U338129

Smart Investing in the Smart Grid

Stick with EXC folks. Not only do you get the wind energy aspect(take note, if you read the recent reports from EXC they are not projecting a big build out for wind in the near-term) but you get the nuclear as well as the company with the lowest carbon footprint around (cap and trade anyone). All of that signals not only somewhat consistent/reliable returns and cash flow, but a very high likely hood of direct benefit from administrative action to help solve the energy issues in the U.S.

Plus, if you look at their most recent debt maturity profile (phx.corporate-ir.net/E...), you'll notice that the debt they have is spread out all the way through 2039. Additionally, the highest payout they have in any given year appears to come in 2018 at just below $1.4 billion with most years well below that. To me, that's pretty conservative financing for a utility company.

I will also add that I really like the dividends from this. My entry point was low $46 and I've been pleased (those that bought at the $90 range probably have a very different view;)).

Berkshire Hathaway Posts Q3 Results: Book Value at Record High

Ravi,

Your point about the new breed of BRK shareholder post-split is a bit concerning. I'd sure like to know what they plan on doing for the shareholder meetings! The Qwest Center was packed enough this year; I can't imagine how bad it will get when people can buy a share for just over $60.

Any thoughts on intrinsic value based on the new book value they provided? Seems like traditionalists would say it's worth between $120,000 - $160,000.

To add to the BNI discussion, it should be noted that Berkshire will be unloading its other rail holdings. That will provide more cash for a cushion as well as prevent a potential "government overwatch" situation.

Buffett's Aversion to Gold Could Cost Him

Gold is the worst investment you can make other than buying stocks in the auto and airline industries. It doesn't matter if you use the dollar, gold, silver, or fish bones for trading purposes...when you sell a product that people want you will always get a portion of their income for your products. Look at all the fools that invested in gold all these years while Buffett invested in great companies that produce cash flows for Berkshire day after day, month after month, quarter after quarter, year after year, decade after decade. Gold's a joke and the only time people invest in it is when this "fear of the declining dollar" is preached by pundits on TV who aren't nearly as qualified as Buffett (i.e. nowhere near as successful at it) is to discuss proper investing strategies.

Sorry, but I can't walk into a store and offer them gold for my groceries. However, I can walk in there with dollars I earned from owning great companies and get whatever I need. Buffett's point is that he investd in great companies for the long haul because they provide better payback for you than gold ever could/can/will.

I guarantee you that all those that ran to gold during this period will end up a lot worse off than Buffett (and those of use that did the same thing) who focused on buying great businesses at reduced prices.

Will Wal-Mart Growth Plans Move the Stock?

I think the problem with WMT revolves around opportunity costs of owning/buying it right now versus what you can get on the market. Even with the run-up since March (which was way oversold to begin with), there is still value in other great companies that have higher dividend yields and which have roughly the same/steady growth opportunities as WMT.

For instance, I'm still buying KO/PEP on the dips and will continue to do so. It's much easier for KO/PEP to increase earnings over time than it is for WMT. Raise the price of soda $0.01 and the companies both make millions of dollars more per day; that's just sick. Oh, and Pepsico, please buy Pringles from PG. Add that to Frito Lay and you have a pseudo-monopoly in that arena...PEP shareholders can only dream:)

Will Wal-Mart Growth Plans Move the Stock?

No.

Owning Wal-Mart: Taking the Vito Corleone Approach

Wage, not "rage":) Oops!


On Oct 23 03:14 PM U338129 wrote:

> Well, if Obama and his socialist party wish to force WMT to take
> on certain practices then the socialist party will have no choice
> but to force all retailers to do the same to ensure everybody is
> on an equal playing field. So, if they want WMT to have unions then
> all companies (Target, Sears, Best Buy, Costco, etc.) must have unions,
> they must all have the same health care as WMT, and they must pay
> the same rage rates as WMT. This must be forced down the throats
> of not just the large businesses, but the mid and small businesses
> as well. If that happens, WMT will be even more powerful because
> it will be the only one that can handle the overhead.

