Recent Buy

buyI wasn’t quite sure I would stretch for a second stock purchase this month after adding to my General Electric Company (GE) position a little over two weeks ago, but September has been very kind to me in regards to my dividend income and kicking in some fresh capital from my bank account meant I had enough to go shopping.

Much like some people derive pleasure from going shopping at a local mall or getting a new electronic gadget, I derive a similar experience/feeling from buying shares in excellent businesses that reward me with regular and increasing dividends. So you can imagine how great it is for me to be able to regularly buy stocks!

I came upon the stock that’s featured in this particular article after writing a quick blurb about their most recent increase for Daily Trade Alert. The more I looked at it, the more I liked it.

This recent purchase is a bit outside of my usual wheelhouse in regards to how small the company is, but I felt confident in their quality and future prospects after studying through their financial statements dating back to 2008.

I purchased 800 shares of Armanino Foods of Distinction Inc. (AMNF) on 9/22/14 for $1.84 per share.

Overview

Armanino Foods of Distinction is an international food company. They manufacture and market a variety of refrigerated and frozen Italian specialty foods, including sauces, stuffed and sheet pasta products, and ready-made meatballs. They market to the retail, food service, and industrial markets.

The company has a market capitalization of $59 million.

Fundamentals

Armanino is a very small company, as previously mentioned. But their growth from being previously an even smaller company to where they’re at today has been pretty impressive, as I’ll go over below.

Their fiscal year ends December 31.

Revenue grew from $19.852 million in FY 2008 to $28.867 million in FY 2013. That’s a compound annual growth rate of 7.78%. Not too shabby at all.

Meanwhile, earnings per share increased from $0.02 to $0.104 during this same time frame, which is a CAGR of 39.06%. That’s extremely strong.

It’s difficult to really get a grasp on whether or not they can continue this type of growth, but recent quarters have continued to break new records for the company. And being just a ~$60 million company, one can see where there’s a lot of potential.

The dividend track record is very impressive for such a small company. They’ve increased their dividend for the last nine consecutive years. And these raises have been fairly substantial; the company sports a 10-year dividend growth rate of 10%, and they’ve routinely paid special dividends on top of this.

They just recently increased their quarterly dividend by 12.5%, and they did so a quarter early due to strong sales results. Gotta like a small company that takes care of its shareholders.

The payout ratio appears a bit high, at 64.9%. But their net income is growing briskly, so I think the company can easily withstand this and continue to grow as they have been. And the growing dividend has led to a very attractive yield; the current entry yield on shares stands at 3.91%, which is obviously well above what the broader market averages.

The balance sheet is extremely conservatively managed, which is wonderful considering their size and need to be flexible. Their long-term debt/equity ratio stood at 0.11 at the end of FY 2013, while the interest coverage ratio was over 80. So they have no issues with their debt management or ability to pay their interest expenses.

Profitability appears very sound. Net margin ended at 11.7% for FY 2013. Return on equity meanwhile finished at 45.89%.

The company is also engaged in actively buying back shares, which is another method to return value to shareholders. From 2010-2011, the company authorized $2.5 million in share repurchases. By the end of 2013, they had used approximately $2.4 million of this authorization, which added up to about 9% of the entire company. Pretty stout for a small company.

The company is international, as described. Asian sales amounted to 11% of the company’s total gross sales for 2013.

Qualitative Aspects

The business model is extremely easy to understand. I’ve previously talked about my desire to invest in businesses that are extremely easy to run, and a company selling pasta, sauces, and meatballs certainly qualifies. But the management that is already in place appears to be doing very well. The original CEO, and co-founder of the original company, William J. Armanino, died back in 2009. Longtime director and former COO, Edmond J. Pera, took over at that time, and has been running it since. He’s been with the company since 2000.

Organic and homemade food has been increasing in popularity lately, which has lead to some shunning of anything processed or prepackaged. In that regard, that’s a headwind for this company. But I think it’s unlikely that anyone after a hard day’s work is going to make pasta sauce, pasta, or meatballs from scratch; it’s too time consuming. So there’s a certain likelihood that this company is going to be selling these types of products for many years to come. I guess I’m basically making a bet on Italian food still being popular a decade or more from now, and I feel good about that.

You have to imagine more people are going to be alive in 5, 10, and 20 years. And they’re going to be hungry. Furthermore, this company primarily markets in the West, where they’re based. There’s a ton of expansion potential for the company over time.

They don’t have a lot of product diversification, but one wouldn’t really expect that for such a small company. It seems that they’re concentrating on what they know and what they do best, but they do employ a full-time R&D department to develop and explore new products, including new sauces, pasta products, and sandwich spreads/dressings.

Risks

I see the biggest risk as their size. They heavily rely on a small handful of key customers. Two customers accounted for 62% and 15%, respectively, of outstanding receivables at the end of FY 2013. In addition, they have a network of brokers that sell and distribute their products, which adds a nature of third-party risk. However, the company feels it’s unlikely that established end market relationships will be affected by intermediaries over the long haul, and I tend to agree. One last interesting note is that the company has not officially applied to trademark the name “Armanino”, which they use as a trademark for their products. I find this odd.

Valuation

Shares in AMNF trade over-the-counter, off-exchange. The P/E ratio stands at 16.58, based on trailing-twelve-months EPS of $0.111. That’s a pretty solid valuation, and you have to like the yield near 4% here. The growth potential is enormous, but one has to carefully consider the downside, which is why I like this stock at what appears to be a below-average valuation with an above-average yield.

I valued shares using a dividend discount model analysis. I was very conservative here, using a 10% discount rate and just a 6.5% long-term growth rate. That growth rate is far below what the company has been able to post for growth in both earnings and the dividend, but considering the size, inherent risk, and high payout ratio, I wanted to be conservative. That gives me a fair value of $2.19, which is still about 20% higher than what shares trade at today. So I think a substantial margin of safety is present.

Conclusion

Overall, this is a really interesting stock. You have a growth, value, and high-yield stock all rolled into one. It’s conservatively managed, has been actively reducing what is already a small float, aggressively increasing dividends, and underlying profitability and growth are all fantastic. I really don’t see much to dislike here, but I’m cautiously entering into just a small position right now.

