GlaxoSmithKline Fell 6%, The World Is Ending, Etc.
One of the advantages of holding a stock for a long time and reinvesting the dividends into the same company that paid out the dividends is that you become very receptive to the idea of falling stock prices. In fact, sometimes I think that only affluent or aspiring affluent private investors that are reinvesting the dividends are the only ones who truly appreciate how falling dividends can aid the income production process. I want to use GlaxoSmithKline as an example because they are in the news today. The management has […]
How You Start A Dividend Stock Portfolio
Far and away the most common question I receive through e-mail from readers could be paraphrased as this, “Okay, I’ve finally reached a point in my life where I got a little money set aside, and I want to start putting together a collection of individual dividend stocks. Where should I begin?” Because I do not know the future, there’s no right way to answer that. And plus, there are so many different answers that would to you putting together something that will result in permanent wealth down the road. […]
What If You Bought Visa, Mastercard, and Discover During The Financial Crisis?
Perhaps more than anything else, the theme here on this site is that great things can happen to your financial life if you can separate the headlines and stock prices from the actual business performance of the company, and then methodically strike when an opportunity arrives for you to take advantage of the low prices in the moment. I’m not just interested in this stuff in the abstract; I like to focus on real, specific companies and discuss what it means to be a value investor in real time. Over […]
Mocking Warren Buffett in 1999
I’m currently working on some articles that talk about how intelligent decisions that you are making correctly at the time may not necessarily show up in the stock price for a bit (think IBM growing profits 9% annually while being universally mocked or someone buying Citigroup stock today getting mocked despite the company making $14 billion in profits over the course of 2014). It happens to value investors all the time. They find something that has higher current profits than the stock price might indicate, or profits are on the verge […]
Life Advice: Remove The “Reply All” Button From Your Toolbar
Somehow, I ended up on the mailing list for ABA Journal and receive weekly e-mails of lawyer shenanigans and mistakes that prove costly. Here’s what ABA Journal sent out today: A prosecutor in the Atlanta schools cheating scandal has been suspended for three days without pay after she mistakenly hit “reply all” when commenting about a defendant’s Stage IV breast cancer. Assistant District Attorney Lori Canfield of Fulton County mistakenly sent a two-word comment to dozens of lawyers and others associated with the schools case, report the Daily Report, WABE and the Atlanta Journal-Constitution. […]
Do You Need To Own Canadian Dividend Stocks?
That depends: What do you know about Canadian dividend stocks? Earlier this summer, I wrote an article about how, for the right type of investor, a mortgage REIT like Annaly Capital could be a useful investment if you understand the risk/reward trade-offs and are willing to deal with substantial volatility: in terms of share price, profits generated by the company, and dividends returned to you as the investor. The implicit assumption in all of that is this: you truly understand the business of Annaly Capital. My guess is that for […]
GlaxoSmithKline Hiccups Here And There, But Ultimately Makes You Rich
I’ve spent most of my day studying GlaxoSmithKline, the British version of Johnson & Johnson. I still haven’t finished my study of the company yet, but it looks like one of the few places in the large-cap sphere where you can get a fair shake and high annual income at today’s price in the low $50s. The source of the opportunity is this: it tends to grow its profits at a slower rate than Johnson & Johnson (Johnson & Johnson will probably grow around 8-10% in the next decade, while […]
Exxon Mobil: How You Make Money
At the time of this writing, the shares of the oil giant ExxonMobil trade at around $100 per share. The company pumps out $7.64 in total profits, and pays out $2.52 in dividends. When you buy a stock, there are three ways to turn a profit (again using Exxon as the illustrative example): 1. Valuation. This simply means that the investor community is willing to pay more for each $1 of profit than they were before. This is what has happened to ExxonMobil over the past three months. In the […]
How Many Different Assets Would Have To Go Away To Make Me Fearful About Supporting My Family?
That question, right there, is what diversification really boils down to—a lot of financial planners say things like, you need twenty stocks, or you need thirty stocks, or whatever it may be—but that kind of stuff is just shorthand meant to give a kneejerk response to a Yahoo! or MSN Money audience that they don’t want to actually have a specific, detailed conversation with. When I think about diversification, this is what enters my mind: U.S. bonds, real estate, small-cap stocks, and large American individual stocks. There are other things […]
Want An Investing Idea? Try Visa, Visa, Visa
In 2008, someone who found themselves purchasing stock in Visa during its IPO year could have peered into the annual report and learned that each share represented $2.25 in profit. Not bad. Fast forward six years. Now, Visa is making $2.20 in profit per share every ninety days. Its quarterly profit now equals its annual profit from just six years ago. This is why it’s important to be broader than Benjamin Graham when it comes to stock selection—every now and then, you have to look to expected future cash flows […]