Coca-Cola Stock: Those Reinvested Dividends

Recently, people are starting to re-awaken to the fact that Coca-Cola is a business that earns 28.2% net profit margins, controls 3.5% of the entire world’s liquid supply, has the most vast distribution network of any manufacturer in the entire world, and has probably the most valuable intellectual property ever invented on its Coca-Cola assortment of brands that have truly global recognition.

The stock, which had traded in the $40s per share more or less since 2012, is starting to show that smaller packaging with higher unit costs and a ruthless focus on automation (that is largely underreported in the financial media) is driving a return to 7-9% earnings per share growth. With a dividend yield still north of 3%, it is now positioned for 10% to 12% returns over a multi-decade period.

That is especially true if you reinvest.

Maybe it all feels the same to investors who look … Read the rest of this article!

The Best Investors Spend Their Lives Asking Why, Why, Why

I just finished reading this thread on The Bogleheads Forum (a popular place where index investors hang out and philosophize about personal finance):

The topic at hand isn’t all that important—it was a bunch of guys debating the get-the-party-started question of international allocation within a portfolio—but I wanted to point out an example of the dumbest way to approach personal finance or any other topic: the constant appeal to authority.

When one of the writers asked what percentage of his portfolio should be international stocks, the first reply was this:

“Why not hold 20-30 international instead? Most of the experts seem to suggest this as the ‘going allocation’ for international.”

That’s a terrible, terrible way to think, and it’s a terrible, terrible way to argue. The only way you can improve as a person is if you understand why you are doing something. It doesn’t particularly matter what … Read the rest of this article!

Two Things You Could Have Done In 1989 To Become A Johnson & Johnson Millionaire Today

If you wanted to accumulate $1,000,000 worth of Johnson & Johnson stock over the past twenty-four years, there are two straightforward ways that you could have accomplished it: some variation of lump sum investing or dollar-cost averaging.

(1)    If you wanted to make an investment in Johnson & Johnson stock on August 19th, 1989 that would be worth $1,000,000 today, you would have had to set aside $43,000 in 1989. That would be roughly the equivalent of coming up with almost $100,000 in terms of today’s purchasing power.


(2)    You could have initiated a dollar-cost averaging program. To have $1,000,000 today, you would have had to put $432 into Johnson & Johnson stock every month since 1989. That would have been about $125,000 in nominal dollars, which would be time-consuming to adjust for inflation (setting aside $432 per month in 1989 was really … Read the rest of this article!

Why You Do Not Want To Win On The Game Show “The Price Is Right”

Benjamin Graham’s famous question that all investors should ask themselves before making any purchase decision (On what terms, and at what price?) even applies to the game show “The Price Is Right” as well.

Check out this recent anecdotal article written about contestants from the famous game show:

One of the mainstream appeals of a show like “The Price Is Right” is that it allows financially illiterate people the opportunity to receive a good or service that they could not otherwise afford. Even though it is irrational (and in some ways even perverse), no one wants to see the guy with a fully funded 401(k), a hundred grand in emergency savings, and a taxable portfolio stuffed with blue-chip stocks  take home a $75,000 Jaguar. You want that car to go to the widow raising two children on $40,000 per year because you know that if they do not win … Read the rest of this article!

Kimberly-Clark Stock Is Finally Fairly Priced

There are about a dozen large-cap publicly traded businesses that I have wanted to cover in depth, but have perpetually declined to do so because I wanted to wait for an opportunity for the stock price to be fair (or better). Kimberly-Clark has now reached such a price point at $104 per share.

On the consumer side, Kimberly-Clark is most famous for being the diaper maker that is responsible for Huggies, Pull-Ups, GoodNites, Kotex, Lightdays, Depend, Poise, and Little Swimmers as well as tissue brands such as Kleenex and Viva (Kleenex is one of those brands that has proven so successful that people don’t customarily ask for a tissue but rather say ‘Gimme a Kleenex.’”

These brands, as you might expect, are stodgy and recession-resistant. It doesn’t matter what the economy throws at you; you’re going to pay an extra $0.40 for Kleenex rather than the generic tissue.

My problem … Read the rest of this article!