Three Life-Changing Investment Lessons From Conoco Phillips

Over at Seeking Alpha, I wrote an article about what I expected to see from Conoco Phillip’s dividend policy over the next five years. My argument in a nutshell was this: Conoco chose to keep its payout ratio at the $2.64 mark after it spun off Phillips 66 to its shareholders, and this effectively amounted to a dividend hike that took the dividend payout ratio from the 30% range to the 45% range. Going forward, Conoco will either have to: give shareholders lower dividend increases for a bit during the good years so its payout ratio can get to a more manageable level, or freeze the dividend during the next downturn in … Read the rest of this article!

The Only Life-Changing Insight On Bond Investments I’ve Ever Had

I was recently reading through some of the financial statements of Altria, the tobacco company that is either a cause of death or wealth depending on whether you created a relationship with it as a customer or stockowner, and was struck by how the management has chosen to structure the business over the years: (1) first, it is loaded up to its gills in debt, carrying $14 billion in debt on the balance sheet which demands $1+ billion interest payments, (2) it keeps almost no inventory on hand, as the tobacco produced is quickly sent out to suppliers almost instantly, (3) and lastly, it dang near leases everything out, principally through Philip Morris … Read the rest of this article!

What You Can Learn From Finance Writer Rocco Pendola

When I first began writing finance articles at Seeking Alpha, I was immediately drawn to a contributor named Rocco Pendola. Aside from the fact that he has the right taste in music (like me, he’s a Springsteen guy), I quickly became aware of the fact that no one was able to generate tons of tons of comments on their articles quite like Rocco could. He was Seeking Alpha’s “it” writer, and whatever he chose to write about, a crowd soon gathered.

Fortunately for me, when I first started writing, Rocco reached out to me and regularly offered advice on how to deal with the tumultuous waves of “being out there” as they … Read the rest of this article!

A 5% Junk Bond Bubble: What Could Possibly Go Wrong?

In rare situations, it actually is better to sell off the stock of companies you own rather than try and live off the income. For those of you who pay attention to market history, you know that we are living in one of the worst times of high-yield American bonds with junk status that we have ever witnessed.

Right now, the junk bond yield of something like the Bank of America Merrill Lynch Index is at 5.002%. For a quick refresher on the topic: last year, the yields of junk bond indices fell below 5% for the first time in American history, and we are flirting with that mark again this year. My … Read the rest of this article!

Walgreens Stock: Tobacco, Drugs, and Wealth

I was not surprised to see the news earlier this year that Walgreens was resisting calls that it refrain from selling tobacco products at its 14,800 drug stores across the world. As a result, many market commentators have compared Walgreens’ stock unfavorably to CVS, which stopped selling cigarettes during a phase-out program over the past three years on the basis that being a health-store was morally incompatible with selling a product that causes cancer and other severe health ailments.

The reason why Walgreens has held off on dropping cigarettes is because cigarettes are a much larger portion of their overall revenue pie than it ever was at CVS. At CVS, tobacco sales were … Read the rest of this article!