Safe Dividend Investing
In 2000, I lost $300,000 in mutual funds that an investment advisor had put my lifesavings into.... I lost it because I had entrusted it to an industry that does not educate investors nor encourage them to look closely at what that industry is doing with their money..... I set out to find a better, safer way to invest..... My podcasts relate to what I learned in creating a generous, reliable income and in growing my wealth.... A few of the more important lessons I learned and explore are:.... (1) It is critical that you become a self-directed investor.....(2) If you can not easily measure the risk and potential in an investment, then do not invest in it. This excludes from your portfolio bundled investment devices, like mutual funds, ETFs and Index funds,..... (3) Financially strong companies who have paid “good dividends” for decades will continue to stay strong and continue to pay good dividends because it is both part of their "character" and in their executives selfish interest.....(4) Diversification is critical. Investing equally in the best 20 strong dividend stocks is the ideal.....A portfolio of 20 limits your risk in any one stock to 5% of your wealth..... No matter how strong you think a stock is, do not fall in love with it..... I have lived very well off my steady dividend income for 18 years, through two market crashes and one pandemic. I have watched my portfolio’s capital more than triple from where I started, despite taking out a generous dividend income every year to live on... In charts, for my second investment book,(Safer Better Dividend Investing), I spent months scoring all 628 dividend stocks paying dividends of 6% or greater traded on the TSX, NYSE and the NASDAQ. I discovered dozens of stocks that can provide not only a generous dividend income but outstanding capital growth.....Financial independence is realizable for careful, patient, dividend investors.
Safe Dividend Investing
Podcast 246 - BUFFETT MAKES INVESTMENT MISTAKES TOO
Welcome to Safe Dividend Investing's Podcast 246- (25 October 2025)
As I continue to score and analyze stocks for my next investment book the loss at The Kraft Heinz Company (stock symbol KHC) caught my interest. KHC was a merger formed in 2015 and will cease to exist in 2026 when it is again split into two companies.
It is currently the 5th largest food company in the world. When Warren Buffett, who is recognized to be the most successful stock investor in the world, invested $3.76 Billion dollars of Berkshire Hathaway's money Kraft Heinz he was sure it would provide a generous return. Berkshire have now lost $2.63 billion in this venture.
There are lessons for you to learn from this loss. Perhaps the biggest is do your own basic research and do not accept that anyone can accurately predict future share prices.
In this podcast (with a written transcript attached) you can get an understanding of why the stock scoring software supplied with my books makes it easy to identify and sort the strength of the kind of stocks you wish to acquire for your portfolio.
I write my investment books for those who fear that they will lose their life savings by investing in the stock market My books show investors an easy, safe way to select financially strong, safe, growing companies who pay high dividends . I have been successfully investing this way for twenty years .My portfolio of strong dividend stocks not only provides me with a reliable, growing source of income but over time has increase the value of my portfolio by several multiples.
Unlike mutual funds and index funds - where investors have no control over their investment and only a vague idea as to what stocks are in the fund - a self-directed investor can fully understand and appreciate the value of each stock in the portfolio that they created. They can escape the mundane returns and high fees inherent in owning funds.
For more information on self-directed investing go to my website www,.informus.ca or listen to the previous 245 weekly podcasts. The first 160 podcasts are devoted to answering questions from investors just like you. The remainder give you an opportunity to practice choosing stocks and introduce new relevant topics.
Ian Duncan MacDonald
Author and Commercial Risk Consultant,
President of Informus Inc
2 Vista Humber Drive
Toronto, Ontario
Canada, M9P 3R7
Toronto Telephone - 416-245-4994
New York Telephone - 929-800-2397
imacd@informus.ca
PODCAST 246 (25 Oct 2025
SAFE DIVIDEND INVESTING
BUFFETT ALSO MAKES INVESTMENT MISTAKES
Greetings to investors all around the world. Welcome to Safe Dividend Investing’s Podcast # 246, on October 25th of 2025. My name is Ian Duncan MacDonald, and I am an author of six investment books.
This week I finished gathering the data and scoring the last 70 stocks to go into my new book on 200 high-dividend stocks traded on the New York Stock Exchange. A few of these 70 stocks got my attention. One of them was KHC – The Kraft Heinz Company.
My earlier investment books are like time capsules; I can easily go back and look at the data of a stock that I previously gathered data on and scored. In September of 2021 when I scored and analyzed “Kraft Heinz Company”, for my book, “New York Stock Exchange’s 106 Best High Dividend Stocks” it’s IDM score was a strong 65. Looking at this new KHC data in October of 2025 I see that the score has declined to 51. ( I personally avoid investing in stocks with scores of less than 50). Back in 2022 the share price had been $34.69 (a drop from $36.38 in 2021). KHC is now at $25.71. If I had gone further back to 2017 in my previous book’s historical charts the stock I would have seen that KHC had been at a high of $87.46.
Stock prices, for KHC only go back to 2015. Prior to that it did not exist. What existed were two companies, the Kraft Foods Group company and the H.J Heinz Company. These two giant food manufacturers were merged in 2015.
The clever investors in the newly formed company had deliberately created the fifth largest food company in the world, The new company, The Kraft Heinz Company, had combined sales of 28 billion dollars.
Warren Buffet and the other investors were convinced that by amalgamating administration and accounting they would be able to achieve significant cost savings and improvements in profits. After the merger hundreds of employees were let go as part of this cost-saving plan.
The two companies were well established. Heinz, famous for its ketchup, had been operating for more than 150 years and Kraft had sold its cheeses for about 100 years.
