Why Dividends Matter in the Long-Haul

Last week’s column on dividends offering the best indicator of company performance prompted a reader to ask an excellent question: Why don’t we hear more about dividends on the financial news networks? Frankly, because they just aren’t very exciting — like watching paint dry or tortoises race or glaciers melt.

The rest of my column can be read here:  The Arizona Republic


Growth Stocks Are Wired for Volatility–Buy Value for the Long-Term

Growth stocks occupy the majority of investor and media mind share. More air time is spent on the sales and earnings growth of companies like Tesla, Chipotle and Netflix than their slower-growing counterparts. These high fliers are trend leaders and their stock price performance, while volatile, is generally volatile to the upside.

Until it isn’t. When one of the growth darlings slips and reports an unexpected earnings miss, a once buoyant stock price can tank in a New York minute. Take Whole Foods (stock ticker: WFM).

For the remainder of the column click here: The Arizona Republic

Revisiting My previous Post Regarding Oracle, Corp.

On August 21st of 2013, I wrote a syndicated blog post for The Motley Fool which I linked here.  In that post I suggested that investors consider building a position in the extremely unpopular shares of Oracle Corp (ORCL). At that time it was difficult to find a Wall Street analyst or financial news pundit with a positive comment on the stock.  Most were convinced that legendary CEO, Larry Ellison had suddenly lost his mojo.  He didn’t understand the “cloud” they exclaimed and wasn’t likely to recover from the misstep.  Having watched Ellison and the company for some twenty plus years, I was unwilling to sell him short.  He is a tough competitor and an outstanding leader.  Love him or hate him, you simply can’t argue with his track record in building wealth for himself and his shareholders.  I suggested in my post that he understood cloud computing and was in the process of making strategic acquisitions to right-size the company’s future.

Since that post the total return for the stock is a positive 28.5% versus 15.7% for the S& P 500.

Lest you think I am declaring victory, I am not.  I’ve been investing too long to make that mistake.  There will–at some point–be another problem.  The stock will likely go through another period of difficulty.  Which may just provide another opportunity for savvy investors to buy. When we own shares of great companies–what I call stocks to own for a lifetime– problems often create an investing opportunity.  The question we learn to ask when these companies encounter operating hiccups and stock price declines is: does the management team have the financial and strategic wherewithal to solve the problem?  The Wall Street crowd obviously has doubts which is why the stock price has declined, but often management is in the process of fixing the problem just when investors expectations and the stock price reach their nadir.  Remember that Wall Street and the financial news pundits have a short-term focus.  Ours should be long-term.

And, frequently, their disaster is our opportunity.


Avoid What I Call Terminally Cheap Stocks

Click here to read my current column in The Arizona Republic.  This week we are exploring the “Buggy Whip” factor.  As technology and fashion trends change, savvy management teams will avoid going the way of the buggy whip–into extinction–when automobiles replaced horse drawn carriages at the dawn of the last century.

We take a close look at Coach.  The company is facing tough competition from Kors and Kate Spade and provides us with an excellent, real-time example.

Feel free to post a comment, ask a question or invite others to follow along.

Until next week,