1 00:00:00,040 --> 00:00:01,960 Welcome back, everyone. Today on the Joseph Carlson 2 00:00:01,960 --> 00:00:05,440 Show, it's time we talk about dividends and how I grew this 3 00:00:05,440 --> 00:00:08,240 portfolio into a monster dividend portfolio. 4 00:00:08,240 --> 00:00:12,360 We'll be going over how much money this $750,000 portfolio 5 00:00:12,400 --> 00:00:15,440 earns in dividends every single year, how many dividends it will 6 00:00:15,440 --> 00:00:19,040 earn specifically in 2024, how many dividends it's earned all 7 00:00:19,040 --> 00:00:20,720 time. And we'll be looking at each 8 00:00:20,720 --> 00:00:23,480 holding in My Portfolio, laying out which ones are the biggest 9 00:00:23,480 --> 00:00:26,320 dividend payers, which ones have the highest and lowest dividend 10 00:00:26,320 --> 00:00:28,760 yield, which of these companies are growing their dividend the 11 00:00:28,760 --> 00:00:32,320 fastest and what yield on cost is and which companies have the 12 00:00:32,320 --> 00:00:35,800 highest yield on cost. Every company in this portfolio 13 00:00:35,800 --> 00:00:38,640 pays a dividend. And as these companies generate 14 00:00:38,640 --> 00:00:41,200 continual cash flow, their dividends grow. 15 00:00:41,240 --> 00:00:43,560 So we'll be looking at this overall and getting an idea of 16 00:00:43,560 --> 00:00:45,680 how to grow a dividend portfolio. 17 00:00:45,680 --> 00:00:47,520 Now, of course, we have some other news to get to as well in 18 00:00:47,520 --> 00:00:49,720 this episode. Adobe's getting hit today. 19 00:00:49,720 --> 00:00:53,320 It's down nearly 9% after their Q3 earnings. 20 00:00:53,360 --> 00:00:55,640 They beat on their earnings per share estimates and their 21 00:00:55,640 --> 00:00:57,840 revenues. So the past quarter looked good, 22 00:00:58,080 --> 00:01:01,720 but the problem is they gave week forecast Adobe's supposed 23 00:01:01,720 --> 00:01:04,400 to be growing in part because of AI tools. 24 00:01:04,640 --> 00:01:07,680 They're developing all of these signature creative software AI 25 00:01:07,680 --> 00:01:11,000 tools, but apparently that isn't enough to help the stock grow 26 00:01:11,000 --> 00:01:13,200 faster than expected. This brings us back to the 27 00:01:13,200 --> 00:01:16,160 question of whether or not Adobe's being helped by AI or 28 00:01:16,160 --> 00:01:18,520 hurt by AI. We have news that Uber and Waymo 29 00:01:18,520 --> 00:01:22,560 are once again teaming up and offering driverless ride sharing 30 00:01:22,560 --> 00:01:26,400 trips in Austin and Atlanta. Why is a company as big as 31 00:01:26,400 --> 00:01:30,160 Google that owns Google Maps, it's as big as Waymo teaming up 32 00:01:30,160 --> 00:01:32,000 with Uber? We've also heard the news 33 00:01:32,000 --> 00:01:35,840 recently that MasterCard is doing an acquisition and they're 34 00:01:35,840 --> 00:01:40,240 buying a company that's a cyber security company for a $2.65 35 00:01:40,240 --> 00:01:42,400 billion price tag. We'll be looking into the 36 00:01:42,400 --> 00:01:45,480 details of this deal and also going over what this means for 37 00:01:45,480 --> 00:01:47,520 MasterCard and Visa. So we have a lot to get to in 38 00:01:47,520 --> 00:01:49,120 this episode. If you like this type of 39 00:01:49,120 --> 00:01:51,680 content, just make sure you're subscribed to the channel and 40 00:01:51,680 --> 00:01:53,280 like the video. Both of those things are 41 00:01:53,280 --> 00:01:54,040 completely free. Now. 42 00:01:54,040 --> 00:01:56,240 Let's go ahead and jump into the portfolio here. 43 00:01:56,520 --> 00:02:00,640 This portfolio, the passive income portfolio, is a a normal 44 00:02:00,640 --> 00:02:03,800 equity portfolio. I don't use any leverage, I 45 00:02:03,800 --> 00:02:06,720 don't use any margin. This is all money that I have 46 00:02:06,720 --> 00:02:09,080 contributed or earned in dividends. 47 00:02:09,240 --> 00:02:15,040 The total value is $752,000. The total gains is $261,000. 48 00:02:15,360 --> 00:02:18,760 So we've passed the point of a quarter $1,000,000 primarily 49 00:02:18,760 --> 00:02:21,280 through gains, which is just incredible. 50 00:02:21,280 --> 00:02:23,560 Looking back six years, this seems like it would be 51 00:02:23,560 --> 00:02:26,080 impossible to do. But through a history of steady 52 00:02:26,080 --> 00:02:29,080 contributions, continually adding money, dollar cost 53 00:02:29,080 --> 00:02:33,240 averaging, buying every dip I could and getting continual 54 00:02:33,240 --> 00:02:36,080 dividend payouts that are quickly reinvested back into new 55 00:02:36,080 --> 00:02:40,480 opportunities and having capital appreciation, this portfolio has 56 00:02:40,480 --> 00:02:44,440 grown and grown and grown. This portfolio's origins are a 57 00:02:44,440 --> 00:02:47,360 dividend growth portfolio. That's where things started off. 58 00:02:47,400 --> 00:02:50,280 In fact, if we go back to my oldest videos, the very first 59 00:02:50,280 --> 00:02:53,240 ones that I made, they're still live on this channel. 60 00:02:53,480 --> 00:02:56,880 The very first one, episode 1, was an introduction to My 61 00:02:56,880 --> 00:02:59,120 Portfolio. The current value at the time 62 00:02:59,120 --> 00:03:02,360 was $25,000. I give an update on my 63 00:03:02,360 --> 00:03:05,800 companies, explaining why I thought Apple and Microsoft, 64 00:03:05,920 --> 00:03:08,280 Home Depot and Costco were good investments. 65 00:03:08,280 --> 00:03:11,960 Five years ago I had a video called Building a Winning 66 00:03:11,960 --> 00:03:15,480 Dividend Portfolio. It went over the core aspects of 67 00:03:15,480 --> 00:03:18,440 dividend growth portfolios. The premise of it was to invest 68 00:03:18,440 --> 00:03:21,360 in quality companies that could grow their dividend overtime. 69 00:03:21,520 --> 00:03:24,960 I think the content was OK for the time, but this was five 70 00:03:24,960 --> 00:03:27,560 years ago. A lot has happened over half a 71 00:03:27,560 --> 00:03:29,920 decade. I've learned a lot of lessons. 72 00:03:29,920 --> 00:03:32,080 I've been through a lot of market volatility. 73 00:03:32,400 --> 00:03:35,560 I've seen a lot of investors do a lot of different things. 74 00:03:35,680 --> 00:03:39,320 And with investing, like any discipline, if you actively work 75 00:03:39,320 --> 00:03:43,400 on it, study it, increase your vocabulary, read about it, learn 76 00:03:43,400 --> 00:03:46,280 from other great investors, you get better at it. 77 00:03:46,560 --> 00:03:50,720 Over the past five years, I think each consecutive year I've 78 00:03:50,720 --> 00:03:53,640 grown as an investor, I've learned some things and I think 79 00:03:53,640 --> 00:03:56,680 most of my audience has as well. I've gotten better at doing a 80 00:03:56,680 --> 00:03:59,160 lot of analysis on companies, understanding the true 81 00:03:59,160 --> 00:04:02,880 fundamentals, understanding long term durable moats from weak 82 00:04:02,880 --> 00:04:05,640 moats, understanding which businesses are likely to 83 00:04:05,640 --> 00:04:07,760 increase in value more than others. 84 00:04:07,920 --> 00:04:11,040 I've also gotten a lot better at identifying quality dividend 85 00:04:11,040 --> 00:04:14,400 companies from ones that are dividend traps or value traps. 86 00:04:14,480 --> 00:04:18,320 The accumulation of time and experience and knowledge over 87 00:04:18,320 --> 00:04:21,360 making hundreds of videos on investing, learning from 88 00:04:21,360 --> 00:04:24,480 community members, studying great investors has an 89 00:04:24,480 --> 00:04:27,240 accumulative effect of improving your investing philosophy 90 00:04:27,240 --> 00:04:29,200 overall. And recently I've put all of 91 00:04:29,200 --> 00:04:32,440 what I've learned is the best investing lessons into a simple 92 00:04:32,440 --> 00:04:34,400 investment philosophy presentation. 93 00:04:34,640 --> 00:04:38,680 This is only 8 pages long and I think it goes over the most core 94 00:04:38,680 --> 00:04:42,880 basic lessons of how to create a very high quality portfolio. 