What Is The Best Argument Against Blue-Chip Dividend Investing?

I received an interesting private question from a reader recently, asking me what I thought was the best argument against blue-chip dividend investing. I loved that question, and with his permission, I included parts of my answer below.

When you think about owning a diversified basket of high-quality assets for a long period of time, one of the virtues of the strategy is that it is almost fail-proof. Part of me wants to reach out and say, “Yeah, well, maybe during a WWII type of event, the dividend payouts might stop.” I have no idea what will happen during the outbreak of the next war, but here is what I do know: When Germany was streaking across Europe and launching air attacks on the British empire, the highest quality companies in the world continued to make their payouts. General Mills, AT&T, General Electric, Hershey, Colgate-Palmolive, IBM, and the offspring of … Read the rest of this article!

3M Company Stock: Profits Everywhere

I recall the annual report of eBay stock several years when the company still owned Paypal. I was struck by the fact that this not-so-little subsidiary was sitting inside the eBay corporate umbrella growing profits at a rate of 18% annually. Ebay.com was growing at a double-digit 13% rate, and was priced at a low valuation presumably because investors feared that Amazon would steal, rather than complement, eBay’s share of the online buy/sell market.

Then, in July 2015, eBay actually spun off PayPal at a price of $35 per share. Just four years later, the original eBay investors own eBay shares that have increased in value from $22 per share to $36 per share (not including dividends) and also own Paypal shares that have increased in value from $35 to $109 per share. One share of Paypal was issued for one share of Ebay per the terms of the spinoff, … Read the rest of this article!