In 2008, someone who found themselves purchasing stock in Visa during its IPO year could have peered into the annual report and learned that each share represented $2.25 in profit. Not bad. Fast forward six years. Now, Visa is making $2.20 in profit per share every ninety days. Its quarterly profit now equals its annual profit from just six years ago. This is why it’s important to be broader than Benjamin Graham when it comes to stock selection—every now and then, you have to look to expected future cash flows to make an investment that can change your life. It’s a hint straight out of Charlie Munger’s playbook: you find a company that thoroughly dominates the United States, and then you hold on for the ride while it replicates its business model across the other 200+ countries in the world. It worked with Coca-Cola. It worked with Colgate-Palmolive. It worked … Read the rest of this article!
I’ve never written up a profile of him, but one of these days, I’m going to get around to doing a full fledged admiration piece on the career of Tom Lewis who is best known for running the real estate investment trust Realty Income. Who knows, maybe I’ll try and see if I can track him down or leave a message with his secretary just to say, “Hey man, I don’t want anything from you. I don’t want to hassle you for any of your time. I just want to say I studied your career, and it was good.” I could see great businessmen in retirement appreciating something like that.
For those of you who have owned shares of Realty Income, you already know what it does: it pays out a dividend every month, and it went up every year Lewis was at the helm (and has something like a … Read the rest of this article!
Back when I started writing for Seeking Alpha in 2011, I noted the obvious that everyone else in the stock commentary blogosphere knows: Coca-Cola is a damn good company to own for long periods of time.
I think though, it’s entirely possible that it gets written about so much that people put up blinders to the notion of accumulating Coca-Cola stock in their portfolios now. That’s a shame, because the company is continuing to create wealth, but in a way that doesn’t necessarily make you feel as if you are the owner of a life-changing asset in the moment.
But yet, the figures continue to trickle upward: at the time I started writing about personal finance stuff, Coca-Cola was paying out $0.235 per quarter to shareholders (I’m adjusting the figures to represent the 2012 split). By 2012, that quarterly figure grew to $0.255 per share. Then, in 2013, the payout … Read the rest of this article!
It’s on my to-do list over at Seeking Alpha, but I really need to get around to writing a full fleshed article on AT&T sooner rather than later. I haven’t touched on it much in my three years of writing because the company does have a lot of debt ($79.8 billion worth) and while the debt load is not something that would ever cause AT&T to go bankrupt, it is something that puts a drag on AT&T’s ability to grow earnings per share. You can see this yourself by noticing that AT&T’s ten-year earnings per share growth rate is 1.5%.
However, there is a countervailing force at play that is important to take into account: AT&T tends to offer a dividend yield north of 5% that is also simultaneously growing. That combination is very useful for spitting out new shares for someone who is choosing to reinvest their dividends. … Read the rest of this article!
In 1907, Royal Dutch Petroleum merged with Shell Transport & Trading to create a counterweight that could hold its own against John Rockefeller’s growing Standard Oil in the United States that was scaring the bejesus out of European businessmen because Rockefeller possessed an unbridled ambition and cunning ruthlessness to lower the price of kerosene and gasoline by 80% by underselling competitors with lower prices and engaging in transportation rebates that Standard Oil executives went to great lengths to keep secret.
At a time when gasoline and kerosene executives were respecting each other’s turfs and collecting nice profits for themselves so that they could go about life with nice houses, kids in the best schools, and generous philanthropic records, Rockefeller threatened the “everybody wins” business model that existed if you worked in upper management or above at an American or European energy or trading company. Rockefeller had a secret ambition that … Read the rest of this article!