In every economy, there is more than meets the eye. There is the private sector where  larger firms with their brands are well known; people working in the institutional sector such as government and its agencies including educational. As well as host of smaller firms which are slightly below the radar because they offer alternatives to the larger firms. In a separate category is the underground economy which operates in cash. Today the emphasis is on the alternative firms some are better, some are the same. It is often they seem smaller until such time as they grouped together before you realize it is a  big market. An example is the natural health market including yoga and health food stores.

Health is an complex field, we all wish everyone to have good health – eating the food groups, exercise daily and being able to do what you need to do. Everyday and every year, more people have something that years ago did not show up. Maybe it was not tracked, maybe it was called something else, or maybe it is new. As much as the big pharmaceutical companies have and do have a significant role to play, most of us have at more than one  drug or products from the big companies, the best result is something people do naturally. In the health food stores, many of the companies are relatively small and do not have shares in the stock market. Even though the firms are in the alternative market, they have to make a profit or sell product to stay in business, how much seems to be a constant discussion.

Linking to dividend paying stocks, the alternative market is dominated by smaller companies, every once in a while consolidation does come and there are opportunities as the companies grow. As you choose the best for your personal health, use the same principles for your investing. Invest where there is a long term constant return including dividends and you will be financially and physically healthy.

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

For generations upon generations, the very wealthy have bought expensive gifts. Whatever the tile – the Lords, Dukes, Czars, Raj’s, Emperors bought items because they both had the money and the items are truly wonderful. In the example of jewels, they  came from Paris because that is where they were set in beautiful amazing jewellery. The owners of the jewellery stores and fashion houses dealt with anyone who had the money to spend. This statement is true today as it was three hundred years ago as it will be true two hundred years from today. Two hundred years plus ago, the Haitian plantation owners were the biggest customers of the Paris fashion houses. The plantation owners owned slaves and at the time the land was very, very fertile, resulting in great surplus income being produced and spent in the fashion houses of Paris. If you switch you time horizon to now, many middle income people buy a lottery ticket and if they won the large prize, after paying their debts, many fantasy about buying a luxury item or two. We all have our idea of what luxury brand we would like to own – be it cars, jewellery, art or something else. One method to do investment research is look at what countries or where your favourite luxury brand is selling. That should give you ideas of where there are opportunities.

Linking to dividend producing stocks, luxury brands have a timeless appeal for the brand tends to keep its value and often increases over time. The reason is the low production runs or one time designs. There is another story about people trying to fake the luxury brands, but that is a different story, just consider the constant appeal. The brands may not be the best stocks to hold, but if you own dividend shares which produce a constant income over the years, both the income flow and capital appreciation may allow you to buy or rent the luxury item you always wanted.

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

A while back the author read a couple of books about the end of the slave trade and who profited from it? given last month was Black History Month, this is a timely issue.  The trade triangle went from from England to Africa to US and back again. The ships left England empty, picked up people and sold them in the US returning to England with money from the auctions and raw cotton. The cotton was manufactured in the English textile mills and sold around the world. Invariably there were many people involved in the slave trade from ship builders, to the owners of mills that needed the cotton. There was also a significant role for investors. Everyone likes to have a high return on their investment and as long as it is legal, so much the better. In the UK, the investors who bought into the syndications tended to have highest savings or those connected to the titled positions – duke, earl, etc. It was a rare family in the UK Parliament without an interest.  Although there were risks of ship losses, people losses, if and many did return from a successful voyage, the rewards were 50% plus on the investment. When you receive high returns, the reason not to do it can be easily dismissed. Perhaps the people on the ships are treated better and so forth. Pictures of what reality on the ships was really like help to change attitudes.

Eventually, the government of the day decided to change its policies because governments have other than business interests – one reason was war with France. If the UK was out of the slave trade, English goods could be sold as slave trade free, France, was also deep into the slave trade with Latin America, would have higher unemployment and the war would be stopped. In trying to convince the investors, the eventual method was the tried and true one – buy them out or buy the limited partnerships and allow no more. The price of the buy out cost the government 40% of the existing budget and sent the UK into debt for a number of years leading to much lower prices of English bonds. It was at this time, Nathan Rothschild bought English bonds at a heavy discount. The many English lords who received money put their money into something beside the bonds. Eventually, the English economy recovered and as the bond or gilt went back to par, Nathan was worth considerably more money.