95 00:04:42,880 --> 00:04:45,640 In many ways, my investing philosophy has changed from 96 00:04:45,640 --> 00:04:49,240 looking strictly at dividend growth companies to looking at 97 00:04:49,240 --> 00:04:52,520 compounding machines. Compounding machines is a more 98 00:04:52,520 --> 00:04:55,520 nuanced, holistic term of looking at a company. 99 00:04:55,960 --> 00:04:58,920 It doesn't just focus on the dividend payout, it focuses on 100 00:04:58,920 --> 00:05:02,400 the core fundamental components of a company that allows for a 101 00:05:02,400 --> 00:05:04,080 company to pay a growing dividend. 102 00:05:04,080 --> 00:05:08,040 But the interesting thing is, in most cases, compounding machines 103 00:05:08,240 --> 00:05:12,240 are dividend growth companies. In most cases, compounding 104 00:05:12,240 --> 00:05:15,480 machines make for the best dividend companies. 105 00:05:16,000 --> 00:05:19,000 So this isn't a change of strategy shifting away from 106 00:05:19,000 --> 00:05:21,200 dividends to a different type of company. 107 00:05:21,200 --> 00:05:24,200 This has been a shift of strategy of better identifying 108 00:05:24,200 --> 00:05:26,800 the best type of dividend growth companies. 109 00:05:26,880 --> 00:05:30,600 As it stands right now, every single company in the passive 110 00:05:30,600 --> 00:05:32,600 income portfolio pays a dividend. 111 00:05:32,680 --> 00:05:35,600 And that's typically the case with compounding machines 112 00:05:35,680 --> 00:05:38,240 because in most cases, when you find companies that are 113 00:05:38,240 --> 00:05:41,520 monopolies, they have ample pricing power and operating 114 00:05:41,520 --> 00:05:44,280 leverage and organic revenue growth and are capital 115 00:05:44,280 --> 00:05:46,320 efficient. These are the type of companies 116 00:05:46,320 --> 00:05:48,840 that can afford to pay a dividend, and they're also the 117 00:05:48,840 --> 00:05:51,360 type of companies that can grow a dividend overtime. 118 00:05:51,400 --> 00:05:54,880 So every single company in this portfolio is paying a dividend 119 00:05:54,880 --> 00:05:57,520 and growing it overtime. Even though there's always a lot 120 00:05:57,520 --> 00:06:00,720 of talk about buybacks and companies buying back their own 121 00:06:00,720 --> 00:06:04,080 shares, even though that's a great aspect of a company, we 122 00:06:04,080 --> 00:06:06,720 shouldn't leave out the compounding impact of a stable 123 00:06:06,720 --> 00:06:09,680 and growing dividend that's continually reinvested back into 124 00:06:09,680 --> 00:06:12,040 a portfolio. Now we can better understand the 125 00:06:12,040 --> 00:06:14,880 role that a dividend plays in compounding a portfolio by 126 00:06:14,880 --> 00:06:16,800 looking at a breakdown of the returns. 127 00:06:17,120 --> 00:06:22,040 For example, in My Portfolio right now, we have $261,000 in 128 00:06:22,040 --> 00:06:25,240 all time gains. Now the gains do not include 129 00:06:25,320 --> 00:06:28,360 contributions. So none of this money in the 130 00:06:28,360 --> 00:06:31,120 green is because I put money in the portfolio. 131 00:06:31,480 --> 00:06:35,720 Gains only come from two things, capital appreciation or 132 00:06:35,720 --> 00:06:37,200 dividends. That's it. 133 00:06:37,440 --> 00:06:41,280 So the all time gain is another way of saying the capital 134 00:06:41,280 --> 00:06:44,800 appreciation plus the dividends. Now it's true that you have to 135 00:06:44,800 --> 00:06:48,640 buy stocks to have something to appreciate, but this is from the 136 00:06:48,640 --> 00:06:51,640 appreciation or the dividends. For example, if I was to 137 00:06:51,640 --> 00:06:55,960 hypothetically deposit $1,000,000 into My Portfolio 138 00:06:55,960 --> 00:06:59,160 today, if I somehow had that money and I threw it into My 139 00:06:59,160 --> 00:07:02,920 Portfolio, the all time gains would stay the exact same. 140 00:07:03,160 --> 00:07:06,400 It wouldn't move a penny. The only way that this number 141 00:07:06,400 --> 00:07:09,960 goes up or down if there's capital appreciation or if they 142 00:07:09,960 --> 00:07:12,400 pay me a dividend. We can better understand this 143 00:07:12,400 --> 00:07:15,120 performance here. If we look at a breakdown of my 144 00:07:15,120 --> 00:07:20,040 portfolio's performance as of right now, it has a 158% money 145 00:07:20,040 --> 00:07:22,600 weighted return. That's based off the inflows and 146 00:07:22,600 --> 00:07:25,640 outflows of capital, meaning that since the beginning that is 147 00:07:25,640 --> 00:07:27,480 my rate of return of this portfolio. 148 00:07:27,800 --> 00:07:31,120 We look at the market gain. The market gain is another word 149 00:07:31,120 --> 00:07:34,560 for capital appreciation. This is where the majority of 150 00:07:34,560 --> 00:07:36,680 gains come from. Right now the capital 151 00:07:36,680 --> 00:07:41,280 appreciation is $229,000. So that is the lion's share of 152 00:07:41,280 --> 00:07:44,680 the gains in this portfolio, but we can't count the effect that 153 00:07:44,680 --> 00:07:47,480 dividends have the entire time this is happening. 154 00:07:47,720 --> 00:07:50,320 Dividends are being paid out every single month. 155 00:07:50,680 --> 00:07:56,240 And so far a total of $32,300 in dividends have been earned and 156 00:07:56,240 --> 00:07:59,960 paid by this portfolio. This is Money that's reinvested 157 00:08:00,040 --> 00:08:03,120 back into the portfolio. So part of the net cash flow 158 00:08:03,120 --> 00:08:05,440 here includes the dividend payments. 159 00:08:05,920 --> 00:08:08,360 The dividends continually being reinvested back into the 160 00:08:08,360 --> 00:08:12,520 portfolio buys more shares, which also helps increase the 161 00:08:12,520 --> 00:08:15,000 market gains. So this is what I first do. 162 00:08:15,080 --> 00:08:17,280 I buy companies. Those companies pay me 163 00:08:17,280 --> 00:08:19,680 dividends. Those dividends are reinvested 164 00:08:19,680 --> 00:08:23,120 back into the portfolio. Those reinvested dividends earn 165 00:08:23,120 --> 00:08:26,760 me more capital appreciation. And over and over again, this 166 00:08:26,760 --> 00:08:29,800 cycle grows. Now in my brokerage M1, they 167 00:08:29,800 --> 00:08:32,880 tell me how many dividends I'm earning every single month, my 168 00:08:32,880 --> 00:08:35,640 projected earnings, and what I've earned historically. 169 00:08:35,919 --> 00:08:38,240 We can take a look at the dividend income overtime. 170 00:08:38,520 --> 00:08:44,800 For the full year of 2024, I'm going to earn $8718 in 171 00:08:44,800 --> 00:08:47,120 dividends. So if you think that dividends 172 00:08:47,120 --> 00:08:50,240 are just a small part of the portfolio, that's true. 173 00:08:50,240 --> 00:08:54,400 But 8700 dollars is not a meaningless amount of money. 174 00:08:54,440 --> 00:08:56,440 That is a significant amount of capital. 175 00:08:56,520 --> 00:08:59,600 And keep in mind, it's not like I get one payout at the end of 176 00:08:59,600 --> 00:09:02,120 the year. This is Money that's paid out on 177 00:09:02,120 --> 00:09:06,760 average $700.00 per month. That money gets reinvested back 178 00:09:06,800 --> 00:09:09,680 into the portfolio and have bigger and bigger dividend 179 00:09:09,680 --> 00:09:11,880 payments in the future. Now, if we look at this on a 180 00:09:11,880 --> 00:09:14,440 month by month breakdown, we can see better what's really 181 00:09:14,440 --> 00:09:16,880 contributing to this massive dividend payout. 182 00:09:17,360 --> 00:09:21,920 A lot of it comes from January. So January is the best month of 183 00:09:21,920 --> 00:09:24,800 dividends by about double for My Portfolio. 184 00:09:25,240 --> 00:09:28,720 Why is January so big? Why do I earn over $2000 in 185 00:09:28,720 --> 00:09:30,680 January? Well, there's one company in 186 00:09:30,680 --> 00:09:34,200 particular that has a relatively large payout in January. 187 00:09:34,720 --> 00:09:38,280 That company is Costco. As you can see in the breakdown 188 00:09:38,280 --> 00:09:41,360 there, we have three major companies that pay dividends in 189 00:09:41,360 --> 00:09:44,520 January, Costco, VICI, and Intuit. 190 00:09:44,920 --> 00:09:47,600 Intuit's the smallest, making up an $84 dividend. 191 00:09:47,840 --> 00:09:51,720 Then you have VICI paying a staggering $755. 