Monday, September 29, 2008
Microsoft Corp. (MSFT) has raised their quarterly dividend from $0.11/share to $0.13/share, an increase of 18%. The software giant, whose shares are down about 26% year to date has also announced that they are buying back up to $40 Billion in stock.
Here is a glance at Microsoft's recent dividend activity:
Fiscal 2004 -$3.24 (includes $3/special dividend)
2006 - $0.35
2007 - $0.40
2009 - $0.52 Estimated
Excluding the special dividend paid in 2004, this represents a compounded annual growth rate of the dividend of 16.7%. It is also interesting to note that Microsoft's earnings per share have been on a steady annual growth path since 2002. MSFT now yields about 2%.
Sunday, September 28, 2008
While the $700 Billion bailout is being announced in the U.S., and confidence in most markets jumped off of a cliff months ago; it is important to note that the largest US retail bank near the epicentre of the crisis, Bank of America (BAC) just paid us our $19.68 dividend last Friday. Dividends can remind us sometimes that life goes on despite the bleak news and outlooks.
Also, introducing Dividends Anonymous, finally there's an online refuge for those of us who are addicted to dividends. I've been officially branded a 'dividend addict' over there...
Thursday, September 25, 2008
"Given the recent dramatic developments in the financial markets, we have made some tough decisions to further reduce risk and strengthen our balance sheet while maintaining our dividend,'' added Mr Immelt.
Although all of these decisions by GE to preserve capital seem to have been viewed positively by the market and the rating agencies, I can't help but think that today is a sad day for dividend investors everywhere. One of the largest, most diverse, and most stable dividend growing firms in the world has decided to not raise their dividend for the first time in decades. It will be interesting to see how many companies decide to go this route when faced with the tough financial decisions that the credit crisis has brought.
Tuesday, September 23, 2008
In the course of all that school work, I've pulled a lot of all-nighters, which has required a lot of caffeine to keep me somewhat awake. I've never been able to get into coffee, just too bitter for my sweet tooth (actually, I have about 28 sweet teeth), so Coke was my vice. Lots and lots of Coke.
The thing about Coke is that it is just stupidly destructive to teeth, especially when you're in the lab for 14 hours straight and aren't brushing until you sleep, and you're not doing that, either. Pretty much every tooth from my canines back has a cavity, and the funny thing I learned about cavities from my dentist is that the fillings, particularly when you "chew hard" or grind your teeth like I supposedly do, have a limited lifespan, on the order of about 10 years at which point they usually have to be re drilled and refilled because the enamel starts wearing down around the filling (widening the hole), or the filling itself may crack or become loose. So now I'm in this holding pattern where I have more than 10 fillings that are all on this 10-year cycle, so I'm getting at least one filling redone every year. Needless to say, I spend a lot on dental care -- I usually max out my $500 university dental plan every year, and still end up paying another $500 or so out of my own pocket in co-pays.
To try to ameliorate the situation, I jump on almost every dental care fad there is (I have yet to get a water pick irrigator thing, but I know it's coming). Recently, Crest and Colgate came out with new toothpastes: Crest Pro Health and Colgate Total Advanced Health/Professional Clean. They were more than twice as expensive as the regular version of the toothpaste I usually buy (Colgate Total), so they must be good, right? Well, after I got home from the store (Shoppers Drug Mart, btw) I looked at the active ingredients and the health claims and they were exactly the same. What a scam! I went back to the store and also saw "enamel hardening" toothpaste, which sounded like just what I needed. Turns out this had fluoride as its only active ingredient -- basically, they renamed their basic toothpaste (non-total, non-12-hour-antibacterial, non-tatar-fighting) enamel hardening. I started to wonder if the new Advanced Health tubes were just a marketing gimmick, repackaging the same stuff for a much bigger markup.
