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

The Future Of Anheuser-Busch’s Dividend

August 22, 2014 by Uncategorized No Comments

In the past month or so, I’ve become very curious about trying to figure out what Anheuser-Busch’s dividend future might look like. At first, my curiosity was tied to the fact that I’m from St. Louis, and the brewery had been the trademark business of economic pride. You know how people have a tendency to own companies located geographically near them, especially before the 2000s liberated stock data and dividend histories for investors to broaden their scope? Well, if someone in St. Louis had ever bought the local company, on the basis that they could actually see the factories and see people consuming the wide array of alcoholic products every Friday and Saturday night, they would have built significant wealth. The specific numbers on Anheuser-Busch’s history are starting to fade as the result of the Inbev merger so I might need to print out hard copies to save for my […]

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A Good Time To Sell The Low-Quality Stocks That Slithered Into Your Portfolio

August 21, 2014 by Uncategorized No Comments

In 2009, the S&P 500 went up. In 2010, the S&P 500 went up. In 2011, the S&P 500 went up. In 2012, the S&P 500 went up. In 2013, the S&P 500 went up. So far in 2014, the S&P 500 has gone up. I have no idea what will happen the rest of this year, next year, or the year after that, other than to say this: It would be highly unusual for this string of consecutive up years to continue, and the consequence is this: A bunch of bull market years in a row can make it easy for some trash and junk—truly low-quality holdings—to work their way into your portfolio. With the stock market up around 30% in 2013, and gains continuing into 2014, it can be easy for something to work its way into your portfolio that you would never want to own if something […]

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How To Use Income Investing For Index Funds

August 20, 2014 by Uncategorized No Comments

Possibly the most underrated tool in portfolio risk management is this: Take the dividends that you are receiving from a cash cow, high income-generating asset, and then redeploy those dividends into something that is either of a higher quality or promises more future growth. I’ll give an example of how this might work out. Let’s say you greatly enjoy receiving present income, and always want to take actions that have a high probability of increasing your net worth. How would you resolve that conundrum? For this example, I’ll use something like Linn Energy as an example of our income investments. For most of 2014, Linn Energy was paying out a dividend slightly higher than $0.24 each month. The company owns some very high-quality energy assets, however: (1) the company carries a very high amount of debt, and (2) energy assets are especially known for fluctuating. In other words, Linn Energy […]

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The Discussions Concerning Procter & Gamble Miss The Forest For The Trees

August 20, 2014 by Uncategorized No Comments

If you’ve read the headlines about Procter & Gamble’s plans for its future lately, you have probably encountered headlines like “Procter & Gamble Set To Shed 100+ Brands” or other similar expressions aimed at noting a shake-up at P&G. At first glance, it sounds like a lot—Procter & Gamble has 170-180 brands, and plans to get rid of about 100 of them, conjuring up the image that it’s shedding half its portfolio or something that sounds similarly drastic. The thing to keep in mind is this: the brands being sold only amount to $8 billion in sales per year. As a point of reference, Procter & Gamble sells $88 billion worth of household cleaning merchandise per year. We are talking somewhere between 9% and 10% of the company being sold off here, not enough to really change the quality of the company or expectations for future growth. I think the […]

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Altria Investors Continue To Get Rich

One of the truly lucrative opportunities—and you only have to get it right once or twice to permanently change your life—that faced investors in the past five years was the opportunity to buy the incredibly stellar cash-generating asset The Altria Group, Inc. for fire sale prices. A lot of things came together to put Altria on sale in 2009. Obviously, that was the year of the deepest panic selling from the financial crisis, giving you a chance to do well if you bought any company that has survived over these past five years. But you also had the fact that Altria had recently spun-off Philip Morris International and Kraft (which had also split into what is now Kraft and Mondelez), and a lot of investors didn’t know what would be left standing when it was just a domestic cigarette manufacturer (after losing its most lucrative, fast-growth asset in Philip Morris […]

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The Twenty Stock, Twenty Year Investment Plan