The company appears poised for growth. They’ve been growing substantially on a limited line of products in a rather small market. They have huge expansion opportunities both in terms of market and products, and they’re also actively increasing prices to reflect rises in input/commodity prices.

This purchase adds $57.60 to my annual dividend income, based on the current quarterly dividend of $0.018.

I usually include popular analyst valuation opinions, but I can’t find any that actively track this small stock.

I’ll update my Freedom Fund in early October to reflect this recent purchase.

Full Disclosure: Long GE and AMNF.

What’s your opinion? Think this small stock is too risky? Or does the valuation, yield, and growth offer a lot to like? 

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

Edit: Corrected AMNF’s dividend growth streak.

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134 Comments

  1. DM,
    That makes 50 stocks, right? I’m quite certain if we’d taken a poll of what stock would have been your 50th, no one would have guessed this one! That said, you make a compelling argument and can’t dispute the growth and dividend payments. Tiny market cap is yet another way to diversify.

    Earlier this year I bought a smaller sized food company that was not in my typical zone of stocks I consider because it didn’t pay a dividend. But it was for my wife in her retirement account, and she is a fan of the company, and the stock had a large dip. It was Annie’s, BNNY. Lo and behold it was bought out last week by General Mills (GIS). Quite a nice surprise to see that big jump. Perhaps a company like AMNF has some buyout potential as well. Good luck with this one!
    -RBD

  2. One component I’d encourage you to add to your analysis is a bit different than marginal risk/return (which it seems you consider each stock), but rather portfolio risk/return.

    Of course, we’re not calculating standard deviation or anything like that, but just a way to further consider the risk/return of a potential investment in the context of what you already own.

    For example, another large cap industrial that correlates strongly with DE actually may reduce your overall portfolio’s expected risk/return, while a new holding that does not correlate strongly with another current holding may actually reduce risk more than initially predicted.

    Obviously, a stock at a good value relative to competitors and the market trumps most measures of portfolio performance, but just another dimension to think about.

    I was shocked when I ran my portfolio through the sector tool in personal capital and saw I have close to zero healthcare exposure, and very low in a few other industries. It doesn’t directly affect how I invest, as I still go for value over anything else, but it’s nice information to keep in the back of my mind as I am sifting through potential trades.

  3. You mention that to you, buying stocks is like going shopping. I very much feel the same way! I get a high thinking about my next purchase and why. Sadly, I got laid off three weeks ago so I have not had my fix in a while, but optimism will and always shall overcome pessimism. I am still researching though, waiting for the day to pull the trigger. Keep up the good work, I really love the work you do and avidly look on the blog for updated work. Also, Early Retirement Extreme (which is on the blogroll for those of you who did not see it) is another daily visit. Hope you are enjoying retirement 8 years early (40 my ass).

    -A fellow junkie

  4. DM,

    Well….after throwing us fastball after fastball you definitely caught us off guard with the off speed pitch. I actually kind of like the purchase, not because it is a good company…it may very well be I don’t know. What I like is that you are leaving your comfort zone a bit and taking some risks as opposed to buying bread and butter companies only. I hope it works out for you. As you know, I sometimes coat-tail your picks (only the good ones though) so keep your eyes open!

    MDP

  5. Interesting pick. Pink sheet stock, but appears conservatively managed in terms of cash in insured deposits. No major owner of shares. Sales appear concentrated principally in 2 lead customers. Very high return on equity for low leveraged firm, with growing sales. Facility renewed with fixed price lease for specific duration, and option to extend but price not clear on extension. Marketing strategy not clear, using distributors and website suggesting broader market possible. Lost 3 percent today, so maybe higher beta, but almost double average share volume today. Market cap of 60mln, so small firm. The yahoo data suggests reasonable 350,000 salary for CEO annually. You may have good pick, but high beta with high tick at 2.06 share and low tick at 1.61 share over last 52 weeks, and close today at 1.84. Interesting company worth considering. Good luck.

  6. Well hello there… pretty spectacular the twist you’ve provided here. I think given the size of your portfolio and level of diversification you already have, it doesn’t hurt to mix things up a bit. The opportunity for a buyout and growth is certainly large here, and it goes without saying that receiving a 4% dividend to wait and see is the added bonus. There is a stigma that goes with stocks priced so low, but that shouldn’t matter as long as the company continues to grow.

    Keep up the good work!

  7. RBD,

    Haha. Crazy, right? I wouldn’t have expected a tiny Italian food producer to be my magical 50th position either. Funny how things work out. 🙂

    Great stuff there with BNNY. I noticed the drop on GIS the other day and almost bought. I was already looking in the food space because I was researching AMNF. And I like their purchase there with BNNY. I see there was a little customer backlash about it, but I think the majority of BNNY’s customers will keep buying. It gives them some organic exposure, which is desperately needed with the sales declines in some of their core products.

    But you never know. Maybe someone will come along and buy up AMNF. It’s firing on all cylinders, from what I can see.

    Cheers!

  8. I ran across AMNF a while back ,but passed on them because I couldn’t find an annual report/letter to shareholder on their website. Were you able to find one? The return on capital are very good, and the business is simple to understand. It looks like a great investment, I just didn’t have all the information I needed continue the research.

    The smallest company in my portfolio is OBCI, which is about $30 million in market cap. They don’t pay a dividend, but paid a special dividend recently. I use their products surprisingly and the annual reports are fun to read. Management appears honest and able, they should be since they own like 70% of the company haha.

    Best of luck on the investment, cheers!

  9. Ravi,

    Hmm, that’s an interesting way to look at it. I don’t know if I look at my portfolio like that, where it’s the sum of the parts. Rather, I consider it greater than the sum of all the parts, if that makes sense?

