Dividend Investors’ Obituary Syndrome

About a month ago, Berkshire Hathaway disclosed that it had purchased 26.5 million shares of Kinder Morgan at a price of nearly $400 million, at an average somewhere near $15 per share. In the past month, a combination of rising oil prices and the disclosure of the Berkshire investment has increased the per share market value of the holding to $18.62, for a gain of 24% in the past month.

On January 22nd, I wrote in my article titled “Kinder Morgan Stock at $13” that “[t]here will come a time when the price appreciation and dividends from this low $13 price point will be enormous.” That turned to be one my most e-mailed predictions of the past year, with some readers strongly disagreeing with that analysis and others wanting to know how I could be certain that Kinder Morgan would avoid corporate death through bankruptcy or a corporate … Read the rest of this article!

Colgate-Palmolive: The Super-Compounding Blue-Chip Stock

This past January, Colgate-Palmolive traded at $77.90 per share. Over the course of 2017, this company, perhaps the only one in the world that can be fairly called Big Sodium Fluoride, earned $2.59 per share in profits. On a trailing basis, the stock traded at 30x earnings.

As you well know, this is the type of valuation for a large-cap, blue-chip stock that makes it difficult to sustain significant outperformance because the earnings per share growth and the dividends will be partially offset by a compressing P/E ratio that will act as a limiting factor on what the price growth of the stock could otherwise be.

Over the past year, the investing has gotten a bit mum about Colgate-Palmolive as its stock price has declined from $77 to $62.

This catches my attention, especially as someone aware of Colgate’s current business excellence and as someone aware of its distinguished history.Read the rest of this article!