In the days of days of old, when the armies marched into new lands, the first construction was a fort with a moat or areas where the commanders believed the fort would have a competitive advantage over the enemy and would be considered safe. Most of the time it was true, the forts were constructed where the enemy would not go, but sometimes the enemy goes where it is not expected. Think of the Lawrence of Arabia movie – they came across the desert because the other side did not expect them to come across the desert. Companies who consistently make money have solid moats or defences that make it very hard for them not to make money. Although things do change with technology or the companies have to have “bad” management or a combination of other things.

According to data from Morningstar some companies to consider for they have demonstrated advantages Morningstar examined 5 year annualized growth rate of earnings per share; one year total return; and upward revisions by analysts over the past 90 days. The companies are Visa, Comcast, Intuitive Surgical, Home Depot, Express Scripts Holding, Amgen, Starbucks, ebay, Walt Disney, Magellan Midstream Partners, Dun and Bradstreet, Blackrock, Philip Morris International, Brown-Forman, Franklin Resources, ONEOK Partners, Mondelez International, T Rowe Price, Fiserv, and Wal-mart. All of these companies have done well in the past and are continuing to do well.

Linking to dividend producing stocks – each of the above have a vast number of competitors, but they also have a large advantage over their competitors. It can shrink, they are dependent of a variety of expectations in the economy, but if you look at each of them and determine why their model works, you can occasionally check to determine if it is continuing to work. If you are satisfied it is working, then you have the luxury of not doing anything. If the model is not working then you have adjust your holdings.

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

A new movie is being released today – the latest James Bond movie or franchise. The movies over the years have proven to be money generators for the movie industry at large and the owners MGM/Columbia Pictures. This particular movie has the added attraction of being rated a very good movie, some of the other movies had one or two great scenes but not really a very good movie. The franchise will continue for years to come for every good franchise movie has an ending that will lead to the continuing saga. From a financial perspective, there are enough young and older folks who will go to the movie (including the writer) that the revenues from this franchise will ensure more movies are made.

Linking to dividend producing stocks – not every movie released by MGM will do well from a financial point of view, but there are enough including James Bond to ensure the company will continue to generate revenues. This is the key to dividend producing stocks as you do your research what is the reason or the business model for the company to continue to make money. If that reason continues to be a competitive advantage, you investment is good and it will do better than an index fund.

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

The other day, the writer went to a fall fair for agriculture to see the animals, the food, and to celebrate both. At one of the displays, understanding most displays are to encourage you to eat more, was the cheese display. One of the many recipe booklets was different methods to have a grilled cheese sandwich. If you were making a grilled cheese sandwich for a child, you would tend to make it relatively simple – butter the bread, cheese in the middle and cook it. The cheese melts and it is fun to eat (besides it is good for you, even better if you add some fruit). As an adult, there are a thousand choice of cheese, toppings, bread, etc. to enhance the sandwich. Many of them are very good to eat. We tend to forget what is simple is also effective.

Linking to dividend producing stocks – what is simple is effective. If you take a company that has been consistently made money and buy the shares on the expectation the pattern will continue. As an investor, you must decided how does the company consistently make money and will that continue? If you determine the money making will continue, then as a long term investment your work is done and you can enjoy the simple but effective pleasure of receiving dividends for a long time to come.

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

Most ot us have credit cards, life is easier if you have one. If you consistently pay off your credit cards, life is easier, for the credit card interest rate is higher than most investments will earn. Each year the credit card folks give you something new which results in understanding the credit card just that much more difficult. Is a cash back better than rewards? if you accumulate points, what is there end date or when do you have to use them? how many points does it take you to gain a “free” trip? Do the extra features make senses for you? There are many questions that you have answered and resulted in the card(s)  in your wallet.

Linking to dividend producing stocks – since you have answered many of the questions regarding credit cards, a similar process is done with investing in stocks. There is rarely a perfect answer, but it depends on the individual and their circumstances. However, picking dividend stocks, which have consistently increased their dividend rate over the years has proven to be a successful.