Linking to dividend paying stocks, in every industry, cycles come and go and as an investor you need to pay attention when opportunities happen. In the above example, government actions to end the slave trade while worthwhile to the general public, the actions had an devastating affect on the price of bonds for the same public. Government’s have an impact on the economy, their interests are not always aligned with business. Prices will go up and down, however getting paid a dividend or interest always softens the blow, and allows for the transition to more profitable days.

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

One the weekend the writer had the occasion to ride the rails or go for a train ride. While a train ride is good, the profitability of it means the government has to give it a  subsidy. During the ride the passenger train passed a freight train and that is a different outlook for your pocketbook. When North America was being settled, the government of the day quickly realized sailing goods and supplies from one coast to another was not going to keep the country together. The history of both Canada and the United States is the governments were driven to link the country together with the railway. Millions of dollars were raised to do the feat. Eventually the goal was realized and then the profitable operations of the railway had to be considered (it was a good thing much of the railway debt was guaranteed by the government). Very soon every town with thoughts of growth wanted a railway and more government guaranteed dollars went into the railway networks. In the last number of years, the survivors of the shakeout from regular economic activity and stock promotion have lead to what are now considered solid railway lines.

The railway companies long ago gave the passenger side to a quasi-government agency and make the bulk of their money on commodities and moving containers. The railway companies move coal, wheat, oil and a host of other products. If the big three are doing well, then railways are making money. The latest boon for railways is the Bakken oil strikes and moving the oil to market. The shale oil is an area without a good network of oil pipelines, which means the next best thing is railway cars. Until the pipelines are built, railways cars will be transporting oil. Hopefully the oil is being shipped at competitive rates for the Rockerfeller money was built on undercutting the competition and getting large rebates from the railway companies. Expecting the oil is shipped at competitive rates, there are a number of companies to start looking at: Burlington Northern and  Santa Fe Railway, CN, CP, Union Pacific, CSX, Norfolk Southern. As well as the companies that make the oil containers for the railways.

Linking to dividend paying stocks, the big railway companies pay a dividend and as the economy begins to move along, the railways will continue to benefit. If you have a love of railways or just like to see them pass by with long profitable trains, the shares are worth looking into.

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

In North America our society runs on the use of energy and in particular electricity. The wonderful thing about hydro from an investor point of view is after the capital costs of building the project, the cost to maintain the facility is low and the income is high. The water flows, goes over the dam, the water also turns the turbines beside or inside the dam which makes the electricity. The water should turn the turbines for the next 100 years plus. The only things to worry about is too much water or too little water. However given river management systems, there is a high degree of probability there will be enough water flow for the next 100 years. As long as there is enough water the electricity is produced and everyone in an urban setting needs hydro to live. .

Linking to dividend producing stocks, the investor owned utility is a classical case of what dividend buyers are aiming for. In the case of the dam and the turbines, the competition is not building another dam or the utility has a monopoly like conditions. As long as the regional economy is reasonably stable, electricity is needed or there is a demand for the product. There are alternatives – people can use less by conservation but there will be a demand for electricity. Even though the regulators will help keep competition out, the management needs to be watched to keep its costs down. The dividend should be safe even as the economy changes. When companies have similar conditions, those are the type you can invest in and review at your leisure.

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

On many streets through the winter, at least in areas where it snows, the snow ends up piled on the road. During the end of winter as the sun shows itself on a regular basis, the snow begins to melt which is great. However the snow which was piled up on the street has transformed from snow to a layer of ice. The ice becomes a barrier for the melting ice and snow to get to the drains on the street, resulting in puddles or mini lakes. The water either has to build up to a large level to go around the barrier or some ice needs to be chopped away before the water can drop. The issue is how much ice needs to be chopped before the water can drain?

