I don’t think people realize how difficult it is to deliver annual returns in the 10% range once you reach a certain size. In the case of Wal-Mart, it is almost incomprehensible how huge this company is. In terms of revenue, it generates about $487 billion per year. They sell about $1.3 billion worth of goods every single day. It wouldn’t surprise me if, within the next fifteen years, Wal-Mart comes closing to moving $1 trillion worth of merchandise in a given year. In terms of profits, Wal-Mart makes about $16 billion in a year. That’s a little bit less than in 2012 when Wal-Mart made just shy of $17 billion per year.… Read the rest of this article!
The best argument in favor of the reinvestment of dividends—particularly pertaining to companies that you know will be bigger and stronger ten years from now—is that your money immediately is put to productive use. If you choose to pool dividends together for a separate investment at a later date while sitting on cash, you miss out on the dividends (and price appreciation, if any) that occur before you get a chance to put your cash to use.
The classic Benjamin Graham quote on this topic is this:
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“It is far from certain that the typical investor should regularly hold off buying until low market levels appear, because this may involve a long wait,
In 2002, Otter Tail made $1.79 per share in profits on behalf of its owners. For those of you unfamiliar with the company, it is a small, $1 billion-sized northern electric company with 2,300 employees. It has 130,000 costumers, and provides power to half of Minnesota and a little less than half of North Dakota. It has a small footprint in South Dakota as well. The earnings don’t grow all that much, as the company spends about 13% of its revenues on fuel costs alone. Plus, it has an extensive dividend commitment that prevents the company from retaining profits and growing significantly over the long term.
In fact, profits haven’t grown at all … Read the rest of this article!
Colgate-Palmolive is probably one of my favorite businesses—if someone said I had to make a decision today to only own eight stocks for the rest of my life, and the list could never be changed, it would occupy one of the eight slots (with Nestle, Coca-Cola, PepsiCo, General Electric, Johnson & Johnson, Procter & Gamble, and ExxonMobil occupying the others).
You’re already familiar with its product line—Colgate toothpaste, Hill’s petfood, Irish Spring soap—and the fact that the company has been growing dividends for 50+ years (and, like Procter & Gamble, has been paying dividends in uninterrupted quarters dating back to the 1890s). Not only is it a blue-chip with a long history, but … Read the rest of this article!
Yum Brands. Diageo. Nestle. Wal-Mart. Coca-Cola. If you ever develop the urge to invest in Africa, look to buy stock in those five companies which are currently investing throughout the continent to mixed results, although Nestle is once again proving that it has the business model to make money anywhere.
I was reading through the T. Rowe Price Africa & Middle East Fund (ticker symbol TRAMX), and I was reminded of the statistic that there has never been an African-focused fund open to American retail investors that has beaten the S&P 500 because it is extraordinarily difficult to successfully predict African firms that would serve as suitable long-term investments.
Since its inception in … Read the rest of this article!