needed to be done before painting would start. The result was very well done.

Linking to dividend paying stocks, to pose for the picture the artists did their homework and used patience to get the job done, it took 6 hours to do the painting. Often times it is reported when people invest their money, they invest based on one phone call and say ok do it, as if you do not do it money would not be made. When you give yourself patience or time to make a decision, money is not lost. One method to ensure you limit your loses is invest in stocks which pay a dividend. With this method, whether the stock goes up right away or goes up over the course of the year it is ok, for in the meantime you have received your dividend payments. When you add the returns from the dividend and capital gain, for limited risk the return is good.

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

When you look at investing there are many many choices, for most people, in order not to lose money, the list they need to look at should be a narrow one. Within the narrow list are many choices and very few of them will turn out to be a bad one, but things happen to all companies. In the Globe and Mail on Wednesday, Michael Bowman (mike@bowmangroup.com) looked to the criteria of companies that have a good credit rating as designated by Standard and Poor’s. The highest is AAA and Mr. Bowman started his criteria at A. This should mean companies can pay their debts.

The next step to narrow the field even more was to ensure the companies have a 3% dividend yield or better or the company makes profits.

Continuing the narrowing process is to look at the Return on Equity (ROE) and the number decided was greater than 10% which is how much profit does the company make for a dollar invested in percentage.

You can change any of the criteria, but when you have put all the above criteria together the the result is low risk companies which have a history of making money and retuning some to its shareholders. There never is no risk, but with this criteria you will notice a Return on Equity in the range from 11% to 38% with most in the high teens for Return on Equity. It is not surprising the shares went higher over the year. Next year it may not be as high, but in relative terms your risk is going to be lower than many other choices. The dividends will give you a base return on your investment, plus possible capital gains and you are looking at a solid investment. Which company do you start with is up to you, but your portfolio should have more of these type of companies in it for both the short term and long term.

The list Mr. Bowman and his team come up with found the largest and highest rated company on our list, at AA+, is General Electric Co., which makes everything from light bulbs to military engines.

McDonald’s Corp. has the highest ROE on our screen. The company serves 70 million people each and every day from its 35,000 restaurants in over 100 countries.

All of Canada’s Big Six banks made the list.

The highest P/E ratio belongs to Public Storage. The company owns and operates 2,200 self storage facilities in the United States and Europe.

Great-West Lifeco Inc., IGM Financial Inc. and Power Financial Corp. – all companies under the Power Corp. of Canada umbrella – also made the list.

Quality companies with credit ratings of ‘A’ or better

Company            Ticker  Market Cap   Dividend Yield  S&P   P/E  ROE

General Electric     GE-N    284.52        3.11      AA+   15.34    11.04
Chevron Corp      CVX-N    242.74        3.40      AA     10.34    15.00
Pfizer Inc             PFE-N    229.57        3.02       AA     14.17    32.27
Procter & Gamble PG-N    236.44         3.02       AA-    19.61    16.02
Cisco Systems CSCO-N   127.44         3.07       AA-    13.05    14.65
Royal Bank of Cdn RY-T  103.99         3.50       AA-     13.05   19.37
TD Bank                 TD-T    91.01         3.28       AA-     13.29    13.97
Eli Lily & Co          LLY-N   72.65          3.35       AA-     13.23    28.92
Intel Corp            INTC-Q 137.24         3.64         A+    13.31   17.58
Bk of Nova Scotia BNS-T  76.82         3.77          A+   12.48    16.37
Costco Wholesale COST-Q 55.72       7.17        A+     25.44   17.15
Bank of Montreal BMO-T  46.70          4.03         A+    11.33   14.96
CIBC                      CM-T  35.98          4.21        A+     10.83    20.84
Great-West Lifeco GWO-T 31.26        3.92        A+     14.51    16.67
Power Financial     PWF-T 24.83        4.02        A+     14.00    10.81
IGM Financial         IGM-T 13.54        4.00        A+      17.76    17.22
Public Storage        PSA-N 31.94       3.07        A        34.65    16.11
ConocoPhillips       COP-N 90.34       4.05        A        13.04    1 6.43
Sysco Corp           SYY-N 23.56         3.13        A        18.03    19.22
McDonald’s Corp MCD-N 106.95       3.27       A        17.41     38.45
KKR & CO LP      KKR-N 18.82         5.75       A       1.78        29.25
National Bank of Cda NA-T 14.18     3.92       A        9.43       20.67
Diamond Offshore DO-N 7.55           7.19        A       11.53      11.91
Questar Corp       STR-N  4.60          3.01       A        19.45     14.43
Piedmont Nat Gas PNY-N 2.92        3.63      A         18.61       12.13

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

In the book Eating Dirt by Charlotte Gill, Greystone Books, Vancouver, 2011, the author writes about the people who plant trees for a living. We all know trees are a valuable export from North America and the wood to build houses comes from somewhere, after the logs are cut from the Cascadia area or the west coast – California, Oregon, Washington State and British Columbia, someone needs to plant trees for more to grow in the future. The book describes the people who do this and as the many things you learn about the environment as they do the work. In addition, there are interesting sidebars about the uses of trees. For most of us, planting a tree is a trip to the nursery or making a donation to a group which will plant trees. The trees in the book are fir trees which come in test tube size and the group will plant near a million trees before moving on to the next destination to plant another million trees and it continues.

One side bar in the book was about countries and their need for trees and a simple theory about the size of the Roman Empire and what drove it. At one time the Roman Empire covered much of Europe, Africa and the Middle East and at the time was the greatest empire in the world. Different reasons are given for the size and one of them was the discipline of the legions or the military. The Emperor would go to war every 5 years or so and would demand a fleet of ships. The ships were wooden, where did the wood come from? At first it came from Italy, but that did not last long, then the empire took trees from Europe and Asia Minor, as the demand for fleets grew new lands needed to be taken for their resources. Perhaps if you watch the first part of the movie Gladiator from 2000, you will know why they are in the part of the country they are in.

In one of the frequent wars between France and England many years ago, the timber came from the Baltic area (Sweden, Finland) and who controlled the Baltic had a strategic advantage. When France controlled the Baltic, England found its colonies in North America rich in timberland. The tide was shortly turned and wood has been a constant export product from North America and a reason to invest.

Linking to dividend paying stocks, whatever industry you are in, your sense of the importance to the world is made. In this case the importance of trees and the search for resources. While planting trees is a great thing, trees take a long time to grow back to the desirable heights, but there needs to be a start, perhaps even more should be done. A question for the forest companies is when do they cut the new growth and what do they meant by that? In the search for a sustainable continuing dividend, you want to ensure the time frames allow the dividend to happen.

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