    For instance, I’ve only run one “portfolio analyzer” that Scottrade offers in my entire investment history, which breaks down your sector/market cap/etc. exposure and pie charts the whole thing out. I guess that kind of stuff has never really interested me. I look at every individual investment based on its own merits, and not necessarily how it’ll fit within the portfolio. I have rough numbers in my head for exposure to certain sectors/companies/yield/growth, but I don’t analyze it like that. I just buy when something catches my eye and seems to make sense based on individual merits.

    I look at it in a very decentralized way. Every company is an individual investment and will hopefully live up to my investment thesis. How that affects the overall portfolio (one position becoming too large or too small) is really a company-specific issue more than a portfolio-wide issue, in my view.

    I hope that answer was coherent? 🙂

    Cheers!

  10. Interesting pick. I am actually surprised to discover you investing in a penny stock. That being said, this seems like a good one with a high probability of future grown or being bought out. In the mean time you get a good dividend yield (i.e. you money working hard for you).

    I recently bought a low price stock also.

  11. Mike,

    Terribly sorry to hear about the job loss. I know this might sound trite, but every single time a door has closed for me, a bigger and better one soon thereafter opened. A positive attitude is key, and you have obviously already figured that out. 🙂

    Appreciate the support and readership. I’m definitely enjoying my early preview of financial independence!

    I’m sure things will work out for you far better than you expect, but I’ll wish you luck anyway.

    Best regards.

  12. MDP,

    Haha. I sometimes run across what I feel is a gem and I’m willing to put my capital to work there. There’s definitely some independent thinking that’s necessary for an investment like this simply because there are no analyst reports or anything else. You’re simply working with financial statements and a calculator. It’s old school, but I like it that way. 🙂

    I invested in TIS a while back after doing similar research. That’s another very small company that I’m confident will do well over the long haul.

    I wouldn’t mind at all if you invested as well. I’d love to have another long-term dividend growth investor as a fellow shareholder!

    Thanks for dropping by.

    Best wishes.

  13. Keith,

    Good rundown there. It’s interesting that the beta is listed as higher elsewhere. Google Finance has it listed as 0.59. I can’t really confirm or deny its volatility as I’ve only been watching it for about a week now.

    However, I’ve always believed that volatility is actually opportunity for those accumulating assets. A lower beta is probably much more desirable for those already living off of their dividend as it smooths things out.

    Thanks for stopping by!

    Cheers.

  14. W2R,

    Absolutely. I felt okay about investing here with a solid stable of high-quality businesses already working hard for me. I think it’s okay to crank up the risk/reward a bit when you’ve already got a pretty sizable base already built up that’s chock-full of relatively low-risk investments.

    We’ll see how it turns out, but it’s operationally and financially excellent. These types of investments are always a bit more exciting for me because I’m doing all the legwork. It’s easy when you’re comparing notes with professional analysts that do this for a living. Much more difficult to read through annual reports and put the numbers together for yourself. Makes me feel like how Buffett must have felt when he was young. 🙂

    Thanks for stopping by!

    Best wishes.

  15. Henry,

    Hmm, I had no problems accessing annual reports as far back as 2009. They have their recent financial statements (including the annual report) on their website. I googled for older ones and found them that way.

    Gotta love a small company that’s shareholder friendly and has a competent management team. I hope OBCI turns out to be great investment for you!

    AMNF doesn’t have annual reports that are fun to read, but they are really informational. I always enjoy those that are a little more entertaining, but I ultimately want the numbers more than anything else.

    Thanks for stopping by.

    Take care!

  16. IP,

    A great investment is a great investment, regardless of its stock price. 🙂

    Could be bought out at sometime. But I’m actually quite okay if it isn’t. As long as they continue performing even close to as well as they have in the past and keep raising that dividend I’ll be a very happy camper.

    I hope Bombardier works out great for you!

    Cheers.

  17. Looks like a solid buy. I don’t think a payout ratio of 64% is that high, but I guess it also depends on the industry. A couple of my favourite oil and gas dividend stocks have a payout ratio of around 85%

  18. Just wondering if you know if they file with the SEC? Just curious as to the oversight and all. Also, I was wondering if you had any concerns with the small number of products offered. With all the growth, it only takes an issue with delivery or storage and maybe orders being filled or experation dates on inventory to cause issues. I recall Snapple had an issue back in the early 90’s with shorts taking hold of the reigns. I just located some of the info about what happened. I mentioned the CBUK debacle with me in 1999 back in a comment on your blog, and Snapple and Jiffy Lube were 2 of the companies that I studied to see how shorts took out companies that had issues.

    http://books.google.com/books?id=rLu5zuIy6UwC&pg=PA106&lpg=PA104&ots=HPkj-ff6dI&focus=viewport&dq=snapple+1994+short+interest&output=html_text

    Give this a look and tell me what you think.

    Good luck on the purchase. I love Italian food and will be looking for the product.

    Keep cranking,

    Robert the DividendDreamer

  19. Very interesting buy Jason! Well you do have a long list of solid conglomerates in your arsenal of dividend growth stocks I guess its about time you mix it up by adding something a little bit more risky hey? 😉 im looking forward to seeing how this company treats you. good luck Jason 😀
    Ace

  20. My favorite kind of shopping is the one where I buy something and think “how much is this going to increase my annual income by?” Glad to know I’m not the only one who thinks this way!

    Really interesting buy. Didn’t expect that this was going to be company #50, but sometimes it’s really refreshing to see something other than the blue chips being talked about. 🙂

  21. Interesting buy there Jason! It’s a really small cap, but these can offer a great opportunity. Everyone’s got to start small right? 🙂 Congrats on getting to 50 stocks.

    I was just wondering, how much do you pay commission on each buy? I hate that here in Finland I have to pay 19$ for US stocks and that really affects the size of each purchase so the cost isn’t too big..

  22. Pingback: ARMANINO FOODS OF DISTINCTION INC. (AMNF) | Dividendo
  23. Over here in Holland ( europe)

    When a stock costs $50.- and u buy for a total amount $1,350.-(ca. €1.000,-) of stocks then u pay: €0,50 + 27*0.004USD= 0.108 USD. Wat will be about €0,57 per transaction.
    This is a new broker degiro.nl though so.. dont have fancy charts and that sort of thing yet.

