The Conservative Income Investor | Welcome To The Financial Home Of Tim McAleenan Jr.

Royal Dutch Shell: When Not To Worry About Dividend Cuts

July 9, 2014 by Uncategorized No Comments

In 1907, Royal Dutch Petroleum merged with Shell Transport & Trading to create a counterweight that could hold its own against John Rockefeller’s growing Standard Oil in the United States that was scaring the bejesus out of European businessmen because Rockefeller possessed an unbridled ambition and cunning ruthlessness to lower the price of kerosene and gasoline by 80% by underselling competitors with lower prices and engaging in transportation rebates that Standard Oil executives went to great lengths to keep secret. At a time when gasoline and kerosene executives were respecting […]

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The $50,000 Trust Fund

July 7, 2014 by Uncategorized No Comments

There are going to be some kids, somewhere, born in 2042 that are going to have a great head start in life by getting a free education because of the very intelligent decisions of a man and his wife in 2014. A reader of this site who told me has been visiting the site since I started it last May told me that he had finally gotten around to putting aside a decent-sized cash egg that he intends to use as an education fund for his grandchildren (at present, he […]

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Fortunes Are Built By Being Exceptional In One Of Three Ways

July 4, 2014 by Uncategorized 1 Comment

Halleluiah! Break out the tambourines and shake them. Break out the fireworks and make sure you don’t shake them. On the day dedicated to celebrating American exceptionalism, I wanted to point out one of the greatest truths that is necessary for building long-term wealth: You must be exceptional in one of three ways. Way #1: You possess the ability to identify and purchase an exceptional company that is growing rapidly. It took $8,500 in 1992 to create over $1 million worth of Starbucks stock today. Once it became apparent that […]

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The “Follow Your Passion” Career Advice

July 2, 2014 by Uncategorized No Comments

From what I can tell, there are two types of parents out there when it comes to advising and strategizing with their kids when it comes to selecting a major in college and finding something to do with your life after that. First, you have the “follow your passion” camp. What this camp gets right is that what you do in class, and what you do for a living, will occupy half of conscious life. It becomes as much who you are as what you do in those eight hours […]

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Upcoming Changes To The Blog

June 24, 2014 by Uncategorized No Comments

Hi All. I wanted to give everyone a quick update about the future plans for the site. Here’s the dilemma I’ve been needing to solve for awhile: How can I avoid those inevitable two to three month disappearances that have been the result of real life getting busy and preventing me from updating the site? I’ve finally come up with a solution that should be manageable over the long term: I’ll be moving to a regular posting schedule so that the site gets updated with a new article on Mondays, Wednesdays, and […]

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No, You Should Not Sell Your Website

June 20, 2014 by Uncategorized No Comments

This is probably the most important topic that I’ve yet to ever discuss in any of my financial writings: 100% profit growth does not lead to the same results for every type of business. Let me give an example: Let’s say that over a century ago, you were Mr. Pemberton, and you started Coca-Cola. When you were growing your soda business, you were doing a magnificent thing because you were the owner of a business that could be capitalized at thirty, forty, fifty times profits. Every time you doubled your […]

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The Vanguard Equity Income Fund: A Delightful Lifelong Holding

June 20, 2014 by Uncategorized No Comments

Reader “Matt” from this site recently pointed out one of his favorite investments to me: The Vanguard Equity Income Fund, which has an expense ratio at 0.30% and has the stated purpose of owning common stocks that either offer a starting dividend yield above the S&P 500 average or possesses a dividend growth rate over the S&P 500 average. The Fund consists of 159 stocks that have the following blended characteristics: A P/E ratio of 16.7, a return on equity figure of 19.8%, a collection of companies that are growing […]

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Bank of America Stock And Gold Speculation

June 20, 2014 by Uncategorized No Comments

Two thoughts for the day: Number 1. Here’s the problem with contrarian investing: even if you read the books and agree with the abstract notions of doing things like “buying fifty-cent dollars”, it’s hard to actually execute on that in real time. If someone wants to engage in value investing with the big ole’ American stocks, you’d find yourself working towards Citigroup and Bank of America, two companies that will eventually merit textbook entries on wealth destruction when college students in 2045 read about corporate (mis)management at America’s leading financial […]

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Three Life-Changing Investment Lessons From Conoco Phillips

June 17, 2014 by Uncategorized 1 Comment

Over at Seeking Alpha, I wrote an article about what I expected to see from Conoco Phillip’s dividend policy over the next five years. My argument in a nutshell was this: Conoco chose to keep its payout ratio at the $2.64 mark after it spun off Phillips 66 to its shareholders, and this effectively amounted to a dividend hike that took the dividend payout ratio from the 30% range to the 45% range. Going forward, Conoco will either have to: give shareholders lower dividend increases for a bit during the […]

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The Only Life-Changing Insight On Bond Investments I’ve Ever Had

June 16, 2014 by Uncategorized No Comments

I was recently reading through some of the financial statements of Altria, the tobacco company that is either a cause of death or wealth depending on whether you created a relationship with it as a customer or stockowner, and was struck by how the management has chosen to structure the business over the years: (1) first, it is loaded up to its gills in debt, carrying $14 billion in debt on the balance sheet which demands $1+ billion interest payments, (2) it keeps almost no inventory on hand, as the […]

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