High Yield Reads - 4/5/14

Summary of recents posts and pieces of interest, sometimes enduring, to dividend investors:

• Base Hit Investor on Markel - as you might guess from the title, I am main interested in dividend stocks, but there are one or two exceptions, Berkshire comes to mind. Another exception is the so called Baby Berkshire: Markel. This write up is a very good overview of what makes Markel tick, including excellent underwriting, and investment track record. In addition, Markel launched Markel Ventures which is wholly owned companies that do sexy things like dredging canals and slicing hamburger buns for McDonald's. I attended the Markel brunch in Omaha last year the day after the BRK meeting and they look at Ventures as a small but growing part of the business, Tom Gayner said then "we have never been more liquid."

• On a related note its worth studying Markel's holdings for ideas, many of which are excellent dividend growth opportunities, included in their top 10 holdings: 3rd largest holding: Diageo, 8th  Walmart, 9th Exxon Mobil

• Timothy McAleenan Jr picks up an interesting thread comparing the history of tobacco stocks (off the charts) to the future of beverages. I, for one, hope he is right.

• Quality matters in dividend investing. Another post by Mr. McAleenan; is Colgate the best dividend stock in the world?

• You can very easily find higher yields elsewhere. It’s not what Colgate does for you now that is so impressive, but rather, what it does for you as a lifetime partner that causes jaws to drop....In 1983, Colgate yielded 1.8%. Nothing impressive. Yet, every $1,000 you invested in Colgate back then would be paying out $6,483 in annual dividends. Every 56 days, Colgate would generate as much dividend income for you as your entire initial investment. The catch is that it took 32 years to do that. It’s not every day you meet someone that thinks, let alone acts, in terms of decades, but it is nice to know that sweet rewards await those who wrap up diligence, patience, and money into a giant ball of delayed gratification and let it roll

(Related to that, here are my three rules of dividend investing. 1) quality matters in dividend investing 2) quality matters in dividend investing 3) quality matters in dividend investing)

• Todd Wenning connects the dots on a recent Fidelity article with 4 things to know about dividend investing. The Elf story is a great way to reinforce what the yield isn't telling you. Just leave the gum, Buddy.

• China Cash Shortage Brings IOUs to the Fore (WSJ) - quite a scary statement on the health of China's banks and companies stacking debt on top of more debt. Corporate debt is surging and its not backed by cash but IOUs, what could go wrong? 

• But Martin Wolf thinks it may not end in tears, instead he expects the government to lead reform efforts that end with a whimper not a bang.