One of the things that I find remarkable about investing is that, over long periods of time, the results that you experience tend to mirror the earnings per share growth rate plus dividends of the companies in which you buy business interests.
Ten years is probably the shortest amount of time that we can categorize as “long term”, so let’s take a review:
Since 2004, Colgate-Palmolive has grown earnings per share at 8.5% annually. The dividend is generally somewhere around 2%. And over the past decade, investors have received annual returns thereabouts: 11.03% annually.
In the case of Southern Company, you get about 4% earnings growth and a 5% dividend each year. And, over the past decade, investors have achieved total returns of 9.20% annually.
For Boeing, you got 10% earnings per share growth and a dividend around 2-3% annually. The total returns for investors have been just under 14% … Read the rest of this article!
I enjoy studying the mega-cap companies like ExxonMobil, Johnson & Johnson, and Nestle that have delivered excellent results for shareholders over a multi-decade stretch. Unlike many other companies that are constantly flipping brands, taking on debt here, laying off employees and slashing jobs there, these businesses actually undertake the task of making a business work.
I’m not saying they’ve never done any of the above-mentioned activities, but rather, if you look at a business line like Tylenol under the Johnson & Johnson umbrella, the company had to answer what I call the “then what?” question. Say you load up the company with debt, lay off workers, and engage in other cost-cutting measures, what do you do then to grow the business? The answer is (1) make sure the product is in the best shape it can be delivered in; (2) arrange for its distribution accordingly; and (3) market the product … Read the rest of this article!
California, Illinois, and Alaska now permit divorce courts to consider the “best interest of the pet” (limited to dogs, cats, and a few other animals) when determining which spouse gets the pet after the divorce is finalized. The other 47 states apply a bright-line test of awarding the pet to the spouse that paid for it or adopted it. And in cases where the purchase money comes from, say, a joint checking account, the pet goes to the individual that can show he or she initiated the purchase of the dog, cat, or other pet.
The advantage of bright-line ownership rules is that liability for dog bites is clear and, if there is a divorce, taxpayers aren’t paying for a judge to determine who gets the Old English Sheepdog.
California, Illinois, and Alaska have adopted “best interest” rules that recognize how pets are unique forms of personal property. As one … Read the rest of this article!
On a recent CNBC appearance, Warren Buffett discussed the investment strategy for his will:
“Well, I didn’t lay out my whole will. . . . I did explain, because I laid out what I thought the average person who is not an expert on stocks should do. And my widow will not be an expert on stocks. And I wanna be sure she gets a decent result. She isn’t gonna get a sensational result, you know? And since all my Berkshire shares are going to philanthropy, the question becomes what does she do with the cash that’s left to her? Part of it goes outright, part of it goes to a trustee. But I’ve told the trustee to put 90% of it in an S&P 500 index fund and 10% in short-term governments. And the reason for the 10% in short-term governments is that if there’s a terrible period
… Read the rest of this article!
I was reading this academic study on why alumni cease donating to their alma mater, which is titled “Why Alumni Don’t Give: A Qualitative Study of What Motivates Non-Donors to Higher Education.” It addressed a very intriguing question with implications that extend beyond universities to the business world and human relationships at large: Why does someone stop supporting you? It is an interesting question because nearly all business-related inquiries are related to the pursuit of a new customer rather than the retention of a pre-existing one.
I expected that the most dominant reasons for stopping donations would be that the school engaged in some strategy that a donor disapproved of or that the donor that the school’s endowment was doing just fine (thank you) and didn’t need any additional support.
Instead, the number one reason why donors stopped giving money to their school was because it felt like … Read the rest of this article!