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

Posted on November 6, 2012 by Doug

In the United States there is a general vote on Tuesday – besides the Presidential election, there are many other votes for office and many states have special votes. If you are a citizen, you should vote. If for no other reason, November 11 is coming forth and we remember those who lost lives in part to allow people to vote.If you are near a mythical average voter, you will likely have a variety of different views on subjects which makes it good, the polls indicate the presidential vote is close. Your vote is needed.

One of the many advantages of dividend producing stocks is you can vote for management or even against them if you wish. Voting is something you do on a regular basis. It is easier to vote for shares than it is for politicians. If you vote you shares you can vote over the phone, the computer, mail in your vote, attend the meeting or vote by proxy. If you vote for politicians, most places you have to do it in person. (The writer has never understood why it is easier to vote for shares than voting for people who likely have a bigger influence in your lives, it is after all voting.) Anyways voting is important, if you vote about a company’s management and you are eligible to vote, you should vote.

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

Recently the writer read the book Outperform – Inside the Investment Strategy of Billion Dollar Endowments by John Baschab and Jon Piot, John Wiley & Sons Inc, 2010. The book examines what lessons can be learnt from the people who manage the funds at the larger educational institutions.

One of the topics discussed was cash. The book is about endowments funds which have very specific methods of operations as opposed to individuals. Part of the operations is a liquidity notion, ensuring their portfolios generate part of the operating budgets of the institution. How do you look at cash? If you are a dividend stock holder, the stocks generate cash either to be reinvested or to take advantage to buy more dividend stocks or for other purposes. For many investors cash is not consider part of the asset allocation method, but if a downturn hits or money is needed what would be sold first? Not considering cash or equivalents is doing a disservice to the the portfolio.

In an ideal world you should have 18 months of operation in cash or liquid cash equivalents. Liquid means if you were to sell to generate cash what investments would you sell and not necessarily at a loss? In a high degree of portfolios, the method to make as much money as possible is to use leverage, if you are correct, you have done very well; if not, cash needs to be raised. Do you have a strategy for cash? If you own bonds and dividend paying stocks which have paid dividends for a number of years, you can project income into your portfolio. Cash needs to be part of the asset allocation model.

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

Recently the writer read the book Outperform – Inside the Investment Strategy of Billion Dollar Endowments by John Baschab and Jon Piot, John Wiley & Sons Inc, 2010. The book examines what lessons can be learnt from the people who manage the funds at the larger educational institutions.

Educational institutions by their nature will have professionals both internally and externally evaluating their portfolios. If you are not doing investments as part of your daily work, then remember the rules of keeping it simple. Simple in terms of fees, in terms of what you think you own and what you do own, simple in terms of the strategies you use, simple in terms of your time frames and simple in knowing why you own what you do. Some of these simple rules are hard to do when good sales people call you. However since you control the money, take your time to keep it simple. By investing in dividend stocks, you have shown you do have patience. if you do nothing when you own good dividend paying stocks that have raised their dividends on an annual basis, you have done good. Remember you are an individuals and individuals have the opportunity of flexibility.

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

Recently the writer read the book Outperform – Inside the Investment Strategy of Billion Dollar Endowments by John Baschab and Jon Piot, John Wiley & Sons Inc, 2010. The book examines what lessons can be learnt from the people who manage the funds at the larger educational institutions.

Many of the institutions use a macro approach with emphasis on emerging trends. If you regularly read or listen to the news, you should be able to identify the emerging trends. The secret is how do you profit from knowing about the trends? The are many strategies you can use but an easy one is to park the money you were considering investing in the trend into an ETF or Exchange Traded Fund that is related to the trend.. ETFs track an index and now there are many to choose from. There are two good reasons for this strategy – one the fees are low and two as time goes by you do more research into how to play the area, you can determine what kind of returns you are expecting to make. For many institutions this process takes months before they determine which investment councillor to use. The two elements to learn from university endowments are keep your investment fees as low as possible and two take your time before you make a decision and once you do monitor the results.

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