There is a wonderful advertisement of someone enjoying the backyard hammock for the person does not have to worry about their investments. It is a half truth, but we are wish it was a full truth. On the stock exchange there are many companies trying to make money, the reality is most of the exchange do not – they are selling hope. Hope is something we all need, strive for, but it does not always pay the bills. There is a small group of companies who consistently make money and pay dividends, they also exist on hope that the world will not change too much each year. If the world does not change too much, then the companies will make money. In order to pay a dividend, companies have to generate extra cash, some of you may have seen the TV show the Shark Tank and one of the guest Kevin O’Leary talks about “show me the money or cash flow”. If you think similar to Kevin, you will tend to stick to companies that pay dividends. Dividends that come every year and perhaps, just perhaps, you can be lying in the hammock.

The first aspect of passive profitable investing is start with dividend paying companies.

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

It is said, in life there is death and taxes. Hopefully for the readers there is something more – living life, family and earnings.

Taxes is a consideration for every investment, however it should not be the first consideration. If you worry too much about taxes, there are relatively easy methods to shelter your money, but please note some of your taxes pay for the lifestyle which you live, or paying something is good. The question is how much?

That being said, paying too much or paying when there are alternatives, needs to be seriously considered. For example if you bought a Guaranteed Investment Certificate from your bank the interest would be 100% taxable as interest income. If you bought the stock or shares of the bank as it pays dividends – the dividend rate is taxable at 60%. You have saved 40% through the use of the tax system. (In the area where the writer lives these are the rates, over areas can vary) In addition, with dividend stocks, the capital gain is taxed at 50% and less if you lose money for the losses are deducted agianst the capital gains and the losses can be up to 5 years ago. This is the tax system helping owners of shares and dividend paying companies, why not use it?

From a tax perspective, dividends have advantages over interest income, but the it should not be the first consideration for investing. Over the years many of us have put money into investment devices to save taxes, but the investments have turned out to a long term holding on the books as the investments were duds. Words of advice – take taxes into consideration, but if you would not buy the investment without the tax savings, is it worth doing? With Dividend stocks and the quality that is available, the writer is confident you will see the tax system as one more advantage for the Dividend paying shares.

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

If you were to look through the companies listed on the Stock Exchange, you will see many companies. Most do not pay dividends, they are listed on the exchange for growth reasons – the expectation their stock rises because of something they do, lands they own, all sorts of reasons. If you own them, you may get richer faster.
The ones that pay dividends are the ones, I am interested in. Their stock prices do go up and down, but generally not to the degree the stocks that do not pay a dividend. The reason why dividend stockds tend not to go down as much is they pay a dividend or a yield to you. If you own them you will get richer slower.

The companies that pay dividends tend to be market leaders, are in industries where they are either regulated more or in the wonderful world of capitalism (those with less competition), for good reasons. If we take an example of a pipeline company that transports oil. There are a few of them – they pay dividends. As the public sentiment moves towards the environment, the public does not want to see more of these companies for they provide a highly regulated important service. Highly regulated service includes a barrier to entry for others, which means the pipeline companies earn enough money (plus some) to continue to pay dividends into the future.

The point of the above is when you examine dividend stocks, you will see some of the best companies on the exchange and that is a great starting point.

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

Whenever you invest your money, one of the highest priority or most important things to know is when do you exit? When do you sell some or all of your position?

If you are similar to the the vast majority, who invest to make gains, your answer to the question was something like when I make money. But when do you sell part or all of your position? The answer will be the difference between making money and not making money in the world of investing.

If you have no strategy, then you need to have built in feature(s) to ensure a strategy automatically kicks in. With dividend stocks and monthly income funds – the strategy is simple, if a company does not pay or cuts their payments, you automatically know without even thinking, about the long term perspectives of the company, it is time to sell and move on. There will be plenty of signs before the announcement of a dividend cut for it is not good company thinking to raise the dividend and then cut it the next year. But at the minimum, you know what to do and you have a exit strategy and that action will save you money.