192 00:09:52,040 --> 00:09:55,720 VICI is a real estate company. The majority of returns from 193 00:09:55,720 --> 00:09:59,000 real estate typically comes from dividends, or in the case if you 194 00:09:59,000 --> 00:10:02,000 own the real estate, directly from the rent and then you have 195 00:10:02,000 --> 00:10:07,840 Costco. Costco paid A1 $1296 dividend in 196 00:10:07,840 --> 00:10:10,440 January. Does Costco really pay that big 197 00:10:10,440 --> 00:10:13,360 of a dividend? Or do I own so much Costco that 198 00:10:13,360 --> 00:10:15,800 it should be paying me $1000 per quarter? 199 00:10:15,800 --> 00:10:18,800 My Costco position is only $80,000. 200 00:10:18,800 --> 00:10:21,760 Now that's a big position and the majority of that is from 201 00:10:21,760 --> 00:10:24,440 games. It's $44,000 in the green. 202 00:10:24,760 --> 00:10:29,000 But an $80,000 position is not enough to earn $1000 per 203 00:10:29,000 --> 00:10:30,880 quarter. If we use Qualtrum to look at 204 00:10:30,880 --> 00:10:33,480 the dividend history of Costco, we can see this illustrated. 205 00:10:33,840 --> 00:10:37,400 The dividend is this, this one right here, a $15 per share 206 00:10:37,400 --> 00:10:41,040 dividend that was paid out in Q1 of 2024. 207 00:10:41,120 --> 00:10:44,600 Notice how it's much larger than any other dividend before or 208 00:10:44,600 --> 00:10:46,720 after it? That is because this is a 209 00:10:46,720 --> 00:10:49,240 special dividend. This one right here is a special 210 00:10:49,240 --> 00:10:51,200 dividend. This one back in 2020 is a 211 00:10:51,200 --> 00:10:54,480 special dividend, and this one and this one and this one. 212 00:10:54,760 --> 00:10:58,120 These abnormally large dividends are when Costco management says, 213 00:10:58,560 --> 00:11:00,840 hey, shareholders, we have way too much cash. 214 00:11:01,120 --> 00:11:03,440 We can't distribute it through our normal dividends every 215 00:11:03,440 --> 00:11:06,120 quarter. We're stockpiling this cash and 216 00:11:06,120 --> 00:11:07,560 we think that you should have it. 217 00:11:07,560 --> 00:11:09,640 So we're just going to throw this money out to you, the 218 00:11:09,640 --> 00:11:13,680 shareholder, to give you an idea of how much a $15 dividend per 219 00:11:13,680 --> 00:11:16,560 share is. That is the equivalent of Costco 220 00:11:16,560 --> 00:11:20,640 paying out a full year of earnings of the company, a full 221 00:11:20,640 --> 00:11:23,800 calendar year, earnings they paid out in a single dividend. 222 00:11:23,880 --> 00:11:26,000 So this was a massive dividend they're paying. 223 00:11:26,000 --> 00:11:28,280 I can tell whenever Costco is going to do this because you can 224 00:11:28,280 --> 00:11:32,560 see that the cash balance rises way above their levels of debt. 225 00:11:32,960 --> 00:11:36,880 We had it right there. Their cash was $17 billion. 226 00:11:37,200 --> 00:11:40,440 Their debt was 5 billion. They had way too much money. 227 00:11:40,680 --> 00:11:43,320 So what did they do? They gave some of it back and 228 00:11:43,320 --> 00:11:46,760 that's why their cash went down from 17 billion to 10 billion. 229 00:11:47,160 --> 00:11:50,720 Then what happens after that? Costco earns too much money. 230 00:11:50,920 --> 00:11:53,920 It goes from 10 billion to 11 next quarter. 231 00:11:53,920 --> 00:11:57,240 It's going to go up more and more and more, and eventually 232 00:11:57,240 --> 00:11:59,600 they're going to have excess cash and they'll pay a special 233 00:11:59,600 --> 00:12:02,520 dividend again. So $1300.00 of this year's 234 00:12:02,520 --> 00:12:04,440 earnings is because of the special dividend. 235 00:12:04,840 --> 00:12:07,440 Now, we're probably not going to have a special dividend every 236 00:12:07,440 --> 00:12:10,640 single year, but I think on average we'll have them around 237 00:12:10,640 --> 00:12:13,960 every three years based on the rate that Costco's growing and 238 00:12:13,960 --> 00:12:15,800 the amount of excess cash they generate. 239 00:12:16,040 --> 00:12:19,840 If we move on to February, we had an ETF called S Gov pay a 240 00:12:19,840 --> 00:12:21,280 dividend. That's when I still owned a 241 00:12:21,280 --> 00:12:24,080 little bit of cash. We have MasterCard and Costco 242 00:12:24,080 --> 00:12:26,720 paying their normal dividend. So Costco got done paying their 243 00:12:26,720 --> 00:12:29,160 special dividend, then they paid their normal dividend. 244 00:12:29,160 --> 00:12:32,600 We move on to March. In March, I earned $688 in 245 00:12:32,600 --> 00:12:35,840 dividends. Texas Roadhouse paid 265. 246 00:12:35,840 --> 00:12:39,640 S&P Global paid 175. Microsoft paid 122. 247 00:12:39,840 --> 00:12:42,600 Texas Roadhouse has turned out to be a great dividend payer 248 00:12:42,600 --> 00:12:44,560 company. If we glance at their dividend 249 00:12:44,560 --> 00:12:47,680 growth history over time, they are growing their dividend far 250 00:12:47,680 --> 00:12:50,960 faster than the market average. Last quarter they only grew it 251 00:12:50,960 --> 00:12:53,480 by 11%, which is still really fast. 252 00:12:53,880 --> 00:12:57,080 But for the past five years, they've averaged growth of 15%. 253 00:12:57,560 --> 00:13:00,800 That's really quick growth from a restaurant company. 254 00:13:00,880 --> 00:13:04,200 Like I said, if you buy a compounding machine, a company 255 00:13:04,200 --> 00:13:07,880 that can grow its free cash flow at a high rate, they can afford 256 00:13:07,880 --> 00:13:10,000 to grow their dividend at a high rate. 257 00:13:10,440 --> 00:13:13,200 So the best dividend growth companies are free cash flow 258 00:13:13,200 --> 00:13:15,520 growth companies. The best free cash flow growth 259 00:13:15,520 --> 00:13:17,600 companies are compounding machines. 260 00:13:17,760 --> 00:13:20,160 Moving on to April, we have another dividend payment from 261 00:13:20,160 --> 00:13:23,200 VICI, one from Union Pacific. This is a company that I've 262 00:13:23,200 --> 00:13:25,640 since sold. And then we have Intuit, which 263 00:13:25,640 --> 00:13:29,360 is an $84 dividend payment. Intuit does not pay a lot in 264 00:13:29,360 --> 00:13:31,920 dividends right now. They're mostly doing buybacks. 265 00:13:32,040 --> 00:13:35,120 May we have MasterCard, Costco again and Apple. 266 00:13:35,320 --> 00:13:38,960 In June we have Texas Roadhouse again, S&P Global and Microsoft. 267 00:13:39,000 --> 00:13:41,240 And then we start to see a little bit of cycling care where 268 00:13:41,240 --> 00:13:43,640 the same companies are paying out their quarterly dividends. 269 00:13:43,720 --> 00:13:45,320 The new one in July is Salesforce. 270 00:13:45,320 --> 00:13:46,800 That's a new holding to the portfolio. 271 00:13:47,040 --> 00:13:49,480 They're also a dividend payer. And then we have the projected 272 00:13:49,480 --> 00:13:52,520 dividends in September, all beginning of $122. 273 00:13:52,520 --> 00:13:56,600 One from Microsoft, S&P Global will be 188, Texas Roadhouse 274 00:13:56,600 --> 00:13:58,840 will be 265. The ones that are projected 275 00:13:58,840 --> 00:14:03,080 throughout the rest of the year are $700 in October, 263 dollars 276 00:14:03,080 --> 00:14:06,400 in November and in December it will be 773. 277 00:14:06,480 --> 00:14:08,960 And again, whenever these companies pay dividends, that 278 00:14:08,960 --> 00:14:11,880 money immediately ends up in my cash balance. 279 00:14:12,120 --> 00:14:16,200 Right now I have $800 in cash. 100% of that money is from 280 00:14:16,200 --> 00:14:18,360 dividends. I'll look over the dip Finder 281 00:14:18,360 --> 00:14:21,160 and see which companies are doing well and doing poorly in 282 00:14:21,160 --> 00:14:23,400 My Portfolio in terms of their performance. 283 00:14:23,680 --> 00:14:26,280 When I look right now, I see that the companies that have the 284 00:14:26,280 --> 00:14:29,720 most momentum, the ones that are rocketing to the moon, are 285 00:14:29,720 --> 00:14:33,960 Costco, Moody's, S&P Global, Apple, and VICI. 286 00:14:34,400 --> 00:14:37,000 This group of companies are just doing fantastic. 