Colgate Palmolive Dividends Make You Rich Without Even Realizing It

To kick off the new year, let’s take a step into the “Way Back Machine.” We won’t get carried away with ourselves and go too far back (long New Year’s Eve night and all that)—only ten years to the January 1st start to 2004.

At that point in time, you were looking to make an investment with $25,000. Maybe you inherited it, maybe it was a bonus, maybe you sold an asset or business, or maybe you put together the money through some good old-fashioned saving.

As you come across some potential investment ideas, you decide to take a hard look at Colgate-Palmolive. Everyone knows how lucrative toothpaste, soap, and other toiletries are. The company slaps brand names on its goods like Ajax, Irish Spring, Hill’s, Soft Soaps, Fab, and of course, Colgate and Palmolive, and it is able to achieve 36.0% returns on total capital because of the … Read the rest of this article!

The Moment Warren Buffett Became Famous

Sometimes, it’s easy to forget about the moments that “make” someone famous. My favorite high school teacher was always quick to remind me that Robert Frost’s iconic poetry like “Fire And Ice”, “Stopping By Woods On A Snowy Evening”, or “The Road Not Taken” weren’t always part of the national consciousness. Even though he had been winning Pulitzer prizes and had become somewhat of a celebrity among eastern college students and academics, he didn’t really become a household name until he spoke at JFK’s inauguration and read “The Gift Outright.”

http://www.youtube.com/watch?v=6i_Ajyek2YA

CNN, even though it had been gradually becoming a regional powerhouse in news coverage, did not gain the #1 spot until a baby fell fifty-five feet into the ground and delivered live coverage that satisfied the public craving for the news story. Walt Disney, who created a media empire that now competes with CNN for eyeballs although the target … Read the rest of this article!

Warren Buffett On Diversification

Reader “sumflows” uploaded this video from Warren Buffett’s speech at Florida that discussed Buffett’s advice on diversification, and the best part about it is that Buffett gives advice based on the particular goals that leads each person to investing in the first place.

http://www.youtube.com/watch?v=wbjPiYE-F4Y&feature=youtu.be

If you are someone that is making $9,000 per month post-tax and is only spending $6,500 of it, and you don’t have a particular desire to spend a lot of time studying individual companies, then it makes a lot of sense to open up an account with Vanguard and funnel the money into the S&P 500 Index Fund each month that barely costs anything in fees (the expense ratio for “VFINX” is 0.17%, meaning you would have to pay $17 each year on every $10,000 you entrust to this S&P 500 Index Fund run by Vanguard).

The first of the two main … Read the rest of this article!

The Original Dow Jones and Forever Investing

Happy New Year! Let’s kick things off right by uncovering a good look at what happened to some of the oldest members of the Dow Jones Index, way back in the 1890s.

The components that were part of the index in the 1890s may sound unfamiliar to some of you: Chicago Gas. American Cotton Oil. Laclede Gas. American Spirits Manufacturing. National Lead. Tennessee Coal & Iron. U.S. Leather. American Sugar.  U.S. Rubber. North American Company. American Tobacco. General Electric.

Having paid many utility bills to Laclede Gas, I’m all too aware that they are still with us. And obviously, we all know that General Electric is still with us. But still, it can be easy to take a look at lists like that and assume that nothing “lasts forever” and you need to constantly churn your portfolio.

The interesting, though, is that you if you take a hard look at … Read the rest of this article!

How Dividend Growth Covers Up Mistakes

Over the past ten years:

Colgate-Palmolive has grown its dividend by 12.5% annually.

Pepsi has grown its dividend by 13.5% annually.

Exxon has grown its dividend by 8.0% annually.

McCormick has grown its dividend by 11.0% annually.

Coca-Cola has grown its dividend by 10.0% annually.

Disney has grown its dividends by 8.0% annually.

Normally, I talk about these facts in the context of building wealth. But dividend growth also serves another useful function: it preserves wealth. When you have ownership interests in businesses that are raising their cash payouts each year, it allows for you to completely screw up with an investment or two and still do all right for yourself.

When you think about building a portfolio of companies that you truly intend to hold for 20+ year increments, the big fear is that something like General Motors is going to slip in there, go bankrupt, and muck things … Read the rest of this article!