There are a great many stories about stocks that rose to great heights in prices, then came down to much lower prices, people owned them on the way up and down, because they had no exit strategy or when to sell. It is easy to get attached to a company story, you need an exit strategy or when do you sell part or all of your holdings? Just remember taking some profits is good.

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

it seems in this world we live in, you have to be connected and react all the time. Sometimes that is a great thing and we can see all the advantages. Sometimes that drains you, because the rest of your life seems to have to connected and interconnected and all you do is react. What if you could pick investments and visit them weekly, monthly or quarterly, but in different ways have an eye on them all the time?

If you owned dividend stocks for example those in the consumer goods sector- ie Wal-mart, Johnson and Johnson, or P&G – all companies paying a dividend for many years. Everytime you went to the grocery store or shopping you can check out your investments. As you go into the store you ask your yourself or those who you are with you about the store and the displays – are they kept up?, what turnover of goods are they doing? do you like the selection? the products? If the answer is yes – the companies are still appealing to you and others similar to you, your research could be over. If the answer is maybe or no, then there are other questions and other things to consider. (the same story can be said about the oil companies, your utility company, etc) If you are changing then perhaps others are changing to and how is the company still making money from you?
This is why, no matter what industry or sector you work in, you can see opportunities and challenges – it is the questions that determines if you do something.

Dividend stocks allow you the ability to take your time. Before a company can pay a dividend, the company needs to have the ability to pay its debts, have money in the bank to carry out its programs and then pay the dividend. Often before the company stops paying a dividend, the signs of trouble can be seen. The above helps you look for them at a seemingly more leisurely pace.

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

When you look at a stock exchange chart index over the years, there is a significant upwards trend. Indicating if you owned the index over the years covered, there would be some bumps along the line, but if you owned stocks over the time period you would have made more money than leaving your money in a GIC or a bank account.

One of the questions to ask is why? The first clue is to look at the stocks which make up the index 50 years ago, 25 years ago, or even 10 years ago. Are they the same? The companies your grandfather grew up with are not the same as you grew up with, fortunately some are, but not all. The names in the stock exchange change – for lots of reasons.

In order to keep things simple, how do you ensure that when changes occur, as they will, you continue to benefit? If you own an index fund, when the stock exchange changes the indexes, the losers are removed. The winners are kept and more winners are placed in the index till the next time. If you own a dividend fund, if a company does not pay a dividend or is threatening not to pay, the manager sells it. They companies get replaced by those that do pay dividends.

Thus a key to successful investing is limiting losses. Losses happen, you can not avoid them. Sometimes losses are good for the tax code allows you to deduct your losses against any capital gains so losses may not be such a bad thing, if you had capital gains. Dividend shares provide an automatic discipline to exit a holding, even one that you have an emotional attachment to.

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

This is a website about the virtues of investing in a relative boring fashion, being comfortable, and making you wealthier.

Why dividend paying stocks?

It works.
Checking your portfolio does not have to be done daily or hourly.
One of the important reasons – there is a guaranteed method – when you sell to limit losses.
In investing in these companies – you are buying some of the best that is to be offered
It is good for taxes – dividends are taxed better than interest income
It is relatively easy to keep track
Your habits reflect the companies in your portfolio
You sleep better at night

What should you do?

Depending on the money you start out with – buy either a Dividend Fund, idivdend fund or buy the individual stocks and if possible use the reinvestment option.
In the long run you will be better off. In addition add a monthly income fund.