Owning Wal-Mart: Taking the Vito Corleone Approach

Well, if Obama and his socialist party wish to force WMT to take on certain practices then the socialist party will have no choice but to force all retailers to do the same to ensure everybody is on an equal playing field. So, if they want WMT to have unions then all companies (Target, Sears, Best Buy, Costco, etc.) must have unions, they must all have the same health care as WMT, and they must pay the same rage rates as WMT. This must be forced down the throats of not just the large businesses, but the mid and small businesses as well. If that happens, WMT will be even more powerful because it will be the only one that can handle the overhead.


On Oct 23 02:54 PM cyclingscholar wrote:

> You are forgetting that Walmart is square in the eye of the Anointed
> One, his union and redistributionist hacks, as well as limousine
> liberals who saunter off to Mall of America while telling us to buy
> local.

Owning Wal-Mart: Taking the Vito Corleone Approach

All you can do is continue to buy while the valuations guide you to do so. You see where the growth is, you see what WMT's plan is with the price cuts, and you know the facts about how they continue to produce quarter after quarter. You also know the stock is simply being ignored for now. Seems like a great contrarian move given that everything else worth investing in has already run up (and is too expensive to buy now).

8 Dividend Stocks with Wide Moats

Just to throw a point out there. Take the number of servings of KO products that are served each day around the world (billion) and multiply that by one single penny (i.e. "What if KO raised the price for its products by a mere penny per serving"). That's how simple it is for KO to increase earnings over time. Think of it with that mindset and you will understand the earnings power KO (and PEP) have.

Obviously, those that follow Buffett realize that's not a new mindset when it comes to KO. I heard Buffett say it in a conversation at the University of Florida many years ago (and he's brought it since then as well) and it has stuck. That's why I have/am/will always buy KO/PEP when the valuation is worth it.


On Oct 22 02:40 PM Talib Kweli wrote:

> If you want a name when you lose, invest in these bellwethers whose
> earnings growth is reduced to foreign expansion. Personally, I would
> go with the second or third place firms offering a comparable yield
> in these mature industries. For example, Kimberly Clark instead of
> Proctor; Darden in the place of McDonalds; and Kroger rather than
> Wal-Mart.

8 Dividend Stocks with Wide Moats

No problem. This forum was pretty good.


On Oct 22 06:19 AM richjoy403 wrote:

> Good article, and thanks to U338339 for the thoughtful comments and
> additions of EXC and SYY (I'm warming to EXC).

8 Dividend Stocks with Wide Moats

I highly agree with KO and PEP (as long as you buy them at proper valuations -- like those we saw earlier this year). In fact, they make up the bulk of my portfolio. Because of their products, and the loyalty people have towards them around the world, I would be perfectly content if these were my only two holdings. I will continue to buy them every chance I get as long as they are reasonably priced or better.

JNJ is another favorite of mine. JNJ took advantage of the downturn to make acquisitions that should payoff going forward and further expand the moat. In addition, the company is still sitting on a huge pile of cash. Finally, I feel that it absolutely robbed PFE when it bought out their consumer products division (notice how PFE realized they screwed up and used the economic downturn to acquire WYE to help make up for that void). I don't like Obama's push for socialism so one health care company is enough for me at this time.

I do own PG but I was certainly surprised somewhat by how bad PG did during the recession. Its moat doesn't appear to be as great as once thought. It appears that far too many of its products can be replaced with cheaper alternatives.

I own WMT, but I'm really considering selling my entire stake once it gets to a price level that I'm comfortable parting ways with it. Its dividend doesn't excite me, I disagree with management that it will retain its new customer share base after the recession is over, and it's having to destroy its own profit margin to stay competitive. Having to make such drastic moves against your own profit margins does not scream "protected moat" to me. Simply put, retail is just too tough. WMT is great now, but in retail that can easily change over time. Sears was considered great once and look at it now. WMT is the one stock I own (other than BRK.B) that I really question.