To make a long story merely medium-length, I found that there was one very slight difference: the new expensive versions had tiny silica particles in them, basically sand grains to act as abrasives to help clean teeth even more. I'm skeptical first off of how effective that might really be, and secondly on whether that really makes the toothpaste cost twice as much. I was just about to launch into full righteous indignation mode and write to Colgate-Palmolive and P&G expressing my dismay at their deceptive price gouging tactics and how I was going to switch back to Colgate Total when I was hit by the noodly appendage of perspective. Toothpaste, in the grand scheme of things, is an extremely minor expense, especially in light of how much I spend on dental care. In fact, I've gone and bought myself some Colgate Prevident, something I had been avoiding merely because it costs $12/bottle. Prevident, for those who don't know, is a concentrated fluoride toothpaste (1.1% vs the 0.243% in regular toothpaste) that's meant to be used as a before-bed brush-on treatment after you've already brushed your teeth with regular toothpaste. It's really for people like me with particularly horrible mouths; most people don't need that kind of treatment.
So kids, brush and floss those teeth, and do your homework early so you don't stay up all night drinking Coke like it was your job. I don't want to recommend caffeine pills since they always seemed kind of extreme to me, but it might not be such a bad alternative.
Oh, and MG: Sorry, I know you own Procter & Gamble (PG), but I've just always been a Colgate (CL) guy (and Crest doesn't have a Prevident alternative!)
Sunday, September 21, 2008
Hello everyone, I'm Potato, and I'll be taking over a spot here on MG's blog to mix things up on a semi-regular basis. I have my own blog over at www.holypotato.com, but I can't have a cool guest column pun on my own blog, so here I am. Oh, that and I usually write about whatever shiny thing happens to catch my eye at whatever point I feel like writing, which makes it a difficult blog to follow from the reader's point of view. Here, I'll try to avoid politics and travelogues, which admittedly only narrows things down a little.
Even though MG is kind enough to host this guest column, he didn't write it, he (hopefully) didn't edit it, and so he certainly isn't responsible for whatever crazy things I might happen to say, just to clear him when I eventually put my foot in my mouth.
So, I'm a graduate student, which is of course setting off all kinds of alarms now given that this is a personal finance themed blog, and being a grad student is right up there among the dumb life/finance decisions one can make. I'm in science, so it's not as bad as it could be, and having a PhD in biophysics really does give one a leg up in the supervillan application process, so there is some hope post-graduation. My mind reader gizmo* tells me that the question on your minds is: why is a graduate student blogging about personal finance issues? True, for a long time I took a very hands-off and brains-off approach to my money, but even then I had at least some awareness of the importance of budgeting, saving, and investing thanks to the influence of my dad, a CA and financial consultant. However, I've been getting interested, educating myself, and reading more lately, because I've been faced with a challenge. I was a year late finishing my MSc degree, and that taught me something: my scholarships stopped paying my tuition when I took more than the recommended 2 years. Now that I'm on my PhD I want to be ready in case it takes me more than 4 years to finish, since no one I know in my department has finished in 4 years. So I'm saving, but more than that: I don't want to save just to end up broke if my thesis takes a ridiculous amount of time, to graduate in my 30's with nothing to my name but grey hair and a degree, I want to set up some investments that will grow or produce income to cover my tuition without having to eat away at the principle. And that process of reading and educating myself in money matters is what brought me here. Plus, science is kind of hard to write about, and auto magically puts a large part of my audience to sleep (yes, even more so than finance).
* - actually, my mind reader gizmo is a 1.5T magnet that takes up 3 rooms at the hospital. You'd know if I was using it.
Friday, September 19, 2008
Husky Energy (HSE)
Towards the start of the week I thought Canadian oil and gas firm, Husky looked pretty good at around $40. The stock was yielding 5% and oil is likely not going to $60/barrel for a sustained period. Since Monday though, the stock is up over 16%.
General Electric (GE)
What a week for GE! Overall this was the stock I was most attentive to through the past panic-filled week. GE traded as low as $22.16, where it yielded 5.6%. I already have a large position in GE, so I would have been hesitant to add to my position too much anyway. GE is now up 21% off of that low.
Sun Life and Manulife Financial (SLF & MFC)
Both of these insurance/financial firms traded down really low and were interesting to watch. I still really like insurance as an area to invest in, even after AIG's fall.
