McArabia Chicken

When listening to Peter Lynch’s philosophy, he touches on an investing research approach that involves talking to customers, employees, and business partners of a company.  Philip Fisher also talks about the scuttlebutt approach of finding out as much as you can about a company.  Most of us probably won’t have a chance to talk to a company’s managers or visit their facilities but we can quite easily research the customer’s perspective.

Today, I find myself in an international airport in the Middle East.  Looking for something to eat, I venture to the airport’s food court.  The food court provides a variety of sub sandwich shops, Indian food, fried chicken, and fast food hamburger joints.  As I scan the options, I see a plastic Ronald McDonald smiling at me.  Because I own a VERY small portion of MCD I figured I should probably eat where I’m invested.

As it turns out, McDonald’s is the busiest joint in the food court.  Perusing the trimmed down menu of standard McDonald’s offerings, I notice something new I’ve never seen before: McArabia Chicken.  I decided to order it and it was quite tasty.  I’ve read the stories of McDonald’s international expansion but I’m still a bit surprised to see it thriving in a Middle Eastern airport.

I’m chalking this up as a bonus research opportunity on a company I plan on making a significant pillar of my portfolio.  I recently watched an older Q&A session with Warren Buffett where he talked about how he likes companies that “travel well”.  What he meant by that is he likes it when a company can do well internationally.  For a food establishment to travel well is no small feat in my opinion.  After finishing up my McArabia Chicken with a Coca-Cola Light (aka Diet Coke in the U.S.), I have even stronger feelings towards MCD.

Building a Solid Foundation with a Moat

I’ve been researching stocks/ETFs where I’d like to invest money within my Roth IRA and there are a lot of appealing stocks and ETFs out there from which to choose.  Some stocks are already a small part of my current portfolio while others are on my ever-growing watchlist.

Lately, I’ve been watching several Warren Buffett and Charlie Munger interviews on YouTube and it is amazing how much free advice is out there just by listening to these investing gurus.  They’re investing strategy seems to boil down to a handful of basic tenets:

1.  Find a company that is understandable to you

2.  Find a company with a lasting competitive advantage (or as Buffett puts it, companies with “moats” around them)

3.  Find a company with talented and trustworthy leaders

4.  Find a company that is well-priced

I’m quite certain that besides these four factors, Buffett and Munger employ other detailed analysis but these factors provide an initial basis for selecting investments.  For an average person, knowing a company’s managers or if a stock is well-priced may not be easy.  I do think the first two tenets can be applied by almost any investor although none of these are foolproof.

I also heard Buffett talking about finding 6 good investments and that investors which are too diversified are better off sticking to index funds.  Based on this, I’m looking for some solid stocks in which to build my portfolio upon.  I’d still like to pick some interesting stocks beyond my foundation but my portfolio’s core will be stocks that I feel are safe, solid, long-term performers with dividends.

To start, I have my sights set on three stalwarts that I feel are historically proven leaders in their respective industries.  The first three building blocks of my foundation will the following:

1.  McDonald’s (MCD)

2.  Coke (KO)

3.  Disney (DIS)

These aren’t very exciting like Apple or Google but they’ve withstood the test of time.  MCD and KO have been steady quarterly dividend payers for decades with ~3% yields.  DIS isn’t a strong dividend payer with a yield around 1% and only an annual payout.  However, I feel confident in Disney and the moves they’ve made to grow beyond Mickey Mouse and princess movies.

For me, MCD, KO, and DIS are safe choices but I still need to research another 2-3 companies to finish the foundation of my Roth IRA.  Some of the candidates are already on my watchlist or are small parts of my current portfolio.  More research is needed but PG, CLX, JNJ, and KRFT are on the short list.  I’d like to possibly add in an energy company such as CVX or COP but I haven’t made up mind on those yet.  More to come.

Top Dividend Yielding Stocks on LOYAL3 (part 3)

Time to continue my quest of finding 2-4 reliable, stable, long-term, dividend paying stocks on LOYAL3 that I can periodically invest in over time.  This round of cuts will not be based on numbers, performance, or any quantitative criteria.  This time I’m going off of my gut feeling and following some of Warren Buffett’s advice.  I heard Buffet say in an interview that in order for him to invest in a company it has to be understandable to him.  There are two companies here that I know of but other than that I don’t feel comfortable selecting them as long-term investments.  That said, I’m taking LB and AEO off the list.  I might throw a little money into LB because it has impressive numbers but other than that I don’t intend to make continued, periodic buys of LB stock.

The stocks still on my LOYAL3 list are: MAT, UL, HAS, MCD, TGT, and KO.  Not a bad lineup.

 

Top Dividend Yielding Stocks on LOYAL3 (part 2)

Previously I listed 13 stocks at LOYAL3 with 3% yields or higher.  It is time to whittle down this list further.  Because I’m currently looking for frequent dividend payments that I can reinvest, I’m removing from the list any stock that doesn’t pay dividends at least quarterly.  That scratches BUD and NOK off of my list.  That takes me down to 11 stocks.  I’d still like to narrow it down to 2-4 stocks that I can invest in with small, monthly purchases.  So let’s continue.

My next somewhat arbitrary criteria is to look at the stocks’ overall growth for at least the last decade.  If any stock has a negative growth it is coming off of the list.  I’ll go to the easy-to-use Google stock price chart to check this out.  After some quick stock symbol searching, I’m able to scratch more stocks that either have a negative return over 10 years or 36 years (as far back as Google’s stock charts seem to go).  Also, if the stock is less than 10 years old it is coming off my list.  So here are the next stocks to be removed:

– FTR (less than 10 yrs old; this is fine because I know nothing about this company)

– WWE (negative 10 yr return; this is fine also because my gut feeling is to not invest in WWE)

– INTC (negative 10 yr return; too bad because I somewhat wanted this stock to be around after my little exercise here)

So, I now have 8 stocks left to research:  LB, AEO, UL, HAS, MCD, TGT, KO and one wildcard with MAT.  Google doesn’t show a 10-yr history for MAT but from what I can tell from other research this stock has been around for awhile so I won’t scratch it off just yet.

 

My Investments (that pay dividends)

Here’s a quick list of my dividend paying investments (stocks & ETFs).  Not all of these consistently pay dividends and some of these I invested in prior to my love of dividends.

LOYAL3 Account

– Disney (DIS)

– Hasbro (HAS)

– Coca-Cola (KO)

– Nike (NKE)

– Starbucks (SBUX)

– Apple (AAPL)

– Wal-Mart (WMT)

– Microsoft (MSFT)

– Anheuser-Busch (BUD)

– Intel (INTC)

 

Roth IRA Account

– Activision/Blizzard (ATVI)

– Apple (AAPL)

– Direxion Mid Cap Bull 3x Shares (MIDU)

– J.C. Penney (JCP)

– Procter & Gamble (PG)

– ETRACS Monthly Pay 2x Leveraged Mortgage REIT (MORL)

 

In the future I plan on investing more in stocks/ETFs that have consistent quarterly or monthly dividend payouts.