    This is the cheapest broker we have for buying stocks. Finland woosh thats alot of broker costs!

    Other brokers that are available costing each stock purchase €9,50 + 0,15% using BinckBank Basic

  24. Yes, that is way too much for broker costs.. And we also have to pay 30%(!) tax on all dividends.. That is horrible..

    Oh, I also made a recent buy yesterday, 66xKMI.

  25. Hey DM,

    good pick imho!

    Once i had Pinnacle Foods – bought out by Hilshire Brands for $18.00 in cash and 0.5 Hilshire shares for each Pinnacle Share! Quit a good trade! And since IPO of Pinnacle a good, nice dividend from Pinnacle also!

    I have a question regarding your portfolio:

    Do you have a limit of companies do you will/must have in your portfolio? For me to trace 50 companies seems quit an effort of time?

    Because of this i prefer a handfull of co´s and ETFs which give me a basket of companies in one stake and i haven´t to trace every company but get also 5%-6% in dividends with lower risk imho. (apart from sector-risk | regional-risk and so on…)

    thx
    Alexander

  26. Jason,
    good figures. But very small company. Only 43 employees. Nevertheless I like small companies. They can grow a lot and no or less coverage from few analysts.
    Have you ever tasted some pesto from Armanino?
    Is it better than others like Barilla, Sacla, Knorr or whatever you have in the USA?
    I was surprised to read from frozen pesto that you must heat it, because in europe they sell it in glasses. No heating.

    Ahoj,
    ZaVodou

  27. DM,

    It looks very interesting stock. There is a risk & high reward in the small cap stocks.

    I love your stock picks, but I don’t have enough room in my registered account to buy U.S stocks this year. We have to pay withholding tax if we buy non-Canadian stocks in non-registered accounts 🙁 .

    Best Regards,

  28. Mantra,

    Now perhaps you should start that pizza place after all, since I hear you got a line on a hot supplier.

    Interesting choice, not where I thought you were going. If I had guess it was going to be more traditional stage 3 stocks like V or to strengthen an existing stage 2 position. Either way hope it works out, and it seems like it should. Food is always a good bet; it is safe and always needed, what’s not to like?!

    – Gremlin

  29. Agreed!
    Kraft also looks decent here. IMO

    But a small bit of risk, with the proper homework and analysis, might pay off big.

  30. As to the Trademark issue, McCormick Spices owns a trademark to Armanino Farms. AMNF probably would not be able to register Armanino on the Principal Register because it is confusing similar to the MKC mark. It is unclear to me how long AMNF has been using Armanino, but it is possible that they will be fine and not have to change their name. It is also possible that MKC could bring suit forcing AMNF to change their name. It depends who has priority (among other things).

  31. Absolutely agree. A good value today beats any other measure of portfolio performance (or risk) out there.

    The big help for me is to also understand the big picture, and to understand if I am being too biased one way or another.

    Based on that, energy and healthcare will be my first choice, but if a stock in another sector appears to be a better value, that will always come first!

  32. Dan,

    I generally like a 50% payout ratio or less, as that allows a healthy mix of cash usage. At 50% a company is sending out half of profits to shareholders and keeping the other half to continue growing the business. Obviously, this depends on the industry and how mature the company is, but that’s generally a good mix. That being said, I’m not really concerned with a payout ratio above that for this company because they’re already growing so fast anyway.

    Cheers!

  33. Robert,

    As far as I understand it, they are not required to file with the SEC due to their size. They suspended their filings back in 2005.

    As far as the risk you’re speaking of, that’s the risk that one takes on when investing in a small company. A major hiccup could have a material impact on the company, whereas even a global war would unlikely bring down a Johnson & Johnson. So you have to look at risk-adjusted returns. And one would hope that AMNF provides better returns than a JNJ over the next 10 years or so, as they have over the last ten years (by far). That’s because to the risk one is taking on by investing in them. It’s really impossible to quantify this risk, which is why it’s always important to make sure that even if the investment goes to $0 you’ll be fine.

    But that’s what I love about investing in stocks. Your absolute downside is 100%, but the upside is virtually infinite. I wrote about that a while back, and it’s a wonderful way to think about stocks, and very different from a lot of other asset classes out there (especially bonds).

    Best regards!

  34. Ace,

    Thanks!

    I think it’s okay to maybe think outside the box a little bit once one has a stable of proven dividend growth studs already working for them. My portfolio is still nowhere near complete yet, but I feel like I have some room in there for something like this. The case is pretty compelling, and the numbers are solid. Could go to $0, but it could also increase by 10x along with its dividend. I think the odds are better that the latter will occur. We’ll see. 🙂

    Thanks for stopping by!

    Best wishes.

  35. Seraph,

    Hmm, not sure. That’s weird?

    Glad this was a refreshing pick. Most of the blue chips got to where they’re at due to proven business operations, and that’s why many conservative stock investors stick with them. But I felt like I had a little room to reach out a bit for something with a bit more growth potential both in the dividend and the stock price. In the meanwhile, the yield near 4% is awfully nice. 🙂

    Cheers!

  36. Ville,

    Yep, every company has to start somewhere. Catching a high-quality business when they’re still small is really the holy grail. And one that’s already paying out a sizable dividend while regularly increasing it makes it easy for me to be patient. 🙂

    As far as commission costs go, I pay $7 per transaction. So I’m usually looking at ~0.5% if I’m investing $1,400 (my average). However, I routinely receive free trades for referrals and taking surveys. This particular transaction came with no brokerage fees. I agree that $19 is pretty hefty. I’d have to make sure I was investing enough to make it worth it – probably around $3,000. Otherwise, I’d find investments that don’t have such hefty fees, like perhaps your local stocks, that are also high in quality, provide growing income, and have proven track records of building wealth.

    Take care!

  37. William,

    It’s unfortunate that your transaction fees are a bit high. If my fees were higher than they already are I’d simply try to invest less often/more capital to make it worth it. It’s unfortunate you don’t have more options over there. I actually routinely get free trades due to referrals and surveys, so that lowers my overall costs. I think that over time your fees will go down; a new supplier will come in and disrupt the market eventually.