Let's face it this week was out of control and valuations got ridiculous. Most stocks that I watch on a regular basis were really put on sale. There were exceptions though as several stocks including the following did not get my attention during the last week: Clorox, Procter&Gamble, UPS, J&J, Automatic Data, Pepsico, Colgate, Reitmans, and IGM.
Lots of volatility usually means long term investors can take advantage of some bargains. All of these companies pay growing dividends, so if you can buy them on sale you can enjoy a nice high starting point for a growing pay out on your investment.
Thursday, September 18, 2008
What have I been doing during this massive rout of stocks? Well, just what any responsible, long term dividend investor that is short on funds should be doing. NOTHING. It is beginning to look like we are going through one of those time periods in the market that will separate the strong willed investor from the flighty ones. We often hear and read about long term investing being about ignoring equity valuations and focusing on buying good companies that pay increasing dividends. It is easy to talk about this as being a responsible, sound long term strategy when times are good or even mediocre; whereas when you enter into a period like we are now, it becomes easier to see why the wheat often becomes separated from the chaff. Short term money has no place in a market like this one...
So if stocks are off so much, and I'm focused on the long term, why haven't I been buying?
Well, this one is pretty simple. One of those emergencies, that many of us have dedicated funds for, has cropped up. What we were hoping was as small problem with our gas furnace turned out to be a larger one, and considering the age of the furnace the best decision was to replace it. With my wife being on maternity leave, this was not the most opportune time to replace our home heating source. Here's hoping this sell off goes deeper and last longer than 2008 does, so that I have a chance to buy stocks at some sale prices.
When will this free fall end? Obviously this credit crisis is far worse than most people had anticipated and will likely have some legs as well. In my opinion, I agree with those who have said that this will not end until home prices in the U.S. stop going down. I believe this is the key to repairing most the damage that exists currently, as most of it stemmed from taking risks tied to real estate values. That being said, the catch is that stock markets will stop going down well before it is entirely evident that housing values have stopped declining. Until then, my dividend stream and its potential for mid-long term growth is still in tact, life is good.
Monday, September 15, 2008
Prediction #1 Canadian Financial Stocks Have Bottomed
On April 18, 2008, I declared the bottom on Canadian financial stocks to be March 17, 2008 ($21.50 was the level of XFN, an ETF that tracks these stocks). Well I was wrong on this one as currently the bottom is looking more like it actually occurred on July 15, 2008 ($20.00 on XFN). Or is the bottom yet to come...?
Prediction #2 The Candian Dollar Will Weaken To Levels Well Below $1USD in 2008, & Buying UPS, JNJ, and MO Now Might Be a Good Way To Benefit From This
On November 9, 2007 I posted about this and recommended UPS, JNJ, and MO when the Canadian dollar traded at about $1.06 USD. I was right on this one, as the Loonie now trades at $0.93 USD. If you had bought the stocks here is how you would have fared after currency conversion. These are the currency adjusted returns before any dividends.
Prediction #3 Bank of America Will Not Cut Its Dividend
On November 3, 2007 I used some of my valuable Canadian dollars to buy some Bank of America, claiming that this purchase made a lot of sense as long as the big bank didn't cut its dividend. Well I was right on this one, so far. Bank of America is still paying out the same $0.64/ share that they were at that time, and while they failed to raise the dividend at their usual time of year, they have not cut it, yet....
Sunday, September 14, 2008
If you can't quite make out the photo here, it's actually a Tim Hortons coffee cup. What's so special about this cup is, that printed on the bottom it reads:
"Imagine a job that fits your life"
The massive coffee shop chain is actually using their ubiquitous brown and tan cups to solicit for potential new hires. Most Canadians are very familiar with these cups as Tim Hortons (THI) sells about $6B worth of coffee and donuts each year. That's a lot of double-doubles. These cups are probably the most common piece of litter on Canadian roads, as well as fixtures in vehicle cup holders from Kelowna to Kingston. Not to mention, apparently some of the most valuable advertising space in Canada.
