In the Sunday NY Times sports section there was an article by Hiller Kuttler about the Baltimore Orioles pitching. If you were a young kid with the baseball on the mound, your first choice would be to think about the bottom of the 9th throwing the ball to win the World Series. You might be thinking fastball, curve, slider or another pitch, but likely fastball. The Baltimore Orioles have identified pitchers in their organization who may not reach the majors or would likely have a short pitching career. For these players the choice the team is giving them to learn to pitch the knuckleball. A number of pitchers had success with this type of pitch and play longer than the average pitching career. For the Baltimore Orioles it is a low risk, high reward action for the team.

Linking to dividend paying stocks, one of the very good reasons why you should be interested in them is the low risk, high reward part of the equation. There are many stocks that are high risk but usually low returns, similar to get the pitcher to try something new is hard. Many quality dividend stocks fill the low risk, high returns as evidence by comparing asset classes over the years, you likely be surprised to see the returns they have been achieving. The reason for the low risk, high reward is the emphasis on the quality company (already making a profit) and the dividend it pays to its shareholders. Generally stocks of companies making profits will tend to rise and if they pay a dividend the total return often beats the averages.

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

In North America we are in the midst of August or the summer season, at one time there was an adage to sell in May and go away till September. At the time there was very good reasons to do this – the markets were manual, now they are electronic. The factories used to shut down for two or three weeks as they went through the annual repair and change of the line, that process is much faster now days. During the summer months schools are off or teachers and students are out of school and doing things. When people lived on farms – there were chores to do, now many people live in urban areas – things to keep the children busy is the order of the day. All these factors and more, tended to mean the trading volumes of the markets was slower in the summer. Slower trading volumes meant new stock issues, new bond issues were scheduled for the fall. When the markets picked up stock prices tended to pick up.Even with electronic changes, shopping 7 days a week, the old habits of having the summer as a slower season changes very slowly as historically stocks perform better in the winter season. It also might mean that summer is really the best time to get the bargains for the expected rise in the winter.

Linking to dividend paying stocks, if you are a market timer, reports on the best time to buy or sell is important. Many dividend stocks do not pay their dividends in July and August, because of the above reasons. With dividend stocks, after you have determined the quality of the stock you are buying, expect to receive the dividend for a few years or more. The price of the stock will move up and down, but if you picked a quality company over time you will receive your dividends and the stock price will likely be higher than you bought it. In this fashion you have receive an annual yield on your shares plus a capital gain on the shares.

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

In this case Run to Failure is a book about BP and the numerous disasters it has been part of for the past 15 years. The book is written by Abraham Lustgarten published by  W.W. Norton & Co, NY 2012.. In the book Mr. Lustgarten discusses BP and its numerous environmental infrastructions It did not have to be the method BP was doing as evidenced by Exxon. After the tanker Valdez caused damages, Exxon changed its methods and safety, so it has the best performance and expects to stay as the best. BP choose a different path, and comments people did not trust the company; people went to work tried their best and hoped to come home alive at the end of their shifts; even though BP is a multi billion dollar industry – the repairs on the out of date machinery was in keeping with a bootstrap operation; operations such as Health and Safety are not profit centres however BP ensured that all complaints went to them and anyone who complained did not work long. It is not surprising that under those conditions, incidents happened at a higher rate than its competitors.

Linking to dividend paying companies, all utility companies must continually upgrade their equipment, if they do not then the cost of paying for accidents begins to outweigh the costs of doing little or nothing. It is not surprising in this age, even though many companies would love to expand, those that oppose the pipelines can have a very valid point. Culture and regular maintenance are necessary for success and both can easily be disregarded for short term profits. If you see your utility acting like BP did, switch stocks.

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

In this case Run to Failure is a book about BP and the numerous disasters it has been part of for the past 15 years. The book is written by Abraham Lustgarten published by  W.W. Norton & Co, NY 2012. If you own a pipeline company or an oil company shares or are skepitcal of the industry, Mr. Lustgarten’s book offers you a variety of insights to look at the companies. In BP’s case, the book focuses on 3 major accidents – the Alaska Pipeline leaks, the Texas City refinery fire and Deepwater Horizon off the Gulf Coast and one of the driving forces behind the incidents was senior management drive to cut cost. Mr. Lustgarten agrues well that the focus of cutting costs caused structural harm to the infrastructure. In the oil industry after a discovery has been made at some point the recovery of oil will decline, however to move the oil from the well to a refinery takes a great deal of pipes or infrastructure. In the first 20 years, little should go wrong with the pipes – they are new. It is the next 20 years and beyond that needs to be worried about. In the case of BP, they cut their maintenance budget of the pipelines and things happened – oil leaked, people were injured and died, money was not spent.

Linking to dividend paying stocks, two of the best companies to own are utilities and oil companies. They have proven to generate dividends and are semi regulated by the government which means they fill a need as expressed by the government. If you own these companies, one method of doing your homework is to be cynical, in the case of BP those that received bonuses were rewarded when they slashed budgets. In your homework focus on how people receive bonuses – is it for cutting costs past the bone? generating revenues? what does management reward? If the company you own has a  great deal of infrastructure – how is being kept up? All utilities report to the government, are the incidents higher or lower?