    Cheers!

  38. Alexander,

    Nice! Sounds like things worked out pretty well for you there in regards to Pinnacle. I actually prefer my companies to just continue humming along while they increase their dividends, but an extremely profitable buyout is definitely not a bad thing. 🙂

    As far as the portfolio goes, I’ve had a “magic number” of about 50 for a while now. I just hit that with this investment. Unfortunately, there’s still about 20 or 30 great business out there that I track, and that I don’t own yet. So I’ll probably go over 50. On the other hand, I don’t want to have to track 70 or 80 companies, so I think I’ll find a great balance over time.

    I actually don’t find it time consuming because most of the companies I’m invested in are major blue chips that don’t really require regular babysitting. I’ll probably spend more time watching AMNF than a group of 10-15 other stocks like JNJ, KO, XOM, etc. I find that browsing quarterly reports and/or annual reports to be more than sufficient for most of my holdings. And I find it enjoyable anyway. 🙂

    Best regards.

  39. Sam,

    I already own 60 shares of MCD, which is about 3% of my portfolio or so. I didn’t feel real comfortable increasing that with MCD’s challenges and my already heavy exposure to the company. Mediocre food at a cheap price isn’t quite as popular as it used to be.

    Cheers!

  40. ZaVodou,

    I haven’t been able to try their products. They distribute mostly to the west side of the US, so I wasn’t able to taste some of their offerings. I’d love to try some of their stuff and see what they do, but I’m putting my faith in their ability to make a good-tasting product.

    Thanks for dropping by!

    Best wishes.

  41. FJ,

    High risk and high reward, indeed. We’ll see how it goes. I’m okay if I lose money on this one as the rest of the portfolio is mostly built and doing well. But I think the reward potential outweighs the risk.

    I hope you’re able to score some stock deals in the US next year when it makes more sense for you. 🙂

    Cheers!

  42. Gremlin,

    Haha! I’ll have to call management and see what they can do for me. 🙂

    There were a lot of options, and V is another one I continue to think about. But the numbers here looked really solid from all angles. Not often do you find a 4% yield with double-digit dividend growth. We’ll see how it turns out!

    Cheers.

  43. The secret is in the sauce so I hear…my family loves Italian. Diversifying in that area is endless and they will most likely outperform other food companies that go outside their specialty.

  44. Zach,

    Ah, that makes sense. Thanks for going over that.

    It looks like Mr. Armanino and his father started Armanino Farms many years ago, and eventually sold that to McCormick. I’m not sure if it’s still the case, but AMNF used to get their herbs from Armanino Farms (part of MKC). I see how there would be an issue there.

    After that business was sold to MKC, this business was started up. Looks like Mr. Armanino was a serial entrepreneur. But business has been doing quite well since Pera took over; however, I don’t have access to their records from back in the day, so it’s hard to say what the comparison is.

    Thanks for that!

    Best wishes.

  45. DFG,

    I love Italian as well. Gotta be careful with it, though, as I like to keep my figure. 🙂

    Wish I could taste some of their products to get a feel for what they offer. I imagine that over time they’ll start to distribute nationally and I’ll get to taste some of their products.

    Thanks for dropping by!

    Cheers.

  46. Dm,

    Surprising purchase considering some of the current value in this market, thought you would’ve bought a solid blue chip. Or added to a current position(de,bbl,bax,).

    cheers,

  47. I think this one is definitely off the beaten path. I think you’ve got a good handle on the risk/reward picture, and that’s all that really matters in the end. Starting out with a small position is the right approach, limits risk.

    I have to applaud your ability to scrape the pot in today’s market. But that’s what you have to do in order to find good value.

  48. I didn’t recognize the company, until I went on their website. I then immediately recognized the company’s logo. I know for sure that I’ve purchased their products at Safeway and/or Costco. Good pick. At such low price per share, now is the time to buy lots of them, and hope that the price continues to climb to at least $30/share with many dividends paid out along the way. Thanks for sharing. I might join you on this one.

    I’m currently investing primarily in my 401k, plus a 100-200/month on a taxable account. Due to the $8.95 transaction fees, I’ll have to wait until Oct. so that I can buy in $300-400 worth. This will eat up 2.24-2.98% of my first year returns, but I can live with that.

  49. With all your recent talk about owning a pizza place, it’s good to see you add a some much needed Italian food exposure to the Freedom Fund.

    It sure seems like AMNF has a solid track record and likes to reward shareholders. However, I was wondering how you would feel if management saw opportunities to grow more rapidly and responded by cutting or suspending the dividend in order to reinvest those funds back in the business. I suppose that could happen with a lot of companies, but it certainly seems more possible with a small company that has a potentially huge market it has yet to address.

    It was an interesting buy and I enjoyed the reading all about it. Good luck!

  50. DM,

    investing in a company that small feels pretty risky to me.
    That risk is well diversified of course since this position is only roughly 1% of your portfolio.

    Seems like you put a lot of thought in it, so things should be okay.

    Good luck anyway.

  51. Joel,

    Just a bit of friendly advice…

    You can always try and negotiate better fees from brokerage firms.(for anything else too, for that matter)
    It’s usually all in your presentation to whomever you are talking to. Have a solid approach which includes being prepared to give a couple polite reasons for why you feel that (price X) is a fair one to charge you.

    I always start out with flat out asking for what I want, and then am prepared to defend my point(again…POLITELY) with an example or two.

    For instance, I called up my broker once in the past. They had been charging me $9.99 per trade for the longest time.
    I told them that I wanted to only be charged $7.00 per trade. They declined, saying that they have a certain cost to carrying out the kinds of liquid trades they do at very high rates of speed with no errors, blah blah blah(I stopped listening after the word “no)

    So I came back with: You know I just got a solicitation from Y-company for $4.00 per trade, with a $200 new acct bonus..(I can fax it to you if you want to see it) But I feel that $7.00 is a fair trade for all that you do, in comparison to W-company, because I know you do a great job for me. Also, my account balance will continue to grow with you as I am very loyal. I also recommended my uncle “so-and-so” to you and I will bring you more business. Come on, for every one person like me, you have a hundred thousand people still paying you $9.99. I want our relationship to grow, and not to have me go thru the annoyance of transferring my accounts to W-company…

    So then they said yes(after they get approval from their imaginary supervisor). I reply “thank you, do you think you can throw in a few free trades because I will be buying something within a couple days…”\

    See how easy? The worst they can say is “no”. But let me tell you, I do this with almost everything, garbage company,satellite radio, cable company, and countless others.