With Alberta's economy zooming along some Tim Hortons outlets in the oil rich province have been forced to close their doors before dinner time due to lack of staff. While the rest of the country may not quite be in the same boat, and not everyone would enjoy working at Tim Hortons, it is nice to know that the coffee chain is so in need of new staff that they're selling their products emblazoned with this help wanted ad.
Saturday, September 13, 2008
A 'record' high net worth!
- Debt/Asset ratio fell to 0.50 (we officially have $1 of assets for every $0.50 of debt)
- Net Worth moved up 6.5%
- Total Assets increased 2.6%
- Total Liabilities decreased 1.0%
- House Value/Total Assets fell to 69.9%
- Non-Registered Portfolio rose 13.9%
Calendar Year to Date Gain/Loss: +14.0%
Well, we sprung back nicely from our last report on July 15, which was ugly and revealed our first net worth decline ever. It just so happens that July 15 was actually a 52 week low for the S&P 500 index, so it's easy to see that the market helped us rebound. Having a greater affect than the market though, was the appreciation of the U.S. dollar. The Loonie was dead even with the Greenback on July 15, and it now sits at $0.94 USD. This gave a serious boost to our non-registered portfolio which is about 35% U.S. equities. I am pleased with our year to date percentage change of 14%, during a year of poor stock markets and reduced employment income.
Nevertheless, it feels good to be headed in the right direction again.
Friday, September 12, 2008
Michael James on Money explores the meaningless term Record Earnings
You heard it here first; Reitmans Eyeing Acquisition, on TMWTFS
Comments & Emails
Also, I've implemented a new format for commenting on posts. Let me know if you like this better than the old style. I think it will be more convenient. As always, I appreciate all the comments and emails I receive daily. Keep them coming!
Thursday, September 11, 2008
United Parcel Service (UPS) - The connection is obvious here. They move stuff around.
Performance since July 11 when oil traded above $147/barrel = +16%
The Clorox Company (CLX) - Resin (oil derivative) is used to make several of their consumer goods including Glad® bags.
Performance since July 11 when oil traded above $147/barrel = +21%
SYSCO Corporation (SYY) - Distribute food products all over North America.
Performance since July 11 when oil traded above $147/barrel = +21%
Performance of the S&P 500 Index during the same period = +0%
Wednesday, September 10, 2008
I've been through a lot as a dividend investor, but yet I've been through nothing. As I mentioned in my previous post, I've been seriously investing in dividend paying companies for about 2 years. It is important to note that this is an incredibly short period of time to be invested in equities. In order to garner the maximum benefit from the risk that you assume when you're invested in equities, I believe you should hold them for a time frame of at least 7 years. Looking at things in this light, I've really been through nothing as a dividend investor. So why do I feel as though I've been through so much? Well there are are likely several reasons for this:
Personally: Investing has required us to postpone spending the thousands of dollars that we've accumulated over the past 2 years. How many times has temptation crept up; and it's not like we don't 'have' the money. I've weeded out a few stocks that I should never have bought in the first place by selling them. Some were sold for gains and some for losses.
The Market: The market has been an ugly place to have your money for the past several quarters. The S&P 500 Index is down about 18% since October of 2007. The credit/housing crisis has dragged on for several quarters and the end is not in sight. I've watched my some of my individual stocks plummet, while others have spiked; some have gone both ways.
It's important to keep perspective through all of this, as a dividend investor, and realize that the journey is very long and is measured in years rather than months, weeks, or days. After all, I've seen many dividend raises and no cuts within my portfolio. When it comes right down to it, dividend growth over the many years is the key to success, and will bring share price growth. Solid companies that raise their dividends regularly and run profitable businesses for the long term will become cash generating machines, and share price growth engines over time. What goes on day to day and week to week is just noise.
Tuesday, September 9, 2008
Here is a glance at Le Chateau's recent dividend history:
2003 - $0.10
2004 - $0.16
2005 - $0.20
2006 - $0.28 + $0.75 (special)
2007 - $0.50
2008 - $0.625
2009 - $0.70 (EST) - assuming no raise in late 2009.
