The Rewards of Truly Patient Dividend Investing

I love this chart.


It shows what happens if you had purchased and reinvested dividends in McDonald’s stock over the past two decades. For most of McDonald’s history, the initial dividend yield was terrible. As you can see in this picture, someone who purchased McDonald’s twenty years ago had to settle for an initial dividend yield of 0.9%. Understandably, a lot of income investors don’t get excited by that.

I mean that: it is understandable. If income is your game, you don’t want to set aside $10,000 to receive what amounts to a little over $8 per month in immediate income. That keeps your car washed for the year.

But yet, there is a subset of companies: IBM, Becton Dickinson, Disney, and Visa, to name a few, that automatically get written off by investors because they do not offer a promising initial dividend yield. Their appeal, though, is how fast … Read the rest of this article!

Ray Kroc and the Ford Edsel

On November 19, 1956, Ford Motor Company announces to the Detroit automotive press that it was launching a new car brand, the Ford Edsel, that would be available for the 1958 model year. The company spent $250 million on marketing the car, which had cutting edge features like seat belts, children’s locks, a rolling-dome speedometer, and warning lights for low oil and engine overheating. It had a funky design that looked like the GM Lasalle and was billed as the “car of the future.”

The product was so overhyped that it led to inevitable disappointment upon its market launch. It was discontinued within three years, and only 2,846 Ford Edsels were manufactured in 1960. Ford stock fell from $47 per share to $28 per share between 1958 and 1960. If it weren’t for New Coke, it would probably be regarded as the worst business launch of the 20th century. It … Read the rest of this article!