    Oh, and I periodically call my broker and ask for a couple free trades. I have never been denied. I have a bogus reason for my call(like a question?) and then lead into the request for some free trades.

    Hope this helps and then someday your account will be so large that the brokerage fees wont really matter!!

    Good luck!

  52. j-harr,

    There’s some value there in those particular names for sure, but I also have to consider my exposure. BBL is one I have room to add to right now, but I’m not sure if I like their recent spin-off plan, as the new company will be listed in Australia. So I’ll likely have to sell my stake in the new aluminum, manganese, and nickel business, unless I want a stock on a foreign exchange. And while I like exposure to commodity plays like BBL, there isn’t any pricing power there. So I wouldn’t want that to be a very large position anyhow.

    Cheers!

  53. Spoonman,

    It’s definitely off the beaten path. But if their 5-year or 10-year performance is any indication of their future, I’ll be a very happy shareholder. 🙂

    I think the risk is somewhat limited. But you never know with a $60 million company. What’s funny is that out of my entire portfolio, I own the largest piece of this company out of any other. The weight of AMNF may be quite small in my portfolio, but I now own a measurable (albeit tiny) chunk of the company. That’s pretty cool!

    Thanks for stopping by.

    Best wishes!

  54. joel,

    As a part-owner, I appreciate you purchasing Armanino products. I definitely hope you can join me as a fellow shareholder one day. 🙂

    I would definitely try to boost your capital contributions or invest less often. Those fees will kill you over time. I pay $7 per transaction sometimes, but I often get free trades through referrals and surveys. Although, even at $7.00 I generally face a 0.5% commission as I tend to invest about $1,400 per pop, on average.

    Best regards.

  55. “Imaginary supervisor”, LOL.
    Thanks Lou. I’ll have to give that a try. I never thought that these fees could be negotiated. And I agree that the answer will always be “no” unless you ask.

  56. Chris,

    Haha. I guess the exposure to meatballs and sauce was inevitable!! 🙂

    I would most likely sell if they cut the dividend. I don’t think they need to do that in order to grow, as their track record has already shown. But they actually have a dividend record dating back to 2000, with 55 consecutive quarterly dividends. I don’t know why they’d cut it, but I’d probably have to move on if that were the case. A static dividend for a few extra quarters, however, would be different. This is a small company that doesn’t have a 40-year track record of dividend increases, so I can understand that tough times might force them to keep things steady for a little while. I wouldn’t mind that, due to their size.

    Thanks for stopping by. Glad you enjoyed the post!

    Cheers.

  57. Grow Independent,

    Well, certainly the risk one can take on is relative to their own situation. Warren Buffett, for instance, could buy the entire company like you or I could go out and buy a sandwich. No risk there.

    My personal risk is much higher than that, but I also wouldn’t be ruined if it goes to $0. And that’s something you should ask yourself with every investment. I don’t know the size of your own portfolio, but I probably wouldn’t have felt comfortable with an investment like this when I had under $100k.

    But the great thing with stocks is that the potential loss is limited to 100%, while the upside is virtually limitless. And I think this company has a lot more reward in it than risk.

    We’ll see how it turns out!

    Take care.

  58. And Joel, never be intimidated as everything(especially in business) is negotiable. Just wait for your opportunity.

    What I mean is, if you brokerage acct balance is low, then just use another reason for why you want a lower rate.

    Like: “and you know, I have recently changed jobs and most of my net worth is in my 401K which I will be rolling over(hopefully to you guys) soon.” “Oh the balance is in the (make it up) range.” “So if we can come to an agreement on the $7.00 trades today, I will start setting up the transaction real soon”

    Good luck!!

  59. Lou,

    I just followed your advice and had a chat session with Schwab. They said that they would put a request in on my behalf, and get back to me in a day or two. I pointed out that Fidelity currently has 7.95 trades, but that I would rather keep my funds with Schwab. In addition to that, I also pointed out that I have funds with them through my employer’s 401k plan.

    I asked for $7, but we’ll see how low they can go.

    Thanks again for the tip!

    Joel

  60. A few weeks ago DEGIRO also reached the Polish. Their fees are the cheapest on the market here and i already opened account there. I hope one day i will have portfolio like Jason 😉

  61. I don’t know where my other reply went…

    so Joel, everything is negotiable, especially in business. So don’t ever be intimidated.
    let’s say your brokerage acct balance is small. Then just use different reasoning, like “I will be changing jobs soon and will have to roll over my 401k balance, hopefully to you at Y company. so hopefully we can get this $7.00 trade thing agreed to today and I will start working on the 401k thing”

    Good luck!

  62. Interesting pick on a small company. I’m sure you did your due diligent in analyzing the company and understanding what the company does. Looks like a good calculated risk on this purchase.

  63. Haha. Not a problem. I’m sure I’ll keep buying, as their products are not only good, but also natural and certified organic. I’m sure you already know this, but there’s currently a movement towards organic and natural foods.

    It does seem like a great company.

  64. Lou,

    Thanks for your advice. One day(when/if I’m able to retire early [I’m currently 31]), I’ll be sure to constantly give credit to Dividend Mantra, and its readers, for all this knowledge.

  65. Yes, thanks Dividend Mantra for this site and all your help!!!

    He may not be around for much longer though… (after Schwab puts a “hit” out on him when all his readers ask for lower fees all at once.) Maybe they will offer a $7.00 per trade bounty to whoever gets the job done.

    Sorry Jason.

