You know that deprecating saying that goes around about how the average American spends more time researching the right fridge to buy than studying investing? There’s a corollary to that that should be kept in mind as well: among people who study investing, there is almost no time spent making sure that the paperwork for disbursing the funds (either during life or after it) is done correctly.
The laws regarding the settling of estates, or pretty much anything involving dead people, often have strict rules that look to actual actions rather than intent because the person isn’t around anymore to say what they meant and all that’s left is a swearing contest between adverse parties confident that they know what the deceased individual really wanted.
Per this passage from Yahoo! Finance:
Before Leonard Smith lost his battle with cancer in 2008, he worked with his financial advisors and attorneys
… Read the rest of this article!
If you own a conventional dividend company—let’s go with Colgate-Palmolive as an example—there are three techniques (buybacks, volume growth, and raised prices) to raise profits that principally flow from two sources (the volume growth and raised prices). In other words, if you sell toothpaste, the way you make higher profits is by increasing the amount of toothpaste you sell and/or raising the cost you charge your customers for each tube. If you do at least one of those successfully, you might also engage in a stock repurchase program that destroys some of the ownership units so that the remaining shares can lay a greater claim on profits.
In the case of tobacco stocks, you only have one tool in your arsenal: raising the price per pack of cigarettes. Selling more of the items is not an option, as smoking rates have been declining in the United States since the 1980s. … Read the rest of this article!
I’m going to start ramping up and expanding the frequency of posts for the Patreon subscription service (which you can access by clicking here) by moving to a mid-week and weekend posting schedule. For a while, I have been flummoxed on the best way to increase the amount of content I produce because I only make so many investment decisions per year.
To that end, I am going to add more financial investing philosophy articles, analyses of tempting decisions that should be avoided, and assessments of stock performances for companies that I already own.
In this spirit, I just published an article titled “Understanding How Capital Works” that criticizes the mantra that an investor cannot go broke taking a profit. For a specific example, I point out that investors in Ross Stores could have easily sold in 1989 after the stock tripled in the prior year … Read the rest of this article!
This is a rare topic that I haven’t gotten to address yet explicitly, and I’m glad I now get the chance—I recently heard from a reader who mentioned that she enjoys her job, is quite good at it, is certain of her job security, and does not see the point in investing.
It’s a perfectly fair question, and I’m glad she asked me it.
Here’s how I think about it.
Part of my explanation has to deal with seeking prosperity, and the other part of my explanation has to deal with ensuring survival.
First, let’s talk about prosperity. Because the writer said she worked in retail, I’ll use that as an example. Let’s say that you are the manager of a very small boutique clothing store, and you make $60,000 per year. For all of your hard work, you will get about $5,000 per month (and then you’ll have … Read the rest of this article!
Realty Income is an interesting company for a couple of reasons: the starting yield is usually high, with investors throughout much of its publicly traded life being able to establish a position with an initial yield of at least 5%. The dividend grows each year, which is an unusual characteristic once you leave the tobacco, telecom, and oil industries (although real estate can be a close fourth). And the dividends get paid out monthly, giving you the ability to instantly compound because your dividend income immediately buys new shares every month that then start paying out dividends all of their own.
As you can imagine, those factors combine together to produce pretty amazing results when you choose to reinvest your dividends back into the REIT.
First, let’s look at what Realty Income’s are returns are when you just add up the share price appreciation and the dividends paid out over … Read the rest of this article!