Linking to dividend paying stocks, while achieving the highest rate is wonderful, using the analogy of the ice, there is not that much ice and eventually the puddle will dry. The better solution is not to remove all the ice, but some of it allowing for a stream to drain the puddle and continue to allow the remaining snow to melt on a nature control environment. The warming weather will eventually remove the ice. If the solution for the ice blockages is to make path for a stream, then a reasonable and constant dividend policy can be considered the best choice. While you may be tempted by the highest dividend payout ratio, sometimes it is better in the long run to look to companies with a history of paying dividends and increasing them over the years.

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

When the writer was younger, there were 3 streams in high school to go after graduating – university, college or work. The first choice for many was either work or university with college further down the list. As the economic slowdown has remain in neutral, many people are discovering colleges offer challenging and interesting programs. Reading over an insert about colleges, it seems the bias of colleges further down the list remains. There can be many reasons, one is university graduates tended to become policy makers and their bias is university (there are more grants for universities than colleges)  If you end up with a good paying job, it is not surprising a bias exists. However, people are learning with a college degree, you can end up with a good paying job too, maybe make even more money than those with a university degree.

Linking to dividend paying stocks, we all have biases. In the above case educational bias, we have hometown bias, regional bias, and even our source of income. That is okay, and on many levels it is good thing to have. Wherever you are from, you will be exposed to certain industries more than others, that is good and it is to your advantage that you see opportunities. In business, the balance sheet and income sheet remain the same, wherever you are from, a business needs to make a profit. For this blog, if the stock trades on a market, paying dividends is the next stage and if they are consistent over the years so much the better.

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

Over the years many people have gone to IKEA to purchase furniture and fixtures, making IKEA the world’s number one furniture retailer. Among the extras at the furniture store is a restaurant and play area for the kids. In the last week, the little meatballs that are in the restaurant in the European stores, have tested as pork, beef and horse meat. The stores in non European countries are supplied by a different supplier and are unaffected. However, they are affected because most consumers will not know, they will see the headline of horse meat in the meatballs and automatically believe that their IKEA is affected. The issue for IKEA will be how does it communicate and ensure that horse meat is not part of any of its products? and why was horse meat included in the first place? In the IKEA example, the sale of meatballs is a very small percentage of the business, but when you add the phrase Swedish meatballs and link it to IKEA the Swedish company, the issue does not seem so minor after all, the issue is connected to IKEA’s brand awareness.

Linking to dividend producing companies, while most of the time the concentration will be on growing market share, ensuring high margins, profitability and paying the dividend, it is important to ask how does or how did the company deal with its problems? These days, just about every phone comes with a camera, people use them. Prior to cameras, many issues were dealt with differently, now companies have to deal with the issues openly. When consumers feel the company did them wrong, the camera is used. How companies deal with complaints and problems is an important consideration for investing in a company.

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

There are many wonderful examples of companies whose business has made consumers lives easier. An example is Garmin which specializes in GPS for all kinds of uses. For many generations, many people had only a little sense of direction on their journeys for they did not either read or bring a map. In retrospect that may be part of the more interesting journeys. Then Garmin invented the GPS for your car and a host of other uses. The car use was the biggest category for the company and had the highest profit margins. The company expanded to many other uses and now you can even buy a watch with a GPS. All was good, exciting, profitable and then came the smart phone. . As more and more people have smartphones or they become the standard (cell phone companies make more money from the data then people talking on the phone) the app is downloaded and used. Are revenues the same as before, not surprisingly they are less. Does Garmin still do lots of things with GPS, yes, but changes abound for it and companies like it.

Linking to dividend producing companies, we all get use to receiving services one way, until there is a change and then wonder how we did it before? When there is a change to make life better or easier for consumers, there tends to be an affect on a company or group of companies. Those companies have to adjust, to concentrate on higher margin products or increase the volume on lower margin business to sustain itself. If the company is attuned to the consumer, then the stock has a legitimate opportunity to rebound and continue to be a holding. However if you are changing, then others are also changing, and sometimes it may be better to watch from the sidelines from seemingly more stable companies.

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