287 00:14:37,000 --> 00:14:39,280 They're the ones that are carrying My Portfolio right now. 288 00:14:39,560 --> 00:14:42,760 Moody's is crushing the market. S&P Global's having a great 289 00:14:42,760 --> 00:14:46,480 year, and of course, Costco is up 40% year to date, not 290 00:14:46,480 --> 00:14:47,920 counting their massive dividends. 291 00:14:48,240 --> 00:14:50,920 So these companies are doing so well that I typically look at 292 00:14:50,920 --> 00:14:53,520 them and I think, you know what? I'm just going to hold my share 293 00:14:53,520 --> 00:14:56,240 in these and focus on reinvesting my dividends and 294 00:14:56,240 --> 00:14:58,480 ones that haven't rocketed up quite as much. 295 00:14:58,800 --> 00:15:01,320 When I look at the other end of things, the only company that's 296 00:15:01,320 --> 00:15:04,080 not doing well right now is Salesforce. 297 00:15:04,440 --> 00:15:08,040 This one is having a bad year. The company has yet to gain any 298 00:15:08,040 --> 00:15:11,240 market momentum. I do analysis on the company and 299 00:15:11,240 --> 00:15:13,760 from the fundamentals, everything looks really good. 300 00:15:14,160 --> 00:15:16,880 So this is a company that I look at as a potential buy. 301 00:15:16,880 --> 00:15:20,360 And of course, if we look at my trade history in 2024, one of 302 00:15:20,360 --> 00:15:22,800 the companies that I've been buying the most with every 303 00:15:22,800 --> 00:15:26,160 dividend payment and with new contributions is Salesforce. 304 00:15:26,240 --> 00:15:29,080 I'm buying into this company because it's not doing well 305 00:15:29,080 --> 00:15:31,000 right now. It is a great company 306 00:15:31,000 --> 00:15:33,920 fundamentally that the stock price isn't following, but 307 00:15:33,920 --> 00:15:36,320 Salesforce of course is not the only example. 308 00:15:36,320 --> 00:15:39,920 The point is the dividends don't need to be reinvested right back 309 00:15:39,920 --> 00:15:42,920 into the company that paid them, and in many cases, the company 310 00:15:42,920 --> 00:15:46,120 that just paid a dividend is not the best one to reinvest the 311 00:15:46,120 --> 00:15:48,680 money back into. For example, again, one of the 312 00:15:48,680 --> 00:15:51,280 biggest dividend payers this year has been Costco. 313 00:15:51,560 --> 00:15:54,280 But Costco's trading at an all time high multiple. 314 00:15:54,280 --> 00:15:57,400 Costco's very expensive looking at its historical multiples. 315 00:15:57,880 --> 00:16:00,520 So out of the companies that I have to pick from, even though 316 00:16:00,520 --> 00:16:03,360 Costco's paying a lot in dividends, it's not the one that 317 00:16:03,360 --> 00:16:05,280 I'm reinvesting the dividends back into. 318 00:16:05,640 --> 00:16:08,600 I'm buying companies that have less positive sentiment, like 319 00:16:08,600 --> 00:16:11,480 Salesforce and Booking. To better understand a dividend, 320 00:16:11,480 --> 00:16:13,880 it's important to know where the dividend comes from. 321 00:16:14,080 --> 00:16:17,160 What affords a company's ability to pay for a dividend? 322 00:16:17,400 --> 00:16:20,840 That is called free cash flow. Free cash is the amount of money 323 00:16:20,840 --> 00:16:24,720 that's leftover after a company pays for all its operational 324 00:16:24,720 --> 00:16:27,120 expenses and capital expenditures. 325 00:16:27,440 --> 00:16:30,240 When you you factor in operational expenses like paying 326 00:16:30,240 --> 00:16:34,040 employees, paying for logistics, paying for all those random 327 00:16:34,040 --> 00:16:37,040 expenses a company has. And then you also factor in 328 00:16:37,040 --> 00:16:40,440 paying for capital expenditures, buying warehouses, paying for 329 00:16:40,440 --> 00:16:43,560 office space, paying for vehicles to ship things back and 330 00:16:43,560 --> 00:16:46,080 forth. It's the money left on the table 331 00:16:46,080 --> 00:16:48,440 after all those cash flows are accounted for. 332 00:16:48,680 --> 00:16:51,440 That is your free cash flow. We're running MasterCard and 333 00:16:51,440 --> 00:16:54,200 after we pay for basically everything to run this company, 334 00:16:54,400 --> 00:16:58,240 we have $11 billion leftover. We're very profitable company. 335 00:16:58,240 --> 00:17:00,240 We have a lot of free cash flow leftover. 336 00:17:00,360 --> 00:17:01,840 Well, what can we do with that money? 337 00:17:01,880 --> 00:17:05,319 Companies do one of two things with their leftover free cash 338 00:17:05,319 --> 00:17:07,280 flow. One of the things they do, and 339 00:17:07,280 --> 00:17:09,920 they do it frequently, is they buy their own stock. 340 00:17:09,920 --> 00:17:13,000 Buying their own stock reduces the amount of shares over time, 341 00:17:13,280 --> 00:17:16,880 increasing investors equity. As the share count goes down, 342 00:17:17,079 --> 00:17:19,359 your value in the company increases. 343 00:17:19,560 --> 00:17:22,440 So buybacks are one of the things they do with their extra 344 00:17:22,440 --> 00:17:24,640 cash. But then some companies are so 345 00:17:24,640 --> 00:17:28,800 profitable that they also dish out money through dividends, and 346 00:17:28,800 --> 00:17:31,640 this is where the dividend payouts come from, the free cash 347 00:17:31,640 --> 00:17:33,200 flow. Now, knowing that, we can look 348 00:17:33,200 --> 00:17:36,320 at the companies in My Portfolio and see what they've paid out in 349 00:17:36,320 --> 00:17:38,240 dividends over the past 12 months. 350 00:17:38,640 --> 00:17:41,880 The top one is VICI. And that makes sense because 351 00:17:41,880 --> 00:17:44,720 again, this company is required to pay out the majority of its 352 00:17:44,720 --> 00:17:48,080 profits and dividends. So far, in the past 12 months, 353 00:17:48,440 --> 00:17:52,360 VICI has paid me $2742 in dividends. 354 00:17:52,640 --> 00:17:55,720 Vici's not a flashy holding. This company doesn't do anything 355 00:17:55,720 --> 00:17:58,800 too spectacular. They just own a lot of iconic 356 00:17:58,800 --> 00:18:00,760 real estate and they collect rent checks. 357 00:18:00,840 --> 00:18:03,520 It only takes a handful of employees to run this company. 358 00:18:03,800 --> 00:18:06,440 They buy real estate, they collect checks, and then they 359 00:18:06,440 --> 00:18:08,240 look for other investment opportunities. 360 00:18:08,640 --> 00:18:12,000 So the gains from this company aren't astronomical, but they 361 00:18:12,000 --> 00:18:14,720 were never supposed to be. This company was never going to 362 00:18:14,720 --> 00:18:18,120 be a growth monster company. It was going to be one that paid 363 00:18:18,160 --> 00:18:21,120 a steady rate of return with continual dividends and 364 00:18:21,120 --> 00:18:24,000 continual reinvested dividends. So far I've gained around 365 00:18:24,000 --> 00:18:28,800 $12,000 from this holding. The dividend yield is 5.15% 366 00:18:28,920 --> 00:18:32,040 today. The yield on cost or what I got 367 00:18:32,040 --> 00:18:36,680 and my yield based on the price I paid for it is 5.86%. 368 00:18:37,040 --> 00:18:39,200 So it's very close to the current dividend yield. 369 00:18:39,440 --> 00:18:42,480 Meaning that I got this company on a discount, but not an 370 00:18:42,480 --> 00:18:44,680 amazing discount. The average price paid was 371 00:18:44,680 --> 00:18:48,200 $29.52. So the majority of my return 372 00:18:48,200 --> 00:18:50,760 over owning this company has been from dividends. 373 00:18:50,840 --> 00:18:53,280 Now if we move on to Costco, this is actually my second 374 00:18:53,280 --> 00:18:56,800 biggest dividend paying company over the past 12 months, and 375 00:18:56,800 --> 00:18:59,120 that is of course because of their massive special dividend. 376 00:18:59,360 --> 00:19:04,760 I've earned $1673 from Costco in dividends in the past year. 377 00:19:05,080 --> 00:19:09,040 My yield on cost is 1%. So based on the price that I got 378 00:19:09,040 --> 00:19:12,400 Costco, I paid half as much for the dividends that I'm getting. 379 00:19:12,640 --> 00:19:14,040 As if you're going to buy it today. 380 00:19:14,040 --> 00:19:18,400 My average price paid for Costco is $431.00 and that's for a 381 00:19:18,400 --> 00:19:21,040 company that's currently trading above $900. 