If you are familiar with some of my writings, you have probably encountered my use of the phrase “high-quality dividend stock” to describe the kind of company worth buying and tucking away in your portfolio for decades to come.
Even though I like the phrase a lot, it is one of those descriptive terms that has fallen victim to overkill and probably cause eyes to glaze over when the word is used on a repetitive basis. That’s why I wanted to scribble down a quick post to state the obvious—what exactly I mean when I talk about high-quality assets, and why I think they make great investments for you on your life’s financial journey.
How can I tell if an asset is high-quality?
I generally look for one of three character traits to tip me off:
(1) The company has brand equity—customers flock to a certain product even if it … Read the rest of this article!
Although it does not receive much coverage, healthcare company Davita has quietly become one of Berkshire Hathaway’s fifteen largest holdings. Davita is a $12 billion company, and Berkshire owns 19.2% of the stock, which carries a present value of $2.3 billion. Since becoming publicly traded in 1995, Davita has compounded at a rate of 13.2% annualized, turning every dollar invested in the stock into just shy of $17 over this time frame.
What I like about the business is the simplicity and necessity of its business model. It provides dialysis services and aids in other treatments for kidney failure at an average rate of $350 per treatment, approximately 7% or $24.50 of which flows through to shareholders as net profits after all expenses including taxes are paid.
Over the past ten years, demand for Davita’s dialysis services have grown by a whopping 18% annualized rate, and Davita’s own internal projections … Read the rest of this article!
I recently profiled a few businesses that have fallen in value while their earnings power has remained intact. Please feel free to subscribe and join me on Patreon.