August 15, 2014 by Uncategorized 7 Comments

 “Hello Mr. McAleenan….[few paragraphs redacted]…I can’t help but feel that most of your advice is not going to be applicable to a majority of Americans. Getting a large estate is nice if you’re in the 1%, but what’s a realistic plan for the rest of us schlubs?… –Derek” Hey Derek. When dealing with the emotional and seemingly impossible side of compounding/building wealth, I remind myself that it all comes down to three things: the amount of time that you have to invest, the amount that you invest, and the rate of return that you are able to return on what you invest. Those are the three numbers that you must manipulate in order to get what you want from an investment portfolio. If you find yourself in a situation where the variable “amount of money” is going to be relatively scarce, then you have to rely on the other two […]

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A Growth Stock Investing Lesson From Noodles & Company

August 14, 2014 by Uncategorized 2 Comments

Have any of you been checking out the price action in Noodles & Company since it posted its quarterly earnings figure a few days ago? After reporting that each share of the stock earned $0.12 in the second quarter of 2014, and posted revenue figures of $99 million. Sales fell 0.6%, and the general operating margin came in at 20.4%. All in all, the business is growing at somewhere between 11% and 12%, which is a perfectly nice rate of growth for a company worth somewhere between $750 million and $1 billion. Why, then, did the price of the stock fall so significantly? The most recent after-hours trade for the stock came in at exactly $21.00, below the $25.58 figure the stock was trading at before the earnings announcement (for a current 17.9% decline since the earnings announcement). The company earned $0.24 per share last year. Analysts are expecting Noodles […]

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Abbott Labs: Dividend Investing During Humdrum Times

August 14, 2014 by Uncategorized No Comments

Today’s a sad day as I’ve been coming to grips with the fact that I have chosen the wrong topic for my site. I should’ve killed this whole passive income thing and gone into women’s lifestyle blogging. Are any of you aware of the perks in that field? Larissa Faw of Forbes Online wrote a piece about what I’m missing out on: In fact, brand executives and women bloggers say the going rate for a $300 kitchen product is 500 monthly views; an all-expense trip to Hawaii requires at least 20,000 monthly views. Because I was lucky to have some Seeking Alpha readers follow me over when I launched my site, I could have spent the last year building up a tricked-out kitchen and studying for exams on a Hawaiian beach on the dime of corporate advertisers. Why am I writing about Bed, Bath & Beyond’s stock buyback program when […]

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How Warren Buffett’s Cities Service Preferred Investment Can Change Your Life

August 13, 2014 by Uncategorized No Comments

From Alice Schroeder’s biography “Snowball” about Warren Buffett: By the age of twelve, Warren had saved $120. In the spring of 1942, he enlisted his sister Doris as a partner and purchased three shares of Cities Service Preferred. The stock plunged from $38.25 to $27. When the stock recovered to $40, Warren sold, netting a $5 profit for the two siblings. He was, however, shocked to see the stock then continue to rise until it hit $202 per share a short period of time later. Warren realized that if he had held off selling a little bit longer, he and his sister would have netted a profit of almost $500. Alice Schroeder’s note: Warren learned three lessons and would call this episode one of the most important of his life. One lesson was not to overly fixate on what he had paid for a stock. The second was not to […]

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Dividend Growth Investing Right Now In 2014

August 13, 2014 by Uncategorized 5 Comments

In August 2011, I wrote my first financial piece online. Even though I’ve been at it for three years, that has not been enough time to cover a full business cycle. Really, since 2009, the stock market and the economy has been moving in the same direction: up. That leads to all sorts of distorted impressions, complicated by the fact that the constant updates about stocks (which we can sell at a click of a button!) that make it easy for us to rent company ownership positions on a yearly, monthly, or even weekly/daily basis without actually applying anything resembling a long-term framework. For instance, I recently wrote something about The Craft Brew Alliance, which was trading at $11.06 last week when I wrote an article about it on Seeking Alpha. I pointed out some things I liked about the company: it was charging high premiums for its craft beer […]

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