- Transaction-free trading platforms can be a powerful tool for compounding dividend returns.
- Concentrating on undervalued stocks that pay high dividend yields and growing dividends can reap high returns.
- Straying into investments that are difficult to understand for the sake of diversification can be a drag on returns.
In the beginning of 2017, I set out to create a total return portfolio for my long-term savings. At that time, I had learned through self-study about value investing, high-yield dividend investing, and dividend growth investing. Seeking Alpha was a wonderful inspiration, as was Get Rich with Dividends by Marc Lichtenfeld and the wisdom of Warren Buffett.
What Seeking Alpha authors helped me realize is that dividend investing can be about much more than income. It is a powerful mechanism for compounding wealth. Continue reading…
My latest article for Seeking Alpha forecasts Nike, Inc.’s earnings and determines its intrinsic value.
- Nike is a strong brand showing consistent revenue growth and excellent financial health.
- Nike’s revenue and earnings outlook for the next 5 years shows a continued ability to generate superior growth and dominate the industry.
- An estimated intrinsic value for shares of Nike based on best- and worst-case scenarios for the company, industry, and economy.
In analyzing stock valuations, people often use the price-to-earnings ratio as a shortcut. The problem is, it is just that a shortcut. It is the stock price divided by the trailing 12 months’ earnings per share. It is a simple measurement of past performance in a complex system that cannot be reduced to one number. P/E is a screening tool at best. It does not tell us enough about the most important factors of stock ownership: future earnings and cash flows.
Nike (NKE) has a P/E ratio of around 65, so investors are currently paying 65 times the last 12 months’ earnings per share to buy the stock. If the last 12 months’ earnings per share were to continue indefinitely, it would take 65 years to make your money back. So, initially, Nike looks extremely expensive. Thankfully, the appropriate price of a stock is based on a lot more than current EPS. Let’s conduct a more detailed assessment of Nike’s current earnings and project its future earnings to get a more accurate assessment of Nike’s intrinsic value. Continue reading…
Microsoft (MSFT) is one of the leading companies in the technology sector. The media and the President may obsess over Amazon (AMZN), investors may follow Warren Buffett into Apple (AAPL), and the average Joe may spend half his day on Google (GOOG/GOOGL), Netflix (NFLX), and Facebook (FB), but Microsoft has been quietly expanding its empire far beyond its traditional PC business. It has everything from a popular video game system to a 500 million-member social network to commercial software and cloud services. Those products are generating growth and income for the company’s shareholders. Here are three reasons they are doing this so well. Continue reading “3 Reasons Microsoft Is a Great Company”
As an advocate for economics education, I get upset when I hear bogus economics claims being made in politics and the media. When this happens, consumers are fooled into spending irresponsibly. Voters are fooled into supporting policies detrimental to the economy. This has been on my mind lately as President Trump doesn’t let a day go by without taking credit for how well the U.S. stock market is doing. Continue reading “Does Trump Deserve Credit for the Stock Market?”