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

Greg Smith wrote a book called Why I Left Goldman Sachs, Grand Central Publishing, NY, 2012 and if you work in a field with titles of Managing Partners, Vice Presidents and Associates, it is good book to help understand the things you need to do to advance your career, besides doing an excellent job. In the case of Mr. Smith what defined excellence changed over the years essentially from making money and helping clients to making money. Making money and helping clients tries to have a longer term focus for helping clients does not always mean they trade with you (your competition is doing the same thing) but it does mean trying to provide them with ideas and solutions that should work. It also means that the interests of the clients come before the interest of the firm, clients are not just revenue generators. Mr. Smith observed the focus of Goldman and others, became short term profits and the firm’s interest first. Eventually clients saw what was happening and stated we do not trust you, but because of who you are, we still need to deal with you.

Linking to dividend paying stocks, on Wall Street or whatever street you trade on, they love big fee generators. In the case of dividend stocks, there is limited fee after you have purchased the stock. The idea is to sit back, adjust as need be, but as long as the company is paying a dividend with a yield you like, there are no extra fees. If you own shares in a company which has paid a dividend for 50 years, then the stock price will go up and down a bit, all companies have some movements, however you should be able to hold that stock in your portfolio for 10 years or more. You do not have to pay attention to the next latest and hottest craze, it may not matter to you. There are other people trading every second or minute or hour or day, it does not have to be you. Through holding quality stocks which pay a dividend, you have lowered your risk and often are well ahead of the index.

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

Where ever you live there is a crop of your favourite treat to be picked. For many people it is part of the summer or fall, one of the crops which the author enjoys picking is blueberries. Although they grow wild, not far from where the author lives, a wonderful commercial pick your own is to be found. The crop needs the correct conditions which has a drawback of pesky bugs, but the taste is worth it. The farm which we go to is clean, has a very good crop or ease of picking, in the country and the prices have remained the same for the past couple of years. While that is great for us, never quite sure how the owner continues, but he does and those that pick the blueberries are grateful.

Linking to dividend paying stocks, similar to the blueberry which produces its crop in August, the dividend is paid every year or quarter. To pay the dividend the company needs consistent earnings and its products always in demand, blueberries are good for you. There are always factors which could affect the crop – the extreme weather, but this was a good year at least at the farm we picked at. Whatever crop you pick or wish to pick, there are similar weather circumstances but the berries with the morning breakfast is worth it.  Whether the rewards are great tasting food or consistent dividends, the consistency of quality is worth doing.

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

At lunch the author heard a speech about a classic kids story – Dumbo the Elephant. The speaker recently had his first child and started rereading classic kid stories is part of his parenting job. One of the reasons why classic kid stories such as Dumbo the Elephant are classics is the simple but effective message. In case you do not the story, Dumbo was born with big ears, when most elephants have small elephants. Dumbo made friends with the circus mouse when mice and elephants generally do not get along. Dumbo’s ears allowed him to glide or fly when all elephants can not. The message is whatever your abilities are believe in yourself.

Linking to dividend paying stocks, after you have done your homework, believe in yourself that you have made the correct decision. Part of your homework is number of years the stock has been paying dividends? has the company raised the dividend? what is the outlook for the stock without dividends? with dividends? When you reached your conclusion believe in yourself that you have made the correct one.

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

As a sports fan, it is always amazing how after someone wins a championship, the whole town and often the country jumps up and supports them. There are towns where through fundraising it seems everyone has contributed to the success of the champions. However, when someone wins a championship everyone takes credit. The politicians because it means votes or could mean votes show up, some for the first time, others because they actually knew the person or have supported them before they won. Some will show up because it is the thing to do or there is some money to be made or could be money to be made. Everyone seems to have an angle to the winner.

Linking to dividend paying stocks, this is one area it does not matter what your angle or pitch is – collecting dividends is a great thing to do. As the company is profitable, all who are interested in their products or services have contributed and the company shares the wealth by paying dividends. The discipline of the dividends often keep the company from making  expensive mistakes by staying on the correct path to winning years. With dividends everyone is invited to the celebration and you know if the company can not pay, the shareholders will find someone else to back.

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

When I moved into the home where I live the previous owner had planted a hedge and it was never taken out. Every spring it needs a trim to have reasonably clean lines. After the August holiday, it will need a little trim to keep the lines remaining clean. The hedge is of sufficient age and is firmly established which means as the weather rains or the sun shines the hedge will grow and invariably it will need a trim.

Linking to dividend paying stocks, ideally the companies you own make money through throughout the year, whether it rains or shine, profits continue. You just have to collect the dividends along the way. The trim can be linked to ensuring the profits do continue by doing your homework on the company. The stock price will go up and down, but if the company continues to be profitable and can pay its dividend, there is little you have to do but watch the hedge grow

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