I am excited to announce that I have become a Creator at Patreon where I will provide regular updates concerning available opportunities aimed at helping you and your family build wealth, with a particular emphasis on high income stocks and the very high-quality blue chips that have been the regular subject of articles on The Conservative Income Investor. Other areas of minor emphasis will include case studies in dumb behavior not to emulate, typical investments that have a hidden or not widely-discussed risk, and even articles on convertible stocks which let you collect income upfront and convert into common stock at a certain ratio that can be conducive to an investor that wants income now while leaving the door open to the possibility of large capital gains that can help improve your net worth.
Kraft-Heinz has excellent operating subsidiaries. The Heinz ketchup brand, launched shortly after the American Civil War, has a near monopoly on the American ketchup industry that has been untouched for over two centuries. If it were still a standalone company, it would be one of the top two dozen businesses in the world that you could hold for a 50+ year time frame. Since 2015, it has been merged with Kraft, giving the combined company a towering position in the cheese, ketchup, and grocery store meats categories.
The activist investors Bill Ackman and Dan Loeb are calling for the break-up of United Technologies into three publicly traded companies–the aerospace, the elevator, and the climate-control units.
Ackman offered the following comments to the press: “Other than Berkshire Hathaway, conglomerates have not had a great track record.”
That comment is bizarre because United Technologies, the company he wants to break up, is an example of a conglomerate delivering exceptional returns. It has a forty-year track record of 15% annual compounding, turning every $1 into $340. Put $25,000 into United Technologies back in the day? Boom, $8.5 million today. Even over the past decade, the compounding has occurred at a rate of 8% annualized (while dividends have grown by 10% annualized). Various sources say different things for the dividend history, but it has been growing annually for at least the past three decades.
Back in the 1990s, Pepsi had its hand in every cookie jar. It not only had its beverage lineup led by Pepsi, Diet Pepsi, Mountain Dew, and (before later selling it off) Schweppes, but also had branched out into food as well. In addition to the well-known Frito-Lay acquisition that turned it into a colossal source of snack profits, PepsiCo shareholders also had an entrenched interest in the fast food business, having held full ownership of KFC, Pizza Hut, and Taco Bell.
In September of 1997, Pepsi’s Board of Directors decided that it would spinoff Tricon Global Brands (YUM’s original name) with each Pepsi shareholder receiving 1 share of Tricon for every 10 shares of Pepsi owned.
On June 12, 2018, Johnson & Johnson shareholders will receive a quarterly dividend of $0.90 for each share that they own, for a total annual payout of $3.60 compared to the prior year’s level of $0.84 and $3.36, for a 7.14% dividend hike.
I would imagine no shareholder reading this website can remember owning the stock for a year in which the dividend was not raised. After all, the dividend payment has increased every year since 1963. Now that Johnson & Johnson is a $341 billion company, the dividend growth that continues at a rate of more than double the prevailing inflation rate suggests that the New Brunswick healthcare giant has developed an unusual formula for making you wealthy if you get your name on the ownership of shares and never part with them.