Dividend investors only invest in companies that pay regular dividends. We believe you should be agnostic and invest in any company that will likely be a good investment – whether it pays dividends or not. Berkshire Hathaway has been a good investment because it doesn’t pay dividends. In this article, we explain why: retaining earnings…
Dividends vs. retained earnings – what is best from a shareholders perspective? In this article, I discuss dividends vs. retained earnings and where the capital compounds best: in your hands or in the company’s hands. Distributions and subsequent reinvestments are an inefficient way of compounding! Given certain assumptions, retaining the earnings is better than distributing…
I wrote an article about sin stocks’ historical performance some months ago. Tobacco companies have performed the best in the US, and alcohol stocks in the UK. In this article, I briefly argue why and why they most likely continue to outperform. Tobacco stocks outperform the market because they have high margins, the regulation makes…
The marginal rate of return is the most crucial factor to compound efficiently. In the long run, your pension is more dependent on the marginal rate of return than the original investment. If you are into dividend investing, you should study the marginal rate of return on your investments. We argue that dividend investing is…
This is a very short article based on two much longer articles: On the 30th of April 2020, Royal Dutch Shell cut their dividend by 67% (I have a tiny position in the stock – 0.05% of my portfolio). As expected, the comments on Seeking Alpha are full of anger and resentment over the smart…
If you’re a future net buyer of stocks you want to pay as little as possible for the earnings. Let me explain why: Let’s assume you buy Disney at 100 and one year later it trades at 130. A 30% return in one year, isn’t that great! Not necessarily: A high share price is not…
