I wanted to provide a list of factors to consider when searching for the best companies that grow their dividends over the long haul. I recommend placing a primary emphasis on per share earnings growth and sales growth, and also examining debt, share count dilution, and payout ratios as part of your analysi
It is not a requirement, but companies that grow their dividends over long periods of time tend to belong to non-cyclical industries that don’t experience many dips in profit.
The pharmaceutical giant Johnson & Johnson has grown its dividend annually since 1963, and has never quit its payout to shareholders at any point in its publicly traded history. What makes this possible? Earnings never collapse to force a dividend cut.
Are you ready for a crazy impressive fact about Johnson & Johnson? In the past thirty-five years, there has only been one year in which Johnson … Read the rest of this article!
Dividend investing for intermediate and serious investors has been the topic of my blog since I started it in 2013. I love the slowness during the last week of the year because it lets you step back and get philosophical about the big picture of what you’re trying to accomplish. As a service to new readers, I thought I would create a seven-step guide to dividend investing to offer as much of my condensed investing philosophy in a short period of time as I can.
Step 1: Determine whether dividend investing best fits your circumstances.
One of the most important things you need to recognize is that wealth gets created by finding the greatest amount of net-of-tax returns. This makes dividend investing a poor fit for high earnings in taxable accounts, particularly those in high-tax states like California. A lawyer in California has no business buying AT&T stock so that … Read the rest of this article!
If you are looking for something that will throw off large amounts of income over the next decade, the possibility of stuffing your IRA with shares of the real estate investment trust W.P. Carey (WPC) seems like one of the smartest decisions you can make to get some passive income flowing. There is also the psychic reward of knowing those cash dividends would require taxation at ordinary income rates if held in a taxable brokerage account but can build up undisturbed if held in an individual retirement account. Theis ability to elide taxation is a reason why I consider attractive REITs to be an ideal retirement holding–a good chunk of the total return comes from cash dividends, and the gusher really opens up when you let the share count increase for years and years.
Right now, W.P. Carey pays out a $3.96 dividend. The payout goes up about half a … Read the rest of this article!
For 99% of human history, you needed to already be rich in order to buy an ownership interest in a prosperous business. Even in old timey England, individual property could not be divided into more than a dozen ownership pieces. If you wanted to make money from a business, you had to possess enough capital to purchase it outright.
The United States did its part to break to break ownership positions into smaller increments by making “share trading” and liquid exchanges a major part of its economic activity. These smaller share increments also had the reciprocal benefit of making it easier for companies to cast a wide net when raising capital that could be used to advance growth at a much faster rate than would be possible if only select financiers could provide the capital.
But still, even with the United States advancing the notion of a highly liquid stock … Read the rest of this article!
An underrated advantage of Berkshire Hathaway is that Warren Buffett is able to buy family-owned companies at a discount to the maximum value that an open bidding for the company would yield. Buffett is able to secure 5% to 20% discounts on fair market value because he is able to guarantee that the legacy and special cultural factors of the business will remain intact after he takes over. Given that founders often infuse part of their identity into their businesses, this maintenance of tradition makes Berkshire more attractive than a cost-cutting private equity fund that will immediately try to wring out more profits to pay down the leverage that is often used to make the acquisition.
When Buffett was in Toronto back in 2008, he explained this advantage as follows: “You can sell your business to Berkshire, and we’ll put it in the Metropolitan Museum. It’ll have a wing all … Read the rest of this article!