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

Many companies will do mergers and acquisitions, there are things to learn

1. The first pitfall is believing that a merger of equals can actually occur.The reality check is one group always benefits, if you believe in equality, there will be inequities along the way and self-destructive behavior.
2. The second pitfall is focusing so intently on strategic fit that you fail to access cultural fit, which is just as important to a merger’s success, if not more so. The cultural fit is this is the way we do things.
3. The third pitfall is entering into a reverse hostage situation, in which the acquirer ends making so many concessions during negotiations that the acquired ends up calling the shots afterwards.
4. The fourth pitfall is integrating too timidly, with good leadership, a merger should be complete within 90 days.
5. The fifth pitfall is the conqueror syndrome, in which the acquiring company marches in and installs its own management everywhere, undermining a reason of the merger – getting an influx of new talent to pick from.
6. The sixth pitfall is paying too much, paying a high premium which can never be recouped in the integration.
7. The seventh pitfall afflicts the acquired company’s people from top to bottom – resistance. In a new merger, new owners will always select people with buy in over resisters brains.

In terms of new products, put your best people in charge. They are good, hungry and passionate in their work and it will result in better results. To do this the President of the company has to talk about the venture and why x person has taken the job and the great expectations the company has for this venture.

Linking to dividend paying stocks, in a company’s cycle when it decides to move to a new level, it will be involved in new products and mergers and acquisitions. There are many good reasons to do them, however bear in mind the pitfalls and maybe you will decide to grow internally first.

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

Strategy is finding the big aha (a smart, realistic, relatively fast way to gain sustainable competitive advantage) and setting a broad direction, putting the right people behind it, and then executing with an unyielding emphasis on continual improvement.

The strategy means making clear-cut choices about how to compete. You cannot be everything to everybody, no matter what the size of your business or how deep your pockets. Pick the product or the service and concentrate on that aspect.

To get to the big aha, there are 5 sets of questions to be answered:

A)    What does the Playing Field Look Like Now

1. Who are the competitors in this business, large, small, new and old?
2. Who has what share, globally and in each market? Where do we fit in?
3. What are the characteristics of this brand? Is in commodity or high value or in between? In is long cycle or short? Where is in on the growth curve? What are the drivers of profitability?
4. What are the strengths and weaknesses of each competitor? How good are their products? How much does each one spend on R&D? How big is each sales force? How performance-driven is each culture?
5. Who are the business’s main customers, and how do they buy?

B)     What the Competition Has Been Up To

1. What has each competitor done in the past year to change the playing field?
2. Has anyone introduced game-changing new products, new technology or a new distribution channel?
3. Are there any new entrants, and what have they been up to in the past year?

C)   What You’ve Been Up To

1. What have you done in the past year to change the competitive playing field?
2. Have you bought a company, introduced a new product, hired a competitor’s key salesperson, or licensed a new technology from a start-up?
3. How you lost any competitive advantages that you once had? for example a great salesperson, a special product, a proprietary technology?

D)   What’s Around the Corner?

1. What scares you most in the year ahead – what one or two things could a competitor do to nail you?
2. What new products or technologies could your competitors launch that might change the game?
3. What M& A deal would knock you off your feet?

E)  What’s Your Winning Move?

1. What change you do to change the playing field – is it an acquisition, a new product, globalization?
2. What can you do to make customers stick to you more than ever before and more than to anyone else?

The above questions ask what are you good at? What is your competitors good at? Why use them instead of you?

The next step is the Right People

Only if important people are assigned the strategy, will it be acted upon, if not the normal will continue. The people must fit the job, the business situation and right strategy.

To win companies do two things very well – they imitate and improve. When you find the best practices the strategy is to adapt them and continually improve on them.

As long as you are not a direct competitor, companies and their people love to share their success stories, all you have to do is ask.  Learn from them, what do they do well which can transform to your company or investments?

In terms of budgeting, Mr. Welch believes it should answer 2 questions:

How can we beat last year’s performance?

What is our competition doing, and how can we beat them?

Through these two questions, discussions will come forth with a growth scenario or an operating plan.

Linking to dividend paying stocks, as investors you are doing this work. Mr. Welch helps formalize the questions, but in the end you are concerned is why is the company you are investing in going to continue to make profits and pay you a dividend. The why includes the competition and what advantages the company has. Your research will help you answer and as you answer the question, more will come. You will look at the people in the company, both senior and next level people and do you expect the company to continue to perform?

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