Friday, October 24, 2014

Visa: High Dividend Growth Stock To Consider

Visa Inc. (V), a payments technology company, operates as a retail electronic payments network worldwide. The company facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The company went public in 2008, and has managed to pay and increase dividends ever since. I initiated a position in 2011, after witnessing the strong dividend growth, the attention of Berkshire Hathaway, and the fact that the stock was available at 20 times earnings

Currently, Visa is slightly overvalued at 20.50 times forward 2015 earnings, and has a low yield of 0.80%. If the company manages to earn $20 per share by 2020, and even if the P/E ratio compresses to 15 times by, the stock could provide very good returns to investors. Another plus is that dividend growth could result in very high yields on cost for Visa investors in 15 - 20 years. Of course, long-term growth is never certain, which is why I do not plan on adding to Visa unless I can buy it at 20 times forward earnings or less. However, I am willing to break my rules slightly, and accept 20 times forward earnings for 2015. If we get a more significant stock correction, I would be a buyer and will try to increase my position to a top 20 level ( meaning it will be in my top 20 portfolio positions by size).  

Full Disclosure: Long V

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Thursday, October 23, 2014

Two Insurance Stocks On My Radar

From a consumer standpoint I might not really appreciate insurance companies. After all, it seems like the money I spend on my premiums just goes into a black hole, never to be seen from again. I rarely initiate claims, and would prefer to keep it that way, as that means some kind of tragedy has likely befallen me.
However, from the perspective of an investor I quite like insurance companies. They basically collect premiums up front and get to invest that capital in the interim until you make a claim against your policy. It’s a low-cost source of capital, called the float, and these companies gets to keep any gains (and losses, for that matter) they reap on other people’s money. So prudent underwriting allows an insurance company to a earn profit on the premiums they charge, while prudent management of the investment portfolio also allows profit there as well.

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Wednesday, October 22, 2014

9 Dividend Stocks That Tenfold Sales

Growth makes addicted. A company that doubles each ten years sales and threefold earnings is a good return and cash cow for your portfolio if you have not overpaid your investment.

Google, Facebook and other techies are good growth stocks with deep values but they are definitely too expensive to make a good return. If not, I am wrong and they boost sales by a higher rate but that's speculation and not investing.

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Tuesday, October 21, 2014

Do We Have A Stock Market Bubble And Will It Burst?

Most people on the market say that the American stock market is overvalued and they use the Shiller-Cape-Ratio in order to justify their comments.
Well, I say it's hard to say whether we are in a stock market bubble but we see definitely low yields in terms of free cash flow and high premiums on book value. It it’s a real bubble; it is a question about how fast the future growth can develop.

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