According to the search engine terms that drive people to this site, one of the most common questions is about whether someone should purchase the common stocks of companies with a high dividend yield. It’s a good question: buying, holding, and reinvesting the dividends from high-yielders like BP and Royal Dutch Shell has been one of the best ways to build long-term wealth over the past twenty, thirty, and forty years, and studies of what happens when dividends are allowed to build on themselves undisturbed for long periods of time is the reason why people like Wharton Professor Jeremy Siegel point out that the old Philip Morris was the absolute best investment you could have made over the course of 1926 to 2006 (among your options that existed in 1926).
But the question is incomplete without considering the company that is paying out the dividends. High-yield dividend investing is only … Read the rest of this article!
Sometimes, I hear from investors that are interested in investing, and don’t mind spending a few years per week thinking about stocks, but don’t necessarily have the time or inclination to elevate that commitment to 20+ hours per week. As a result, they want to perform quick screens of stock ideas without actually having to sift through the entirety of the 15,000 publicly available stocks in existence.
If you are interested in companies that will be paying out dividends for years and years to come, and will build significant wealth over time as well, here’s the quick two-step screen I would perform.
First, you gather a list of companies that have been paying dividends for extraordinarily long times, and then you also making a list of companies that have been growing their companies for very long times.
Charlie Munger’s 2007 commencement address to the Gould School of Law at USC is obviously one of my favorite commencement addresses and I have uploaded the video and the transcript for your review. I’d comment, but Munger speaks for himself and needs no further clarification.
Well no doubt many of you are wondering why the speaker is so old.
Well the answer is obvious: he hasn’t died yet.
And why was the speaker chosen?
Well I don’t know that either. I like to think that the development department had nothing to do with it.
Whatever the reason I think it’s very fitting that I’m sitting here because I see one crowd of faces in the rear not wearing robes, and I know, from having educated an army of descendants, who really deserves a lot of the honors that are being given to the people here upfront. … Read the rest of this article!
McDonalds stock has delivered 14% annual returns dating back to the 1960s. What makes the company so impressive is that not only has it trounced its competitors since that time, but it actually has no fast food peer from the 1960s that is still solvent and publicly traded. Funny enough, the only real competitor that has continued to make money for its owners is White Castle, which is privately held.
Among many advantages for McDonalds is the fact that it is essentially a real estate empire in disguise. Ray Kroc insisted upon buying up centrally located real estate near major roads in town and right off of major highways. This land was purchased at a time when land was cheap in the United States, giving McDonalds a sort of perpetual advantage among the set of customers that spontaneously decide to eat based upon what is nearby and that which is … Read the rest of this article!
In Seth Klarman’s book Margin of Safety, which has become a cult classic due to its excellent wisdom and the fact that Klarman ran a limited edition 5,000 copy print of the book (which regularly sells on Ebay, Amazon, and other sites for north of $1,000), the legendary value investor says:
“The single most crucial factor in trading is developing the appropriate reaction to price fluctuations. Investors must learn to resist fear, the tendency to panic when prices are falling, and greed, the tendency to become overly enthusiastic when prices are rising. One half of trading involves learning how to buy. In my view, investors should usually refrain from purchasing a ‘full position’ (the maximum dollar commitment they intend to make) in a given security all at once. Those who fail to heed this advice may be compelled to watch a subsequent price decline helplessly, with no buying power