In investing, boring is almost always better.
It may be fun to participate in a company's meteoric ride up the stock charts by putting your cash with the likes of Google or Apple, but the real stars of the investing firmament tend to be much dimmer.
Why? It's simple. There are too many people who think Google is a more interesting long-term play than, say, Procter & Gamble or Coca-Cola. All that investor interest drives the price of exciting shares upwards, which does wonders for those who got in early but means you'll pay a high price if you want to buy now.
Further complicating the case for piggybacking on such growth stocks is their lack of dividends. They book profits in many quarters - sometimes stellar ones - but they typically reinvest every dirham they make in order to fund further growth. That means no dividends for investors, and it means if you own these stocks, you aren't receiving any direct compensation for the company's success. Apple may be selling more iPods and iPhones than you could ever have imagined, but none of the profits from those sales are going directly into shareholders' pockets.
Investors are generally more than happy to let Apple and Google reinvest all their profits as long as their stock prices continue to go up. Without dividends, though, the investor's margin of safety gets a lot slimmer.
Returns are tied entirely to capital gains that stem ultimately from what other investors think about the company, not the fundamentals of profits and expansion.If investors aren't getting a slice of company profits, they are also less likely to challenge management over decisions that could affect future growth.
As long as stock prices don't fall, investors have no incentive to make noise if profit growth isn't where it should be. That produces a misalignment between the interests of the company's management and the success of the business. Managers want to please investors by keeping the stock price high in the short term, even at the expense of long-term profits and growth.
To be sure, young companies can hardly be blamed for reinvesting profits: they want to grow, and they need money to do so.
Yet as an investor, I would argue that it's better to wait until a company matures and starts paying dividends than to play the growth game and hope for the best. History is full of examples of "hot" companies that never grew into stable mainstays of the corporate world, flaring out before they paid a single dividend.
The most obvious and recent example, of course, was the 1990s tech bubble, which caused a lot of excitement and an equal measure of turmoil, without many lasting benefits for shareholders. Before that was the "tronics" boom in the 1960s, when companies were able to boost share prices simply by implying that they were somehow involved in the newfangled electronics business.
That is why the unsung heroes of the market are its cheap stocks that pay dividends. They are inexpensive relative to other shares because people aren't that thrilled about them. They're boring, in other words.
But while they may not be the leading lights of a new tech-driven economic order, they tend to be old and stable, and at the same time often have huge and rarely recognised growth prospects.
I'm talking about companies like Unilever, Procter & Gamble, Johnson & Johnson, Kraft, AT&T and ConAgra. These firms make food and medicine and deliver telecommunications services. With the possible exception of the telecoms, most of these firms wouldn't pop up on your radar unless you looked for them. In reality, though, they're all around you.
Check the packaging on your soap next time you go shopping. It's probably made by Unilever. I think these companies have a good chance of growing and posting stable - if not increasing - profits over the next 10, 20, 30, 40 or even 50 years.
They make good products that everybody needs, they operate on a global scale, and the population of the world doesn't seem likely to decrease any time soon.
Human beings need soap and food, and there are going to be more human beings in the world in the next few decades, barring a series of natural disasters or an all-out nuclear war.
As these firms put their tentacles into new markets, they have shown they aren't forgetting the shareholders who own them. ConAgra has paid dividends - now at about 20 US cents per share - since 1987. Procter & Gamble has paid back its investors for about that long, too. Unilever's dividend history goes all the way back to 1985. There have been some blips along the way for all these companies. Nobody's immune to bad economies and bad markets. Even in challenging years, though, these not-terribly-interesting firms haven't left shareholders in the lurch.
If you're a long-term investor, those are the kinds of attributes I would argue you should look for. In any investment, the challenge is to evaluate what, exactly, you are getting by putting your hard-earned dirhams on the line.
If all you're getting is voting rights and the hope that a hot stock's price goes up, you're not getting enough.
@Email:afitch@thenational.ae
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
In Praise of Zayed
A thousand grains of Sand whirl in the sky
To mark the journey of one passer-by
If then a Cavalcade disturbs the scene,
Shall such grains sing before they start to fly?
What man of Honour, and to Honour bred
Will fear to go wherever Truth has led?
For though a Thousand urge him to retreat
He'll laugh, until such counsellors have fled.
Stands always One, defiant and alone
Against the Many, when all Hope has flown.
Then comes the Test; and only then the time
Of reckoning what each can call his own.
History will not forget: that one small Seed
Sufficed to tip the Scales in time of need.
More than a debt, the Emirates owe to Zayed
Their very Souls, from outside influence freed.
No praise from Roderic can increase his Fame.
Steadfastness was the Essence of his name.
The changing years grow Gardens in the Sand
And build new Roads to Sand which stays the same.
But Hearts are not rebuilt, nor Seed resown.
What was, remains, essentially Alone.
Until the Golden Messenger, all-wise,
Calls out: "Come now, my Friend!" - and All is known
- Roderic Fenwick Owen
the pledge
I pledge to uphold the duty of tolerance
I pledge to take a first stand against hate and injustice
I pledge to respect and accept people whose abilities, beliefs and culture are different from my own
I pledge to wish for others what I wish for myself
I pledge to live in harmony with my community
I pledge to always be open to dialogue and forgiveness
I pledge to do my part to create peace for all
I pledge to exercise benevolence and choose kindness in all my dealings with my community
I pledge to always stand up for these values: Zayed's values for tolerance and human fraternity
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The Lowdown
Us
Director: Jordan Peele
Starring: Lupita Nyong'o, Winston Duke, Shahadi Wright Joseqph, Evan Alex and Elisabeth Moss
Rating: 4/5
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
UAE currency: the story behind the money in your pockets