382 00:19:21,040 --> 00:19:24,000 Between the dividends paid and the low cost basis for this 383 00:19:24,000 --> 00:19:26,760 company, this has been one amazing investment. 384 00:19:26,800 --> 00:19:29,720 If we look at Texas Roadhouse, this is the third largest 385 00:19:29,720 --> 00:19:33,760 dividend payer in My Portfolio. I have earned 1011 dollars in 386 00:19:33,760 --> 00:19:36,440 the past year from this company and they keep raising their 387 00:19:36,440 --> 00:19:38,480 dividend paying more every single year. 388 00:19:38,520 --> 00:19:41,960 Also, like Costco, I haven't sold any shares in this company 389 00:19:42,200 --> 00:19:44,760 so it just keeps stacking up and accumulating gains. 390 00:19:45,040 --> 00:19:48,880 The current dividend yield is 1.5% which I think is a bit low 391 00:19:48,880 --> 00:19:50,120 for this company. Right now. 392 00:19:50,360 --> 00:19:55,040 My yield on cost is 2.8%, so I got a much better deal when I 393 00:19:55,040 --> 00:19:57,720 was buying this company and that's because of course, my 394 00:19:57,720 --> 00:20:01,800 average share price paid is $86 for Texas Roadhouse. 395 00:20:01,960 --> 00:20:04,760 Today, Texas Roadhouse trades for 164. 396 00:20:04,760 --> 00:20:07,440 So this is one of the opportunities that I went for. 397 00:20:07,440 --> 00:20:09,880 I was pounding the table saying that I think this company's a 398 00:20:09,880 --> 00:20:13,000 great investment. I made multiple videos on it and 399 00:20:13,000 --> 00:20:14,720 it's turned out to be a spectacular one. 400 00:20:14,960 --> 00:20:19,160 Between the doubling and capital appreciation, the 2.8% dividend 401 00:20:19,160 --> 00:20:22,040 yield on cost, this has been one of my better investments. 402 00:20:22,200 --> 00:20:25,480 The 4th largest dividend payer in My Portfolio is S&P Global. 403 00:20:25,480 --> 00:20:28,560 This one's paid. $718 over the past year. 404 00:20:28,840 --> 00:20:31,240 Now the current yield is only .7%. 405 00:20:31,480 --> 00:20:34,320 My yield on cost is a bit higher because this stock has gone up. 406 00:20:34,560 --> 00:20:37,520 My average cost on this one is 366. 407 00:20:37,640 --> 00:20:40,560 Today a share will cost you $520.00. 408 00:20:40,560 --> 00:20:42,520 So I feel like I got a good deal on this one. 409 00:20:42,520 --> 00:20:45,280 The interesting thing about S&P Global is this is one of the 410 00:20:45,280 --> 00:20:47,560 most through and through compounding machines. 411 00:20:47,560 --> 00:20:50,480 It means every characteristic. It's a super high quality 412 00:20:50,480 --> 00:20:53,640 company that's incredibly efficient, but it also happens 413 00:20:53,640 --> 00:20:57,720 to be a dividend growth machine. The company has paid a growing 414 00:20:57,720 --> 00:21:02,520 dividend since 1985. You have 3040 plus years of the 415 00:21:02,520 --> 00:21:04,200 company paying growing dividends. 416 00:21:04,480 --> 00:21:07,600 That's incredible. So again, in many cases, the 417 00:21:07,600 --> 00:21:11,040 best dividend payers are free cash flow growth machines. 418 00:21:11,240 --> 00:21:13,680 The best free cash flow growth machines are compounding 419 00:21:13,680 --> 00:21:15,920 machines. Microsoft of course shows up on 420 00:21:15,920 --> 00:21:19,760 the list as #5 this company has been one with me for a long 421 00:21:19,760 --> 00:21:21,880 period of time. I've had it since day one of My 422 00:21:21,880 --> 00:21:24,440 Portfolio. In the past, trailing 12 months, 423 00:21:24,440 --> 00:21:27,160 it's paid me 590, $8 in dividends. 424 00:21:27,480 --> 00:21:31,640 The current yield is .71. My yield on cost is 1.11. 425 00:21:31,920 --> 00:21:36,120 My average share price for Microsoft in this portfolio is 426 00:21:36,120 --> 00:21:39,000 271. So I bought this company, I 427 00:21:39,000 --> 00:21:41,920 believe at the right times. I had videos going out when 428 00:21:41,920 --> 00:21:44,960 Microsoft and all of big tech were trading down to 429 00:21:44,960 --> 00:21:49,120 unreasonably low territory around 2:20 and 2:50. 430 00:21:49,400 --> 00:21:52,120 I bought a lot of shares of the company during that time period 431 00:21:52,360 --> 00:21:54,440 and even added to it a little bit more later. 432 00:21:54,600 --> 00:21:59,440 Currently Microsoft trades is at 429, so owning it at 270 I think 433 00:21:59,440 --> 00:22:01,640 is a good deal. I'm going to hold my shares 434 00:22:01,640 --> 00:22:04,440 here, but I think Microsoft shares today are a little steep. 435 00:22:04,600 --> 00:22:06,200 And number six, we have MasterCard. 436 00:22:06,200 --> 00:22:09,760 This one's paying me $444.00 in dividends the past 12 months. 437 00:22:09,760 --> 00:22:13,800 That's .54% dividend yield. My yield on cost is slightly 438 00:22:13,800 --> 00:22:15,680 higher. My average share price for 439 00:22:15,680 --> 00:22:19,800 MasterCard is 384. Currently it trades at 496. 440 00:22:19,920 --> 00:22:22,840 You'll see the common theme here where I try to buy high quality 441 00:22:22,840 --> 00:22:26,000 companies, but I try to do it at times where there's opportunity. 442 00:22:26,880 --> 00:22:30,800 Earlier in the year and even in 2023, there were so many 443 00:22:30,800 --> 00:22:33,880 opportunities to pick up these companies at cheaper prices. 444 00:22:34,200 --> 00:22:37,080 Right now, those opportunities are few and far between. 445 00:22:37,080 --> 00:22:38,760 They're much more difficult to find. 446 00:22:39,040 --> 00:22:41,920 So I'm looking elsewhere than companies like Microsoft, 447 00:22:41,920 --> 00:22:45,360 Costco, and MasterCard. These ones were good a couple 448 00:22:45,360 --> 00:22:48,640 years ago and I believe there holds today, but I think there's 449 00:22:48,640 --> 00:22:50,440 better places to put money right now. 450 00:22:50,480 --> 00:22:55,080 And #7 we have into it now. It's paid me $329 in dividends 451 00:22:55,400 --> 00:22:56,800 into. It's just it's not a big 452 00:22:56,800 --> 00:23:01,480 dividend payer right now and the current yield is only .64%. 453 00:23:01,720 --> 00:23:05,880 My yield on cost is quite a bit higher at .9% and I own the 454 00:23:05,880 --> 00:23:11,160 company at an average cost basis of $463 today, a share of Intuit 455 00:23:11,160 --> 00:23:14,560 will cost you a sizable amount, 656 dollars. 456 00:23:14,560 --> 00:23:17,480 The company is moving fast. They have massive dominant 457 00:23:17,480 --> 00:23:21,200 platforms and they are severely underrated, especially by retail 458 00:23:21,200 --> 00:23:23,920 investors. We have applet #8, so we're 459 00:23:23,920 --> 00:23:25,920 getting down to the lower dividend payers here. 460 00:23:26,120 --> 00:23:29,440 This one has only paid me $233 this year. 461 00:23:29,440 --> 00:23:34,800 The dividend yield is a meager .45%, which is just so small. 462 00:23:35,080 --> 00:23:38,560 My yield on cost, meaning the dividend yield I'm getting with 463 00:23:38,560 --> 00:23:43,520 the shares that I purchased is over double that at 1.12%. 464 00:23:44,000 --> 00:23:48,360 My average cost basis on Apple is $89.00. 465 00:23:48,360 --> 00:23:52,280 Apple today trades at 223 dollars. 466 00:23:52,360 --> 00:23:55,760 I consider my history with Apple and the calls I've made on this 467 00:23:55,760 --> 00:23:59,360 channel with videos over and over again on this stock as one 468 00:23:59,360 --> 00:24:02,240 of the best calls I've made. Owning Apple has been a 469 00:24:02,240 --> 00:24:04,560 significant contributor to this portfolio. 470 00:24:04,920 --> 00:24:07,400 In fact, when we look at the holding now, I have around 471 00:24:07,480 --> 00:24:12,000 $32,000 in gains from Apple and the current position size is 472 00:24:12,000 --> 00:24:15,360 $33,000. The 33 $3000 I have invested in 473 00:24:15,360 --> 00:24:18,680 Apple is almost entirely gains. I still like Apple as an 474 00:24:18,680 --> 00:24:20,840 investment. I think it's a dominant company. 475 00:24:20,840 --> 00:24:23,400 It's a juggernaut and very difficult for other companies to 476 00:24:23,400 --> 00:24:26,080 compete against. But I do see the growth path is 477 00:24:26,080 --> 00:24:28,160 more difficult. Looking for the next 5 years. 