This represents a compound annual growth rate of the dividend of over 38% through 2009. This is not including the special dividend paid in 2007 and assuming no dividend hike in late 2009.
Monday, September 8, 2008
- High oil prices (aside from taxes) are the fault of government.
- Weak economies are the fault of government.
- Shareholders are pure evil and should be placed next to Satan himself on the totem pole. Likewise corporations are sinister and offer no purpose to better the country.
Yes, the economy is the number one issue now that I've been laid off and gasoline is so expensive, let's go out there and fix it!
Friday, September 5, 2008
Be The First To Order in a Restaurant, by Michael James on Money
Telus Calling: Dividend Growth a Reason to Pick Up The Phone, The Globe & Mail
A Breakdown of My Expenses, at Million Dollar Journey
Thursday, September 4, 2008
All summer, the news on television and on the Internet has been focusing on the cost of gas, and relating it to all aspects of car ownership, including insurance. We are told that less driving means cheaper car insurance rates as well as less money spent on fuel, but that even though smaller cars use less gas, they cost more to insure. With conflicting advice, and gas prices that are now going down in much of the country, where should we turn for information? CarInsuranceList.com is an excellent choice.
The primary aim of CarInsuranceList.com is, of course, to sell insurance and the site offers fast free insurance quotes users can request from any page, by clicking a large friendly button. The quote engine is elegant in its simplicity. You plug in some basic information about the type of car you wish to insure, as well as your contact information, and you are matched with insurance companies that serve your area, allowing you to contact them for lower rates, or make comparisons between several insurers.
Insurance quotes are only one part of CarInsuranceList.com's offerings, however. In addition to the quotes, there is a wealth of information related to auto insurance. News stories, updated roughly weekly, highlight financial and legislative changes within the industry, so if, for example, your county begins to enforce a rule that you have to have your insurance card with you to renew your license plates, that information will be on the site. In addition, there longer articles that are also refreshed fairly frequently, that go into detail on insurance-related issues. Recent topics include the use of scooters and bikes in lieu of full-sized autos, as well as pieces on insurance for performance cars and race track insurance. Clearly, this is a site that embraces all aspects of auto insurance, and not just the mainstream products.
Not everyone needs to know which cars are the most fuel efficient, though, or whether or not Allstate will sell auto policies in Florida, but CarInsuranceList.com has their needs covered as well. The static pages of the website provide the basic information every consumer needs to know, like what discounts to ask for, how to save money, and, should they have poor credit or even poorer driving records (or both) how to obtain SR-22 coverage so they can still drive to and from work, even after a DUI conviction.
Let's face it: auto insurance is not the most exciting subject in the world. Nevertheless, it's something every driver needs, and CarInsuranceList.com presents the information in as interesting a 'voice' as possible, while still keeping their site user-friendly, and offering free quotes.
Tuesday, September 2, 2008
Two years ago this month I was 27 years old and I had just opened an online brokerage account with aspirations to build a portfolio for my family's future. I slowly put together a watchlist of stocks and concentrated on saving money and learning as much as I could about stocks and the market. Over time, and as I educated myself, I became naturally attracted to dividend growth investing. The characteristics of dividend growth investing which drew me in are many, and the enthusiastic authors of The DIV-Net will likely cover several of these attributes in detail.
In August of 2006 my dividend portfolio of stocks yielded less than $150/year in income. As the months went by I continued to save money regularly and buy dividend stocks when I felt that they offered good value. Many of the companies I own have raised their dividends several times since I originally bought chunks of them. By August of 2007 my yield had grown to $1,252/year, and today it sits at $2,087/year. Today I continue to view dividends as half of my journey to financial freedom. Dividends are the brushstrokes that I put on today, in creating a masterpiece for the future.
I've been through a lot as a dividend investor, but yet I've been through nothing. I'll write more about what I mean by this in next week's post.
Please visit The DIV-Net to read my follow up post September 3.