November 23, 2014

Investing Articles

November Is for Buying More Nestlé Shares

Nestle Dividend History and Trendline 1982 to 2013

It's been a long time since I've talked really about Nestlé SA other than mentioning it in passing last week.  It's on my mind because this morning, I had my parents acquire some more in their personal portfolios, which I intend for them to hold for the remainder of their lives (which should be at least another 30 years, God willing, as they are both in their early-to-mid 50's).  It's not much, just a bit of cash that had built up and needed to be put to use, but it adds to the collection of ow … [Read more...]

For the Second Time This Year, I Added More Shares of McDonald’s to the KRIP

McDonalds National Labor Relations Board

After writing about buying British stocks for the KRIP, particularly Diageo, I thought I should mention that I picked up some more McDonald's shares for that particular portfolio as part of the same set of trades.  The hamburger giant reported a much bigger than expected 30% plunge in earnings as a result of maelstrom of woes that has engulfed the restaurants.  Management had to set aside a big chunk of money for a one-time tax ruling in a foreign country.  Russia is retaliating against the Unite … [Read more...]

The KRIP Has Gone British

Diageo plc Shares KRIP

I've spent the past week reviewing, analyzing, and modestly adjusting the household portfolios (including the KRIP portfolio), as well as the investments under my control for friends and family.  I ended up executing several rounds of buy orders using fresh cash deposits, dividends that had piled up over the past quarter, and sales of positions that had grown to be too large and needed a haircut for risk management and valuation reasons.  My parents, my in-laws, my siblings, Aaron and I ... eve … [Read more...]

Most Dividends Now Come in the Form of Stock Buy Backs

Share Repurchases More Popular Than Cash Dividends

The Economist has a piece called Share Buy-Backs: The Repurchase Revolution.  To help you understand how popular stock repurchase programs have become over the past few decades, and how they have elbowed out traditional dividends as the preferred mechanism to return cash to owners, consider: The companies in the S&P 500 index bought $500 billion of their own shares in 2013, close to the high reached in the bubble year of 2007, and eating up 33 cents of every dollar of cashflow. The greatest … [Read more...]

Taking $20,000 Out of Your 401(k) To Buy a Stock for a Couple of Weeks Is Not The Brightest Idea

Margin of Safety Value Investing with Ben Graham

Since discovering Reddit two years ago, I've played something of an intellectual game.  I created an account and, from one of my first comments, purposely analyze conversations to add commentary that results in me being gifted Reddit gold (which means someone liked the comment so much, they paid $3.99 to gild it).  It's entirely arbitrary but it allows me to practice mental models, try to study different personalities, and do it anonymously during my coffee breaks.  It's also fun to see how I lon … [Read more...]

Economic Reality Isn’t Always Reflected on Your Account Statements

Wal-Mart Dividend Reinvestment Example

There is an account I handle for someone I know that has a very unique mandate.  It holds a handful of stocks, has practically zero turnover, and once a new position is acquired, the dividends must be automatically reinvested into that business, cost-free, until disposition.  The entire portfolio is held within a Roth IRA and this person is still more than 40 years away from retirement.  Even if he or she never contributes another penny, the account balance at present, with average rates of retu … [Read more...]

The Anniversary, Annotating Annual Reports, and Trying to Make Myself Be Productive …

Studying McDonald's annual report

I was hoping to respond back to a few dozen comments to which I have been meaning to reply, as well as post some mail bag questions, but I think I'm going to put that off until this afternoon and, instead, go out to lunch or go see a movie or something.  Today's our 13th anniversary, which hearing out loud makes me feel kinda old.  Of course, we're not - both of us are only 31 - it's just that we were fortunate enough to find each other as teenagers; an occurrence I highly recommend if you are lu … [Read more...]

I Nearly Doubled the General Electric Stake in the KRIP

General Electric Schenectady

Sometimes, it can seem as if we are living in a through-the-looking-glass investment world.  With the Federal Reserve having kept us in a near-zero percent interest rate environment for so long, asset prices are ... quirky ... to say the least.  Couple this with the psychological influence of the Great Recession, where certain types of companies fell out of favor, and you have pricing differentials that make no sense.  Total stock market capitalization measured relative to GNP is too high, ind … [Read more...]

An Update to the KRIP Portfolio: Microsoft vs. McDonald’s

McDonalds Corporation Official Press 50th Anniversary Chicago Restaurant

One of the best risk management techniques I learned from reading Benjamin Graham's works early in my life was that of horizontal risk shifting.  That is, taking similarly priced assets in your portfolio and looking to find other assets with the same or better return profile (after adjusting for deferred tax benefits and switching costs) but much lower risk.  Graham applied this technique constantly in the fixed income sector, seeking to switch to bonds that were better covered by earnings and a … [Read more...]

Yahoo Finance Is Calculating the Dividend Yield Incorrectly on Some Stocks (And a Note on Royal Dutch Shell’s Scrip Dividend Program)

Yahoo Dividend Error

It's happening, again.  The major financial portals are displaying errors, which I still don't see discussed.  Look at the quotation for Royal Dutch Shell Class B.  The per share dividend is $3.44 on a market price of $87.20.  That is a dividend yield of 3.94%.  Yet, the quote page is displaying a yield of 5.30%.  If someone were to try and do a stock screen or buy based on dividend yield without calculating the numbers themselves, they're going to be in for a bad time.  (And even that is techni … [Read more...]

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