478 00:24:28,440 --> 00:24:31,920 They need to grow through software and increasing prices 479 00:24:31,920 --> 00:24:34,480 and continually innovating, which is going to be a challenge 480 00:24:34,480 --> 00:24:37,120 for the company. The valuation is much higher now 481 00:24:37,120 --> 00:24:40,320 than it was five years ago, and it seems like it's just a bit 482 00:24:40,320 --> 00:24:43,240 more limited in its growth than other opportunities. 483 00:24:43,680 --> 00:24:46,800 So while Apple still is a great company, I've reduced my 484 00:24:46,800 --> 00:24:49,280 position because I don't think it's quite as good of an 485 00:24:49,280 --> 00:24:51,000 investment as it was five years ago. 486 00:24:51,000 --> 00:24:53,680 We look at some other smaller positions in the portfolio. 487 00:24:53,920 --> 00:24:56,440 Canadian Pacific. Kansas City Southern is one of 488 00:24:56,440 --> 00:24:59,240 the companies I've invested in in the past year, and this one 489 00:24:59,240 --> 00:25:02,680 has been a bit of a snooze fest. It's paid me $200 in dividends. 490 00:25:02,800 --> 00:25:06,560 That's a .63% dividend yield. My yield on cost is slightly 491 00:25:06,560 --> 00:25:08,280 higher as the stock price has gone up. 492 00:25:08,600 --> 00:25:11,360 My average on the company is $77. 493 00:25:11,440 --> 00:25:15,520 The share price today is $86, so it's gone up a little bit. 494 00:25:15,520 --> 00:25:17,760 We're in the green by a couple, $1000. 495 00:25:18,120 --> 00:25:19,880 But there's nothing to write home about here. 496 00:25:19,880 --> 00:25:22,160 This one has not been that exciting of a holding. 497 00:25:22,520 --> 00:25:25,120 I think the Canadian Pacific is still a great company. 498 00:25:25,280 --> 00:25:26,880 It's growing. It's free cash flow quickly. 499 00:25:26,880 --> 00:25:28,760 They're going to be growing their earnings quickly. 500 00:25:29,120 --> 00:25:33,240 They have very low downside in terms of disruption or intrinsic 501 00:25:33,240 --> 00:25:36,160 value, terminal risk. I believe I have the ability to 502 00:25:36,160 --> 00:25:39,000 make better gains and identifying high quality tech 503 00:25:39,000 --> 00:25:41,400 companies in #10 we have Moody's. 504 00:25:41,400 --> 00:25:43,080 This is one of my favorite companies. 505 00:25:43,360 --> 00:25:46,400 Moody is one of these companies where it's really boring at 506 00:25:46,400 --> 00:25:49,200 first glance. Your eyes will just glaze over 507 00:25:49,200 --> 00:25:51,440 when you're reading their investor relations. 508 00:25:51,680 --> 00:25:54,800 It's very mundane, very stodgy looking of a company. 509 00:25:55,120 --> 00:25:57,600 But the more you research this company, the more you do 510 00:25:57,600 --> 00:25:59,800 analysis on it, the more you like it. 511 00:26:00,040 --> 00:26:03,160 This is one of the ones that I guarantee the more time you 512 00:26:03,160 --> 00:26:05,240 spend reading about it, the more you'll like it. 513 00:26:05,720 --> 00:26:08,040 If we look at the dividend payment over the past year, it's 514 00:26:08,040 --> 00:26:12,040 only $197.00. That's a .71% dividend yield. 515 00:26:12,320 --> 00:26:15,560 My yield on cost is slightly higher at .87%. 516 00:26:15,680 --> 00:26:18,240 The average price I've paid for it is 389. 517 00:26:18,320 --> 00:26:21,880 Right now it's trading at 479. Even though Moody's doesn't have 518 00:26:21,880 --> 00:26:24,920 the highest yield, this company represents one of the best 519 00:26:25,000 --> 00:26:27,720 dividend growth companies over the past 30 years. 520 00:26:27,800 --> 00:26:30,240 Then at the very bottom here, we have two of the newest 521 00:26:30,240 --> 00:26:33,120 additions. Now these companies are #11 and 522 00:26:33,120 --> 00:26:36,760 12, simply because they're newer additions and they haven't had a 523 00:26:36,760 --> 00:26:40,560 full year to even pay dividends. For example, Salesforce has only 524 00:26:40,560 --> 00:26:44,760 paid me one dividend. The yield on it is .63% and my 525 00:26:44,760 --> 00:26:49,880 yield on cost is .58%, meaning that I'm in the red on this 526 00:26:49,880 --> 00:26:53,840 company. My cost basis is 277 right now. 527 00:26:53,840 --> 00:26:56,520 You can pick up Salesforce for 2:56. 528 00:26:56,640 --> 00:27:00,080 I currently have a $56,000 position and I'm in the red by 529 00:27:00,080 --> 00:27:03,400 4500 dollars. Obviously it's a bummer to be in 530 00:27:03,400 --> 00:27:06,800 the red in any position, but the truth is when you just buy into 531 00:27:06,800 --> 00:27:10,000 a company brand new, like I've done with Salesforce this year, 532 00:27:10,280 --> 00:27:13,040 it's very difficult to control which way the stock will trade 533 00:27:13,040 --> 00:27:16,040 within a single year. Peter Lynch says his best stocks 534 00:27:16,040 --> 00:27:19,040 really happened three to five years after buying them. 535 00:27:19,440 --> 00:27:22,600 So Salesforce being a brand new position, it's much more 536 00:27:22,600 --> 00:27:24,920 difficult to get it right, right away. 537 00:27:25,240 --> 00:27:26,640 I'm going to give this one more time. 538 00:27:26,880 --> 00:27:29,160 And I think with their continual buybacks, with their margin 539 00:27:29,160 --> 00:27:32,640 increases, with their steady organic revenue growth, I see 540 00:27:32,640 --> 00:27:36,560 this one working its way above $300.00 per share in the future, 541 00:27:36,840 --> 00:27:38,520 and that will put me well into the green. 542 00:27:39,040 --> 00:27:42,560 The last one we have Booking, which is my newest addition to 543 00:27:42,560 --> 00:27:46,560 the portfolio and it's paid exactly $0.00 in dividends and 544 00:27:46,560 --> 00:27:49,720 that is simply because I haven't owned it long enough for it to 545 00:27:49,720 --> 00:27:52,720 even pay a first dividend. But this company is a dividend 546 00:27:52,720 --> 00:27:54,400 payer. In fact, they have a decent 547 00:27:54,400 --> 00:27:58,560 yield for this good of a company, a .9% dividend yield. 548 00:27:58,800 --> 00:28:02,680 My yield on cost is .95%. So I'm in the green by a bit on 549 00:28:02,680 --> 00:28:07,560 this one. My average cost basis is $3688 550 00:28:07,640 --> 00:28:12,880 Right now it trades at $3925.00. So looking over every company on 551 00:28:12,880 --> 00:28:16,320 this list, the important thing is to not focus on the starting 552 00:28:16,440 --> 00:28:19,640 dividend yield and which one has the biggest dividend starting 553 00:28:19,640 --> 00:28:21,400 off. The important thing is to focus 554 00:28:21,400 --> 00:28:24,200 on companies that have great balance sheets that have the 555 00:28:24,200 --> 00:28:27,360 ability to grow free cash flow over time, which will eventually 556 00:28:27,360 --> 00:28:30,360 support a growing dividend. This is the reason that My 557 00:28:30,360 --> 00:28:33,920 Portfolio has growing amounts of dividend income every single 558 00:28:33,920 --> 00:28:35,560 year. It's also the reason that I 559 00:28:35,560 --> 00:28:39,560 avoid tragic scenarios where companies struggle, cut their 560 00:28:39,560 --> 00:28:43,720 dividend by 50% or 70% or completely eliminate it. 561 00:28:43,960 --> 00:28:47,320 So far in My Portfolio, no company company has cut their 562 00:28:47,320 --> 00:28:49,160 dividend, they've only grown them. 563 00:28:49,240 --> 00:28:52,200 The dividends that I'm continually paid and I reinvest 564 00:28:52,200 --> 00:28:55,520 back into the best opportunities at the time has acted as a 565 00:28:55,520 --> 00:28:58,480 significant catalyst to the growth of this portfolio. 