    Hahaha

  66. Hey Jason,
    Do you have any idea how we would get the shares of the new foreign company BBL spinoff? Would it be a new ADR through our brokers in the USA? I have not been able to get an exact answer to this question.
    Thanks!

  67. DM,

    It seems like a good acquisition for the long run. Small company but enough room to have a good growth ratio.
    Congrats on adding the 50th stock to your portfolio.

    Cheers,
    G

  68. If it is this cheap then there must be something wrong. The reason why i am not with that broker as a long term investor is their policy:
    – they will lend your stock to other parties (to short?). If something goes wrong, you’ll lose your shares
    – they play with your cash on the money market
    – they dont have a bank permit, so there is no ‘deposito-garantiestelsel” and you’ll lose your money if something goes wrong with this broker

    All too Risky for me, especially in the aftermath of a financial crisis where many people learned the hard way that financial companies dont think about their clients and act as flash boys.

    I would advice to make an informed decision which does not only consider brokerage fees.

    Happy investing 🙂

  69. Thanks for sharing your purchase. It is an interesting purchase, but I like it. You have a solid portfolio with mostly low risk, so this adds a component that can nicely contribute to overall gain. It has the potential for nice growth and pays a great yield! Overall, I like it when it’s an addition to a quality portfolio.

  70. I like it!! I’ve been bullish on AMNF for a while (I was hoping to keep it a special secret all to myself) and with the recent dividend increase there’s even more to love. Nice pickup, and I look to be adding them to my portfolio shortly.

  71. lou,

    As I understand it, the new company will be listed in Australia. There will be no ADR shares, so it will be a foreign stock trading on a foreign exchange. That’s what I’ve read and understand of it. Not sure what I’ll do with my shares yet if that is the case. It’ll have to do more with the quality of the assets and growth/dividend potential more than the fact that they’re trading on a foreign exchange, but I understand these are assets that BHP Billiton no longer wants, so that makes one wonder.

    I hope that helps!

    Best regards.

  72. Geblin,

    Thanks! Can’t believe I got to #50! It’s been a long journey over the last 4+ years, but a lot of fun as well. 🙂

    I hope all is well for you! Thanks for dropping by.

    Take care!

  73. SAD,

    Thanks!

    I agree with you. The risk is there, but the growth potential is as well. And with a larger portfolio already in place that’s mostly chock-full of high-quality stocks, there’s some room in there for a stock with a more aggressive risk/reward profile. 🙂

    Appreciate you dropping in. Keep up the great work over there. Congrats on crossing over $4k. Every snowflake helps that snowball roll…

    Best wishes.

  74. DH,

    I guess the secret is out! 🙂

    The recent dividend increase was just more of the same from this little food company. The fundamentals are impressive. I really don’t see a lot to dislike here. If the next 5-10 years are anything like the past I’ll be a very, very happy shareholder.

    I’ll be glad to have you as a co-owner with me!

    Best regards.

  75. Oh, you actually went and bought TIS? I know it was on your watch list (after your write-up of it, I researched it and am planning to invest) but I remember you had reservations about it.

  76. Hey DM,

    Wow, what a company you have chosen this time, I got to say I didn’t even know it existed even though I scour for great small companies every now and then. I took a quick look and it looks like a very strong company. ROE of around 50%, no debt, high dividend, high dividend growth and a 10 year track record of dividends even though the company has that size. On top of that it’s family managed, it’s really a great find, well done,

    Sadly, because it’s OTC, I think I’ll have some trouble being able to buy it in the UK, but will definitely be curious to see how this pans out for you.

    Best,
    DividendVenture

  77. “they will lend your stock to other parties (to short?). If something goes wrong, you’ll lose your shares”
    In USA (NYSE) brokers lend to each other equities. If you want to short a lot of shares and the broker not have it. They just make a phone call to other maklers and lend the stocks…

    But i will investigate this broker closely! Thanks for info

  78. Wow, DM! I can legitimately say I have never heard of this company. I definitely wouldn’t have expected this to be your next purchase. You do make a compelling case; however, I’m bothered by the market cap, as well as the reliance on so few customers. I (possibly incorrectly) place it in the same category as FHCO before the dividend cut. It’s not for me, but I certainly wish you the best!

    I personally am looking at PCLN for my Oct purchase. Although it doesn’t pay a dividend, I like the company fundamentals. I work in tech (hence the name ‘developer” 🙂 ), so I don’t feel it’s as risky for me to venture into this area, since I understand the business and ‘the way things work’.

    Side note: I love the comments and discussions on your site. Heh, almost makes me want to start my own website! I really appreciate and like how active you are with your community. Please keep it up.

  79. It’s good to have some small-caps in your portfolio. I’ve been looking at a few of them lately since all the really good companies are trading at 20x earnings. I’m not a big fan of this one for the same reason I didn’t like TIS: extremely low volume. Perhaps that’s a good thing though; it means it’s not on the day traders’ radar.

  80. DV,

    The numbers are definitely compelling. And the business model is ridiculously easy to understand. So I like it. There’s some risk, but risk is present in every investment. I think the potential risk-adjusted returns here look very good when looking out over the next 5-10 years. 🙂

    That’s too bad that you might not be able to invest due to its OTC status, but I’ll definitely keep everyone updated on this one!

    Thanks for stopping by. Hope all is well across the pond.

    Best wishes.

  81. Trader,

    I wish I could! I’d love to try their products and see what they taste like, but they distribute mostly to the Western US. However, I believe they’ll grow over time (or I wouldn’t be investing), and perhaps will see some of their products in my neck of the woods one day.

    Take care!

  82. DD,

    Hmm, that’s strange you’re comparing a sauce and pasta company with a lengthy track record of increasing its dividend to a female condom company that lacked any clear evidence they were interested in paying/raising a dividend for any lengthy period of time. Furthermore, FHCO was valued quite highly before the cut and subsequent sell-off. Is there a reason for the comparison?

    Appreciate the support. I really enjoy all the conversations here. I do my best to inspire, motivate, and educate, and I certainly receive my fair share of all of that in return. 🙂

    Best regards!

