Microsoft Stock: I Wouldn’t Sell

Between 2003 through 2013, Microsoft stock traded in the $20s. The company’s stock price performance history is one of the most illustrative examples of how stock price performance and underlying business performance can differ dramatically. Even though the price of the stock did not increase during this ten-year period, the profits per share climbed from $0.97 to $2.65 per share. Profits were tripling while the stock was stagnating, which provided another example that we cannot control the “when” part of stock price movements but should be satisfied that we have performed our task when we have identified and purchased shares in great businesses whose profits are growing.

Since 2013, profits have continued to climb, going from $2.65 in 2013 to an estimated $4.65 per share in 2019. The cash position has swelled to over $131 billion, and the company is expected to grow profits at a clip of 14% annually … Read the rest of this article!

York Water: Stock Predictions Through 2030

York Water has not missed a dividend payment to its shareholders since at least 1819. As of May 7, 2019, the water utility company went on record with its 594th consecutive dividend payment, a quarterly dividend of $0.1733 that was paid to shareholders on June 28, 2019. 

For people who picked up the investing bug, companies like York Water were traditionally great investments because they performed in lockstep with the S&P 500 but were an incredible source of regular income to boot. 

People tend to discount it during periods of peace and prosperity, but an investment is only as good as it will be during the worst economic conditions that it will face during your holding period. If a risk manifests capable of bringing down a business, it doesn’t matter how many years of compounding you receive if you end up multiplying by 0. 

The history of water utility investing … Read the rest of this article!

The Vanguard Equity Income Fund: A Delightful Lifelong Holding

Reader “Matt” from this site recently pointed out one of his favorite investments to me: The Vanguard Equity Income Fund, which has an expense ratio at 0.30% and has the stated purpose of owning common stocks that either offer a starting dividend yield above the S&P 500 average or possesses a dividend growth rate over the S&P 500 average.

The Fund consists of 159 stocks that have the following blended characteristics: A P/E ratio of 16.7, a return on equity figure of 19.8%, a collection of companies that are growing profits at 11.3%, and a turnover rate of 34% (that’s a little bit on the high side for me—I prefer finding those rare funds with turnover rates at 10% or below, but compared to what is out there, this turnover rate is quite good when compared against its peers in the industry that actually have turnover rates above 100% as … Read the rest of this article!