To me, MCD falls in the same camp as WMT. Best house in a bad neighborhood. However, if I were to buy a company in that sector it would be MCD.

Two other companies to consider in terms of a moat would be EXC and SYY (for now). EXC is just a really boring utility company but the dividend is strong and it's relatively tough for new entrants to compete against it. Dividend income from it helps fund purchases in other companies.

SYY has a decent moat in the fact that it's easier for its customers to keep buying from it, and rely on its distribution system, than to look elsewhere. It's distribution system is tough to compete with and customers have come to rely on them for convenience. Whether those relationships will last for 10+ years or more is anyone's guess (you just need to keep on top of the reports).

Dividend Aristocrats: 3 to Watch

That's why it's down $1.295 a share as I respond to you. Rally...right.


On Oct 21 03:41 PM BernankeBeagle wrote:

> up we go. nothing can stop this rally but God himself
>
> good articles: tiny.cc/financenews

Dividend Aristocrats: 3 to Watch

I agree with your % mindset. To me, WMT can hardly be considered a "dividend aristocrat" when it only yields a pathetic 2%. People can talk about WMT growth potential and the use of retained earnings all they want. However, buying KO/PEP/PG/JNJ over the last year would have provided you with 4-3% yields (and still would) and those companies provide roughly the same growth opportunities as WMT does.

I own WMT because I bought it cheap and I consider it a "safe" investment for now (who knows where retail will be 10-20 years from now); but, you'd never hear me say it was a dividend aristocrat. I think the dividend is pathetic given the amount of cash and cash flow WMT has at its disposal. I believe shareholders deserve better (especially after the flat performance we have experienced lately).


On Oct 21 08:38 AM David Van Knapp wrote:

> You are correct to point out that the Dividend Aristocrat list can
> be misleading in that it can contain stocks that have recently cut
> their dividend. S&P only updates the list once per year (in December).
>
>
> Also, the qualifications for making the list include that it must
> be an American company and have a record of at least 25 consecutive
> years of dividend increases. That's why you won't find a foreign
> company such as BP on the list.
>
> The Aristocrat list has no minimum yield requirement, so if you have
> a personal minimum yield requirement, you must research behind the
> list. I require a minimum of 2.5% for stocks with a long track record
> of dividend increases, so XOM (2.3%) and WMT (2.1%) would not meet
> my initial requirements.

10 Dividend Stocks to Buy Now

...and yet the dividend is a mere 2%. If you're buying WMT for a dividend payout then that's not very enticing. Especially when you consider KO (although overpriced at the moment), PEP, PG, and others pay over 3%. For as much money as WMT makes, and the fact that it slowing its growth in the U.S. (international growth is up for debate), you would think it could afford a higher dividend % than 2%.


On Oct 10 01:58 PM mbkelly75 wrote:

> Not paid a dividend - but paying a RISING dividend. WMT has RAISED
> their dividend for 33 years. It is not quite the same thing as paying
> a dividend at all.

Global Imbalances: The Fall of Wal-Mart and the Rise of Rural China

Exactly. The title of this article is ridiculous...."The Fall of Wal-Mart." Look (as Obama loves to say), it doesn't matter where or who creates the crap that Wal-Mart can pawn off on customers. If the Chinese don't want to do it on the cheap then I'm sure Wal-Mart can find cheaper labor somewhere else. The fact is that nobody has the power at this point in time to compete head-on with Wal-Mart. Even the likes of KO, PG, and JNJ bow down to Wal-Mart because they know you simply cannot compete with the distribution system and foot traffic it has. Say what you want and put out articles with questionable titles, but Wal-Mart is far from "falling."


On Sep 17 10:34 PM mkreisel wrote:

> If China's manufacturing costs go up, Wal-Mart will just source more
> stuffs from India, Indonesia, Mexico, Thailand, Vietnam, and even
> Africa. As long as Wal-Mart enjoys its cost advantage vs other retailers,
> I fail to see how it would "fall".