566 00:28:58,480 --> 00:29:00,960 So I'm going to continue to observe my companies, do 567 00:29:00,960 --> 00:29:04,280 analysis on different holdings and try to identify the best 568 00:29:04,280 --> 00:29:07,720 opportunities in the given scenarios that were given in 569 00:29:07,720 --> 00:29:10,040 this crazy market. Now moving on, we get to an 570 00:29:10,040 --> 00:29:13,960 earnings report from Adobe and this is more of a story than an 571 00:29:13,960 --> 00:29:16,960 actual earnings report. It's not just the numbers being 572 00:29:16,960 --> 00:29:20,120 reported here, but this sparks a new debate in the continual 573 00:29:20,120 --> 00:29:24,080 question of what type of returns, actual returns are we 574 00:29:24,080 --> 00:29:28,200 getting from AI. So far, we've had significant 575 00:29:28,200 --> 00:29:31,680 and I mean incredible investments into AI. 576 00:29:31,960 --> 00:29:35,240 The amount of CapEx spending of both large and small companies, 577 00:29:35,440 --> 00:29:38,960 every company in between throwing money into CapEx and 578 00:29:38,960 --> 00:29:42,400 employees and talent for artificial intelligence is at 579 00:29:42,400 --> 00:29:45,880 extremely high levels right now. And now investors are asking the 580 00:29:45,880 --> 00:29:48,920 question, where are the returns? What returns are we getting and 581 00:29:48,920 --> 00:29:51,480 where are they coming from? I've discussed this topic of the 582 00:29:51,480 --> 00:29:54,480 enormous amount of money being spent on AI in the most recent 583 00:29:54,480 --> 00:29:56,480 episode in the After Hours channel. 584 00:29:56,680 --> 00:29:59,480 You can check out that entire discussion, but this is more of 585 00:29:59,480 --> 00:30:02,200 a continuation of it. We have the example of Adobe 586 00:30:02,200 --> 00:30:05,080 here, which is currently down 9% after their earnings. 587 00:30:05,480 --> 00:30:08,280 Now they beat on their earnings per share and their revenue 588 00:30:08,280 --> 00:30:09,800 forecast for the previous quarter. 589 00:30:10,120 --> 00:30:12,320 But obviously investors are looking to the future, 590 00:30:12,320 --> 00:30:14,400 especially with growth companies like Adobe. 591 00:30:14,400 --> 00:30:17,240 The problem that they have is that their forecast for the 592 00:30:17,240 --> 00:30:20,080 future was way below analyst expectations. 593 00:30:20,200 --> 00:30:23,000 Adobe shares dropped after the company delivered an outlook 594 00:30:23,000 --> 00:30:26,320 that failed to quell investors and patience for new artificial 595 00:30:26,320 --> 00:30:29,840 intelligence tools to start generating cash again. 596 00:30:29,840 --> 00:30:31,920 That's the big question investors are asking. 597 00:30:32,120 --> 00:30:34,800 When is this stuff actually going to make real money? 598 00:30:35,160 --> 00:30:38,040 Known for its software for creative professionals, Adobe 599 00:30:38,040 --> 00:30:41,880 has been adding AI features to its applications, such as 600 00:30:41,920 --> 00:30:45,720 embedding its proprietary technology Firefly into products 601 00:30:45,720 --> 00:30:49,200 like Photoshop and Illustrator. But investors are keen to see 602 00:30:49,200 --> 00:30:52,040 the evidence that Adobe can actually make money from these 603 00:30:52,040 --> 00:30:55,920 tools, especially as anxiety rises that small startup rivals 604 00:30:56,160 --> 00:30:58,760 will take a business from traditional software companies 605 00:30:59,000 --> 00:31:00,880 like Adobe Salesforce and Work Day. 606 00:31:01,000 --> 00:31:04,160 These basket of companies, Adobe Salesforce and Work Day, are not 607 00:31:04,160 --> 00:31:07,200 only struggling right now in their stock price, most of them 608 00:31:07,200 --> 00:31:10,560 are trading down again. Salesforce is one that I do own 609 00:31:10,800 --> 00:31:13,880 and that's my worst performing holding so far this year. 610 00:31:14,280 --> 00:31:17,440 Investors are not only concerned about whether or not these 611 00:31:17,440 --> 00:31:20,880 companies can make money from their investments in AI, but 612 00:31:20,880 --> 00:31:24,200 they also have been outlined as the victims of AI. 613 00:31:24,440 --> 00:31:26,240 Salesforce and work there are going to have all their 614 00:31:26,240 --> 00:31:30,080 applications replaced by AI, and Adobe could face similar 615 00:31:30,080 --> 00:31:32,200 pressures. Those concerns seem to be 616 00:31:32,200 --> 00:31:35,600 reaffirmed by the fiscal fourth quarter sales guidance that fell 617 00:31:35,600 --> 00:31:37,160 short of Wall Street's estimates. 618 00:31:37,240 --> 00:31:39,960 Adobe has, of course, a lot of different things they do, but 619 00:31:39,960 --> 00:31:43,120 the most important one is the Adobe Creative Cloud. 620 00:31:43,480 --> 00:31:46,560 The Adobe Creative Cloud is a thing that people sign up for at 621 00:31:46,560 --> 00:31:50,000 companies so that they can have access to Adobe Premiere and 622 00:31:50,000 --> 00:31:53,360 Firefly and Photoshop. Creative professionals rely on 623 00:31:53,360 --> 00:31:55,400 these tools. They've built their entire 624 00:31:55,400 --> 00:31:58,360 business using them. They have huge network effects 625 00:31:58,360 --> 00:32:00,720 in their knowledge base, the amount of people using them. 626 00:32:00,760 --> 00:32:03,080 But it is it is true that there's a lot of competition 627 00:32:03,080 --> 00:32:05,520 rising for Adobe. So as investors are trying to 628 00:32:05,520 --> 00:32:08,400 break this down, what are competitive to Adobe? 629 00:32:08,520 --> 00:32:11,040 Why isn't the sales forecast rising with all their 630 00:32:11,040 --> 00:32:13,960 investments in AI? Adobe has a different approach 631 00:32:13,960 --> 00:32:16,880 on this, a different answer. They said on their sales call 632 00:32:16,880 --> 00:32:19,600 that they're still focused on making sure customers use it's 633 00:32:19,640 --> 00:32:23,080 AI innovations rather than seeking to directly make money 634 00:32:23,160 --> 00:32:26,320 from the tools. So Adobe's taking the approach 635 00:32:26,760 --> 00:32:31,160 of implementing AI features and innovations into their already 636 00:32:31,160 --> 00:32:34,320 existing tools as part of the overall bundle. 637 00:32:34,600 --> 00:32:37,480 They're not breaking them out and charging separately like, 638 00:32:37,720 --> 00:32:40,600 hey, here's the Adobe Creative Cloud and here's this separate 639 00:32:40,800 --> 00:32:42,640 AI tool that you can pay extra for. 640 00:32:43,080 --> 00:32:46,200 So investors aren't able to see the actual impacts. 641 00:32:46,400 --> 00:32:49,720 We're not able to drill down and see how AI is actually 642 00:32:49,720 --> 00:32:54,080 benefiting Adobe, but Adobe could argue that, look, the 643 00:32:54,080 --> 00:32:57,000 reason that our company's still growing and we're maintaining 644 00:32:57,000 --> 00:33:00,040 the market share we have is because of our investments in 645 00:33:00,160 --> 00:33:03,360 AI. That makes AIA necessity rather 646 00:33:03,360 --> 00:33:06,600 than a new feature to sell. The company's also working on 647 00:33:06,600 --> 00:33:10,000 developing similar technology for its 3D and video editing 648 00:33:10,000 --> 00:33:12,040 software. So they're going to be layering 649 00:33:12,040 --> 00:33:14,680 upon AI into all the tools that they have. 650 00:33:15,000 --> 00:33:18,080 And of course they need to do this to keep an edge over 651 00:33:18,080 --> 00:33:20,520 rivals. Adobe has an argument of their 652 00:33:20,520 --> 00:33:21,920 own. They're saying that users are 653 00:33:21,920 --> 00:33:23,840 using these AI tools more and more. 654 00:33:24,080 --> 00:33:29,080 Adobe users have used Firefly, this AI tool 12 billion times. 655 00:33:29,560 --> 00:33:31,440 When we look at the graph, it's pretty convincing. 656 00:33:31,440 --> 00:33:34,080 It's just going up and up. So more and more people are 657 00:33:34,080 --> 00:33:37,640 actually using their AI tools. We're just not seeing a big bump 658 00:33:37,720 --> 00:33:41,040 in the actual metrics or the revenue from this AI tool. 659 00:33:41,040 --> 00:33:43,560 When we look at this most recent quarter and what really 660 00:33:43,560 --> 00:33:47,680 performed well, the document processing software outperformed 661 00:33:47,680 --> 00:33:51,320 expectations by more than the products for editing photos and 662 00:33:51,320 --> 00:33:55,120 videos where Adobe has created proprietary AI models. 