The Initial Term In A Qualified Personal Residence Trust

I remember my naïve days when I thought that the only thing a student of the markets needed to figure out was the assets that performed best. If something grows at 15%, it is going to beat something that grows at 11%. Something I completely underestimated in my early analysis of estate management is the role that the tax code plays in shaping returns. This is especially true when trying to figure out the most effective ways to pass on assets to kids and grandkids. This is an area where the *structure* of the holding can have a greater determinative effect on how much wealth is transferred than the actual growth of the underlying holding itself.

The importance about holding structure has been reinforced in my mind as I have studied qualified personal residence trusts, a rare type of irrevocable trust that allows the original owner of a primary home … Read the rest of this article!

Royal Dutch Shell Stock’s Scrip Dividend

There are certain things in finance that seem to happen every generation. The stock market rises and falls. Coca-Cola purchases its bottlers under an increased efficiency theory, and then later spins it off on the theory that it was dragging margins. And Royal Dutch Shell shifts between encouraging its investors to elect for a scrip dividend and then cancelling its special dividend program on the theory that is no longer creates shareholder value.

If you reinvest, it is easy to think that a scrip dividend is indistinguishable from a cash dividend payout. However, this is a tribute to the efficiency of the modern brokerage houses rather than an accurate depiction of investment reality. Scrip dividends have a different effect on shareholders and the finances of an issuing company than a traditional cash dividend, and I discuss these effects below.

How Does A Scrip Dividend Differ From A Cash Dividend?

If … Read the rest of this article!

BP Shares Go Nowhere But The Dividend Keeps Coming

In light of the recent history for BP shares, I understand why investors might be skeptical of this oil giant. The share price has gone nowhere, the dividend is frequently considered a candidate for a cut, and the debt burden is high. However, I wanted to share you with my basis for having a rosier outlook regarding the future for BP stock as well as the role that a potential dividend cut plays in my analysis of BP’s intrinsic value.

BP Share Price History: No Growth Since 1998 Due To Oil Spill

In January of 1998, BP stock traded at $38 per share. That is the same price that exists today. What gives?

The enormous culprit is the deadly Gulf of Mexico oil spill in 2010 which has a full tally cost of $62 billion for BP shareholders. That is extremely high and unlike any … Read the rest of this article!

A Lifetime of Growth From Johnson & Johnson Stock Dividends

Johnson & Johnson stock has grown its dividend by 13% since 1970 and has compounded wealth for JNJ shareholders at a clip of nearly 14% over that same time frame. When you pay attention to any list of excellent long-term income investments—whether the colloquialism of the day is “Dividend King” or “Dividend Aristocrat”—Johnson & Johnson finds itself on every list of blue-chip stocks.

Many of you have already read ad nauseam—perhaps from me!—about the characteristics of this healthcare giant that make it such a superior compounder over the long haul. However, I wanted to take a moment to discuss with you some of the reasons that has made Johnson & Johnson stock such a consistently superior compounder beyond the information that you have regularly encountered.

Why Johnson & Johnson Stock Keeps Growing

Remember our recent discussions about the advantages of using the holding company structure? Well, Johnson & Johnson is … Read the rest of this article!

The Comprehensive Family Trust Fund Guide

If you are thinking about setting up a trust fund for loved ones in your family, and would like a basic overview of the process and issues to think about, I have prepared a comprehensive guide of what I consider to be the main issues associated with establishing a trust fund.

The Mystique Of A Trust Fund Debunked

First of all, when people hear the term trust fund, they attach a certain Rockefellerian mystique to the term. They think of it as some abstract nebulous “legal thing” that allows millions of dollars to build up somewhere.

The mechanical reality of a trust fund is far more mundane than that—it merely refers to any instance in which the control of an asset is separated via a contract between the person who benefits from an asset and the person who now controls the management of the asset. A second requirement is that … Read the rest of this article!