This is one of the times that another blogger’s post has triggered my (loosely defined) creative juices. The post in question was Lanny’s (Dividend Diplomats) Waste Management analysis. Now I have no disagreement with his conclusion, in fact you could compare the DD Screener to delivering a fastball right down the middle. The only alternatives to a strike are whether the pitch is high or in the dirt.
Personally, I like a little more strategy – the brush back before throwing a curve that nicks the corner. Questions like EPA regulations or NIMBY impact on landfills. Or the number of municipal contracts that are competitive versus monopolistic. Issues obscured by a strict reading of batting and earned run averages.
The jewel in his analysis was:
I was driving around my neighborhood and was surrounded by a few waste disposal service trucks …
Aha! A twist on the old kitchen cupboard investing strategy. You know the drill … identify the companies behind the products you use. I’m not sure of the absolute merits of this strategy, but there is comfort in investing in companies whose products and/or brands are familiar. And it is one I use (to a degree) as well. My assumption being, why not have my spending subsidized by companies I do business with through dividends?
I think I stated earlier I thrive in the obscurities, case in point being that last week I required a new prescription. My meds generally delivered by mail from Humana (HUM). One-off situations are handled by a local pharmacy. In this case I chose Tom Thumb grocery as they accepted Humana insurance and I could wait at the Starbucks (SBUX) nearby. I noticed on my paperwork that Argus Health was used for claim processing. Argus is owned by one of my companies, DST.
There we have it. Humana paid Tom Thumb which paid a processing fee to DST while I paid Starbucks while waiting. Of which HUM, DST and SBUX all will provide a rebate (dividend) to me. Although a topic I’ve mused on before, it is also one I feel never gets old. One can always posit that this level of detail is irrelevant and perhaps it is. But I feel it provides a broader snapshot of the business when inter-relationships are recognized.