261.5 Billions on cash balance

Sometimes you’re just trying to understand what this staggering figure could mean. To Give you an Idea Apple could buy every single Professional team in the following leagues

NFL/NBA/NHL …. and would still have some extra cash to invest in their business. What’s even more impressive is that with 1 Billion iOS users with a retention rate of 92%, you’re looking at a very stable and recurring income stream. Eventually I believe Apple will have to deploy this mountain of cash and it will be interesting to see how they will grow their business.

 

cash reserve

This is becoming a stock pickers market

After an 8 year long rebound where it’s been easy to make a substantial total return by just buying the SP 500 Etf, I believe you must be looking into a stock picking strategy that involves filtering financial statements of quality companies. The main reason being that valuations across all asset classes are stretched and it’s becoming harder to find decent total return stories. If you are willing to put the effort your performance will easily beat the most known benchmark. I am presenting 2 graph that explains what I mean:

 

you can see the very decent perfomance of the Index below….

sp 500 tot ret

Now if you would have done your homework on checking the potential of companies like MMM & Macdonalds & Microsoft and correctly purchased those names instead of the etf look at the difference….

The index is up 57%, while microsoft is up 128%, Macdonalds 197%, MMM 137%

stock picking 1

Of course the goal is now to predict what will beat the index by a wide margin. That’s where you have to put the effort and the discipline to go through those financial statements. You can’t be lazy and expect the same returns you had since the 2009 rebound. It’s also not a bad Idea to think about splitting between paying back your mortgage faster and investing in fat yielding utilities like Dominion ressources, Duke Energy, Realty income, and safe utilities and Reits. I believe favoring high yielding stocks is a good strategy right now.

Be well and get wealthy

 

FANTASTIC QUOTE FROM STEVE WOZNIAK CO-FOUNDER OF APPLE

 

 

I think about resilience as the speed and strength of your response to adversity. So when you encounter a difficulty, a hardship, a challenge, how quickly and how effectively are you able to marshal strength and either overcome that challenge or persevere in the face of it?”

ADDED PFIZER TO MY PORTFOLIO

I have just added Pfizer to my dividend growth portfolio.

pfizer_steel_logo

  1. First aspect I liked is the 4% dividend yield coupled with a growth history going back to 1980. The company only uses 50% of it’s Free cash flow to cover the payment so it’s very safe.

 

pfizer free cash flow

 

2)What about the future? Well with an aging population and limited competition for specific oncology drugs, you can make the argument that this company will be able to generate regular rich cash flow. I expect the annual dividend growth to be between 5 to 8% during the next 5 years. With a current 4% yield you’re looking at 9 to 12 % total return, which I find very attractive given current valuation in the market.

3) What is the risk? With those big pharmas you know that the R&D cost a lot of money. Developing better drugs is a lengthy process, so you need to have a good percentage of attempts to be converted to patented 20 years exclusivity ….

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