663 00:33:55,600 --> 00:33:59,560 So the part of this company in the most recent report that did 664 00:33:59,560 --> 00:34:04,600 really well was the part that has nothing to do with AI and 665 00:34:04,600 --> 00:34:07,160 that's concerning to investors. They say that that's causing 666 00:34:07,440 --> 00:34:11,040 anxiety for investors. Why is the document processing 667 00:34:11,040 --> 00:34:14,840 software where they're really not doing any AI advancements in 668 00:34:15,120 --> 00:34:18,719 doing so well and the creative proprietary stuff with AI that 669 00:34:18,719 --> 00:34:21,199 they're spending a bunch of money on not doing quite as 670 00:34:21,199 --> 00:34:22,920 well. And this comes back to that 671 00:34:22,920 --> 00:34:25,560 debate of how AI is going to help these companies. 672 00:34:25,840 --> 00:34:29,159 In the case of Adobe, I do think they're going to layer upon AI 673 00:34:29,159 --> 00:34:32,199 into all their creative tools. And I still think there's a huge 674 00:34:32,199 --> 00:34:35,480 need for professional tools. But with Adobe, there is 675 00:34:35,520 --> 00:34:38,639 increasing amounts of competent competition. 676 00:34:38,719 --> 00:34:42,000 So Adobe's face a future that requires significant investments 677 00:34:42,000 --> 00:34:45,719 in AI to stay current with their software and competitive during 678 00:34:45,719 --> 00:34:48,920 a time where they're also facing more competitive threats that 679 00:34:48,920 --> 00:34:51,480 are highly competent. When I look at the situation 680 00:34:51,480 --> 00:34:54,760 with Adobe, as much as I like the company and I certainly 681 00:34:54,760 --> 00:34:57,440 don't think it's the worst investment in the world, I think 682 00:34:57,440 --> 00:35:00,360 there's much worse companies you can invest in than Adobe. 683 00:35:00,720 --> 00:35:04,520 But right now, I don't believe this company is as attractive as 684 00:35:04,520 --> 00:35:07,480 an investment as many investors believe, and that's because I 685 00:35:07,480 --> 00:35:10,160 continue to be concerned about the competitive threats. 686 00:35:10,280 --> 00:35:12,880 Now we also have news that Uber and Waymo are expanding their 687 00:35:12,880 --> 00:35:15,960 partnership and now offering driverless ride sharing trips in 688 00:35:15,960 --> 00:35:19,360 Austin and Atlanta. Uber's riders in those cities 689 00:35:19,360 --> 00:35:22,280 can be matched with driverless Waymo cars for some trips. 690 00:35:22,280 --> 00:35:25,280 According to the companies, the rides will only be available 691 00:35:25,400 --> 00:35:28,840 through Uber's app, unlike in San Francisco and Los Angeles 692 00:35:29,000 --> 00:35:30,640 where riders book through the Waymo app. 693 00:35:30,920 --> 00:35:32,880 So Uber negotiated quite a deal here. 694 00:35:33,200 --> 00:35:36,800 They said, look, we'll offer Waymo rides, but only if they 695 00:35:36,800 --> 00:35:39,960 come through the Uber app. Now that makes sense why Uber is 696 00:35:39,960 --> 00:35:43,000 up 5% today. This is a great deal for Uber. 697 00:35:43,080 --> 00:35:46,200 The expansion comes as Uber faces investor pressure to step 698 00:35:46,200 --> 00:35:49,160 up its autonomous vehicle strategy, especially ahead of 699 00:35:49,160 --> 00:35:52,560 Tesla's planned robotaxi event slated for October 10. 700 00:35:52,840 --> 00:35:54,920 Waymo's still small in this business. 701 00:35:54,960 --> 00:35:58,920 As of their weekly recap, they did 50,000 rides, which makes up 702 00:35:58,920 --> 00:36:02,880 for approximately 2% of ride sharing usage in San Francisco. 703 00:36:03,040 --> 00:36:06,240 Ultimately, we'll see what happens, but this is undoubtedly 704 00:36:06,280 --> 00:36:09,040 a good move by Uber. It makes their network effects 705 00:36:09,040 --> 00:36:11,200 stronger. It makes so that the logistics 706 00:36:11,200 --> 00:36:12,960 they've already created have more value. 707 00:36:13,360 --> 00:36:16,920 And even if Tesla comes in and gives a great presentation, I 708 00:36:16,920 --> 00:36:19,600 think Uber will be able to make a lot of money with their 709 00:36:19,600 --> 00:36:22,280 massive network effects and partnerships over the next 710 00:36:22,280 --> 00:36:24,280 decade. But this is a new industry, and 711 00:36:24,280 --> 00:36:26,040 it's exciting to see what's happening now. 712 00:36:26,040 --> 00:36:28,280 Finally, this is some interesting news that we saw 713 00:36:28,320 --> 00:36:31,120 over the past couple of days. We have the company Visa 714 00:36:31,120 --> 00:36:34,440 MasterCard, which I still think that a lot of investors that 715 00:36:34,440 --> 00:36:37,480 haven't looked into these companies view incorrectly. 716 00:36:37,760 --> 00:36:40,440 They view them only as credit card companies. 717 00:36:40,840 --> 00:36:44,280 In reality, MasterCard and Visa are not credit card companies. 718 00:36:44,360 --> 00:36:46,200 They're digital payment networks. 719 00:36:46,480 --> 00:36:48,200 They don't lend money like a bank. 720 00:36:48,440 --> 00:36:51,200 They are technology companies that are incredibly scaled and 721 00:36:51,200 --> 00:36:53,960 globally dominant. They only play a small portion 722 00:36:53,960 --> 00:36:56,560 of total online digital payments, but they play a 723 00:36:56,560 --> 00:36:59,480 critical role and they have decent market share of the role 724 00:36:59,480 --> 00:37:02,760 they play. They're also service businesses 725 00:37:03,000 --> 00:37:06,160 that offer a variety of incredibly important technology 726 00:37:06,160 --> 00:37:08,720 services, one of them being cybersecurity. 727 00:37:08,840 --> 00:37:11,240 The financial services giant said it would incorporate 728 00:37:11,240 --> 00:37:13,680 recorded futures technology, including artificial 729 00:37:13,680 --> 00:37:16,800 intelligence, into its fraud prevention identity and 730 00:37:16,800 --> 00:37:19,880 cybersecurity services. It's expected to close the 731 00:37:19,880 --> 00:37:22,760 acquisition by the first quarter of 2025. 732 00:37:23,360 --> 00:37:25,840 Now, I think that this deal is going to go through simply 733 00:37:25,840 --> 00:37:28,920 because regulators don't want these companies become too big 734 00:37:28,920 --> 00:37:32,640 and dominant. But MasterCard is not a monopoly 735 00:37:32,640 --> 00:37:36,400 of cybersecurity, so there's no argument that they are cornering 736 00:37:36,400 --> 00:37:39,200 the cybersecurity market. Another thing that they could 737 00:37:39,200 --> 00:37:42,400 argue to regulators if they try to give them a tough time is 738 00:37:42,400 --> 00:37:45,720 that by preventing MasterCard from buying a cybersecurity 739 00:37:45,720 --> 00:37:49,840 firm, they're literally making cybersecurity weaker for all of 740 00:37:49,840 --> 00:37:53,280 their customers. So I think this is 1 acquisition 741 00:37:53,280 --> 00:37:55,200 that's likely to go through for MasterCard. 742 00:37:55,520 --> 00:37:58,680 I don't know how the regulators would feel good about blocking 743 00:37:58,680 --> 00:38:02,080 an acquisition of blocking a massive company with a huge 744 00:38:02,080 --> 00:38:04,640 network from buying a cybersecurity firm. 745 00:38:04,640 --> 00:38:07,840 MasterCard said that threat Intel, which is exactly what 746 00:38:07,840 --> 00:38:11,920 this firm does, is critically important to understand what the 747 00:38:11,920 --> 00:38:15,000 threats are, how we prioritize them, and how we can be 748 00:38:15,000 --> 00:38:17,800 proactive. This type of acquisition proves 749 00:38:17,800 --> 00:38:21,080 a few things. One is that MasterCard is a tech 750 00:38:21,080 --> 00:38:23,520 company, it's not a credit card company. 751 00:38:24,000 --> 00:38:27,600 And two, that MasterCard is still focused on growing their 752 00:38:27,600 --> 00:38:30,920 value added services. We know that Visa is doing this 753 00:38:30,920 --> 00:38:34,120 as well at a very brisk pace. When we look at the revenue by 754 00:38:34,120 --> 00:38:37,200 segment, it is true that majority of revenue comes from 755 00:38:37,200 --> 00:38:40,440 the payment network, but there is an increasing amount coming 756 00:38:40,440 --> 00:38:44,040 from these value added services. These are cybersecurity, know 757 00:38:44,040 --> 00:38:47,640 your customer identity, all different services they sell to 758 00:38:47,640 --> 00:38:50,280 their customer. I'm happy about this acquisition 759 00:38:50,280 --> 00:38:51,480 and I think it's going to go through. 760 00:38:51,880 --> 00:38:54,120 That's all for this episode. See you in the next one.