Warren Buffett, now over 90 years of age, the Chairman of Berkshire Hathaway (BRK.A) has been recognized for decades as the most successful stock investors in the world. The shares of its conglomerate, BRK.A, trade at $738,500 a share. They have a book value of $450,112. BRK.A’s market cap is 1.1 trillion dollars
Buffett took a 27% stake in KH in 2015. This made him the company’s largest shareholder.
Prior to the amalgamation Buffett acquired his Heinz shares in 2013 and had made it a private company. In 2012 Kraft Foods Inc split its company into a snack division under the Mondelez brand and cheeses under the Kraft Foods Group.
For the first few years after the amalgamation the new company did well. However, by 2019 the financial results began to suffer. One indicator was a drop in the stock’s dividend payouts. They are paid out of profits.
In 2018 the dividend payout had been $0.63 for share. By 2019 payout had dropped to $0.40 a share where they have remained for the last six year.
Interestingly the dividend yield increased to 6.21% in 2025 from the 4.61% dividend yield in 2022. If revenues drop and dividend payouts remain the same, then the dividend yield percent will mathematically increase. Companies do not want to cut their dividend yield percents because it is usually an indication of declining sales. Investors are willing to pay more for the shares of companies with rising sales and less for declining sales.
Investing in the shares of a company is a commercial risk. It is important to look at the historical risk picture of a stock before purchasing its shares. You want to see a healthy operating margin, a low price-to-earnings ratio, a book value close to its current share price value, rising dividend payouts and rising share prices going back for several years. I include these figures for each stock in my books.
What happened at KHC to send it into a sales decline? With the increased awareness of the benefits of a healthy diet, customers had become aware that the highly processed food being sold by KHC was high in unhealthy sugars, salts, artificial flavors and dyes. As well, the house brands of the large retailers for things like ketchup were often being priced at a third of the price KHC products were sold at without there being any detectable difference to justify the higher price. To maintain market share KHC cut its prices to compete.
KHC also sold off brands like Planters Peanuts and their natural cheese operation. They used the money from the sales to invest this money in healthier new products like protein bars. (It takes time to establish a profitable presence in new market). The government’s recent interjection of tariffs on imported food products has also had a negative impact.
Thus, it is not surprising that KHC will now split back into two companies in 2026. It is also not surprising that Warren Buffet thinks this split is a mistake. It will cost KHC $300 million dollars to execute the split. Buffett’s 23% ownership of KHC was not enough to stop the split. 36,000 KHC employees now face an uncertain future.
Berkshire Hathaway has realized a 70% loss on the 3.76 billion dollars they invested in KHC ten years ago. In 2019 at the first sign of decline KHC had already slashed the book value of their Oscar Meyer and Kraft brands by $25.4 billion.
You would wonder, how many hundreds of thousand investors took every cent they owned and bought shares of KHC for $71.92 in 2015 when it was first listed on the New York Stock Exchange. I am sure they thought they had bought a sure thing when they saw the share price increase to $86.53 in 2016.
How many borrowed money to invest in KHC thinking it was a sure thing if the “big boys” like Warren Buffet were investing billions. How many bailed out at a loss in 2019 when the share price had fallen to $28.37.
Many of these investors were not aware of the three essential rules for safe investing:
#1- Never invest more than 5% of your wealth in any one stock no matter how instantly rich the promoters want you to believe that you will become. The moat that protects your castle of wealth is to invest equally in 20 of the strongest, highest dividend payers you can find. Their fluctuating share prices will balance off against each other but keep your portfolio rising steadily in value. The total portfolio is not seriously impacted by the shrinking values of a few stocks in it.
#2 – Invest in established financially strong companies who have a decade or more of rising share prices and dividend payouts. They do exist and my books help make them easy to find. For example, I am looking at one in my new book whose share price in 1999 was $7.90 and its dividend payout was $0.07 by 2005 it was $12.82 with a dividend payout of $0.12, by 2010 it was $22.31 with a dividend payout of $0.21, by 2015 it was $31.37 with a dividend payout of $ 0.61. By 2024 it was at $95.64 with a dividend payout of $0.99. These are stocks you intend to never sell. This stock now has an IDM score of 71. My research has shown it usually takes at least 10 years or more years for a company to achieve a score of 50 or more.
#3 – If you are investing $100,000 in 10,000 shares of a high scoring $10 stock paying a high divide, you are far mor likely to double your money in 10 years than investing your money in 1,000 shares of a $100 stock. Few high-dividend stocks that score over 50 cost more than $30 a share. High share prices seem to be an indication of speculators betting on a rising price rather than its financial strength.
How do you measure wealth? If selling shares is the only way to realize an income to live on, then you must sell a portion of your current wealth to generate this cash. It is only by successfully betting that your stocks will increase in value and being right that you escape a reduction in your wealth. However, investing in a stock with constantly rising dividend payouts requires no selling of stock or diminishing of your wealth to generate cash to live on. The value of the portfolio and its share prices almost become irrelevant when all your needs are met by your dividend income. The incredible thing is that rising dividend payouts and rising share prices often move in tandem with dividend payouts rising at much higher percentage than share prices.
Who do you blame when the value of your portfolio drops significantly. You have no one to blame but yourself because you are always responsible for your wealth even when you turn over its management to others.
Until next week this is Ian Duncan MacDonald to take the little time it requires to learn how to manage your portfolio as a self-directed investor. Learn how to recognize a strong reliable stock from a weak pending disaster of a stock. Investing need not be complicated. It is far simpler to understand than you imagine.