In the summers of 2007 and 2008—when talking about oil at $150 per barrel was a real thing—Warren Buffett sunk $7 billion from Berkshire’s Omaha Treasury into Houston’s Conoco Phillips, the third largest American integrated oil company at the time. It was, at the time, the largest amount of money that Warren Buffett had sunk into a publicly traded business. Those large $10+ billion stakes in American Express and Coca-Cola are largely the result of capital appreciation, with Buffett only sinking $1.28 billion into American Express and $1.29 billion into Coca-Cola, respectively. Buffett’s commitment to Wells Fargo ($11.8 billion of Berkshire’s money invested) and to IBM (at least $11.6 billion and counting of … Read the rest of this article!
An upcoming change to the blog: In light of a recent conversation, I finally came to my senses and realized that I need to focus on what the true earnings power of the companies I discuss happen to be rather than focusing on the GAAP numbers which can use pension adjustments, currency headwinds, one-time expenses, and depreciation/growth capital expenditures to massage the numbers that are widely circulated to investors. The problem is this—I want to look at numbers that are as untainted as possible so that I can see what a business is really doing rather than merely discussing the gilded lilly that is presented to investors.
I anticipate that this will make … Read the rest of this article!
This is a guest post analyzing PepsiCo is from Ben Reynolds at Sure Dividend. Sure Dividend is focused on high quality dividend growth stocks suitable for long-term investors.
PepsiCo is one of the most easily recognized companies in the U.S. The company’s flagship Pepsi soda brand can be found in virtually every gas station, corner store, and grocery store in the U.S. In addition to the Pepsi brand, PepsiCo also own the following drink brands: Gatorade, Mountain Dew, Lipton, Tropicana, and 7 Up (among others – more on that later).
In the 1930s, a youngish man named Alfred Cowles III founded the Cowles Commission for Economic Research. One of Mr. Cowles’ first projects involved back-testing stock market performance from 1871 through the Great Depression, paying special attention to the effect of reinvested dividends during this time frame.
This was a purely academic exercise—back then, dividends weren’t something that you reinvested because the technology and affordability didn’t exist for it to make sense. It wasn’t a thing. If you owned $40,000 worth of AT&T, you collected your $800 in the mail every three months and used the dividends to help you support your lifestyle. Wanted to make a house payment and take care of … Read the rest of this article!
Last week, Coca-Cola announced that the quarterly dividend was going to increase from $0.305 per share to $0.33 per share. It is that announcement every February, dating back to 1963, that explains why I find this company so appealing. Truth to be told, as nice as the income increases are, it is really the consistent earnings power represented by that dividend increases that catches my attention.
I want to be sure I separate the roots from the leaves: The real reason that Coca-Cola is such an attractive investment is that there are 500 nonalcoholic beverages across 210 countries earning $0.275 profits on every $1 paid by the customer. You buy a case of … Read the rest of this article!