  83. *slaps forehead* I remember reading that article recently. Forgot that it wasn’t ACTUALLY a recent article.

  84. Justin,

    I can understand reservations about investing in a small company. However, low volume doesn’t bother me at all. I was wondering how my order would go through – multiple batches or all in one shot. But it looks like it all went through in one shot. So a stock flying under the radar doesn’t bother me at all. In fact, it’s quite possible if this stock wasn’t flying under the radar it would be more expensive.

    Cheers!

  85. Interesting pickup. You could have a lot of room to run with that one as long as they keep growing or if they get bought out. Just think if they become a big producers, those 800 shares could grow to be worth a fair penny! Feels like a similiar buy to one I have thats a smaller cap stock, although it is traded on an exchange. And you’d love it because its a pizza chain, Pizza Pizza Royalty Corp. (TSE:PZA), its ~300mil market cap though and pretty well spread out in Central/Eastern Canada and expanding around 20-30stores a year.
    Best of luck!

  86. DW,

    You had me at “pizza”. 🙂

    I wish you the best of luck with your investment as well. May we both continue to profit handsomely for many years to come!

    Take care.

  87. Jason,

    Congrats on the purchase and on your 50th company! Like everyone else, this is not what I was expecting at all 🙂 I had never heard of this gem even though it’s on the CCC list. Very cool and interesting buy here! They have a great track record and so much opportunity for growth. I do hope their farm in cali won’t be too badly hit by the drought. I’ll pick some of their food next time I’m at the store and let you know how they taste, hehe. I’m so curious! I love that you can make a move like this with your portfolio now, with that high risk comes a huge potential reward. I’m hoping it skyrockets from here.

    Best Wishes,
    Ryan

  88. Jason

    Wow, where and how did you find this company. It looks very compelling and has a very enviable balance sheet. Not my 50th company (have a way to go), but I think I will open up a small position and join you as an owner. Really enjoy your articles!

    Regards
    Dave

  89. Ha, I was looking at AMNF the other week. I guess great minds think alike 😉 But I am not sure about buying it – it is just too small for me and I don’t know if I understand it that well. That being said, the reason why small companies probably do so well is because they can grow faster (since they are small to begin with) and they can get acquired at a premium.

    So are you not going to add stock 51 going forward, or are you flexible on it?

    I am actually hopeful GIS drops a little more from here, so I can buy it cheaper when I get some more cash in a few weeks.

  90. Ryan,

    Haha. Yeah, it was definitely an unexpected purchase for my 50th stock. Even I didn’t see that coming. But I can’t ignore a great investment opportunity. 🙂

    I’d love to know what you think of their products if you ever get a chance to buy some of their stuff. I was hoping to do some firsthand research myself, but alas they don’t sell their stuff around here.

    Appreciate the support. This one definitely has a unique risk/reward relationship, and it’s a bit more aggressive than I usually like. But I think I have some room for something like this with the way the portfolio is already set up.

    Thanks for stopping by!

    Best wishes.

  91. Dave,

    Thanks for the kind words! Appreciate your readership very much. 🙂

    I actually found this stock when I was researching stocks that had recently increased their dividends. I mentioned at the outset of the article that I was writing for DTA and this stock came up. Once I started investigating it the numbers just started popping off the page. I immediately became intrigued and looked into it further. After about a week’s worth of on and off research I decided to invest.

    Would love to have you as a fellow shareholder! I hope it serves us well.

    Cheers!

  92. Jason,

    Interesting way to diversify your holdings without diworsifying via purchasing more of the same type of mold of blue chip companies. You seem to have checked off all your check boxes in your criteria. Good management, strong balance sheet, solid growth prospects, easy to understand business, and solid dividends.

    Good luck with the investment.

  93. DGI,

    Great minds do indeed think alike. 🙂

    I’m definitely flexible on the number. 50 is arbitrary, but I picked it for a reason. At that number of stocks, assuming equal weight, a dividend elimination by one company would result in only a 2% income loss. And that’s something I can easily deal with. And I think 50 stocks would generally give you solid diversification across the market, assuming exposure to multiple sectors.

    However, there’s still 20-30 stocks I actively track that I’m not invested in. And the majority of these are wonderful businesses that I’d love to invest in at some point. ADP, BDX, CL, SU, TRV, and UL are just a few examples. So I’m going to remain flexible, while also making sure I’m culling when necessary to keep the overall quality intact.

    I like GIS’s diversification and brands, but I think they’re experiencing some issues. The best time to buy great companies is when they’re down a bit, but the funny thing is that GIS’s stock isn’t a great deal right now. So that’s kind of strange to me. You’d think with the way they’ve been performing lately the stock would be cheap, but it isn’t. I do like the recent purchase of Annie’s.

    Thanks for stopping by.

    Cheers!

  94. The Aiki Trader,

    Thanks!

    It definitely checks all the boxes for me. I would say the only thing that adds an element of risk is its small size, but it’s exactly that small size that provides them huge growth potential. So I’m willing to take the good with the bad here. 🙂

    Appreciate the support. Hope all is well over there with your investments!

    Cheers.

  95. Jason, and Ville,

    As you can see my avatar is green. That is green of envy for those $7. Congrats to living in a competitive capitalistic country, Jason. My $14 on US stocks made me feel a bit unhappy but now when I hear about Ville’s $19 I realize it could be worse :p Besides I can buy Nordic stocks without the commission klling the deal. It’s a much smaller market than the american but still there are a few nice stocks to buy here. Unfortunately they tend to be quite expensive nowadays, I think. No bargains anymore 🙁

    Over here @ the other side of the Baltic sea [seen from Ville’s point of view] we also have 30 % tax on divdends and capital gains. Annoying but at least those hefty fees helps me to cool down and stay long. I prefer to believe that I’d be cool and stay long anyway but the fees and taxes certainly helpes to relax and not sell during market-turbulence.

  96. Felix,

    That’s a shame about taxation/fees, but I think you made a great point there. The super low costs of trading stocks over here in the US might actually promote destructive behavior where you’re constantly dancing in and out of the market. Maybe higher fees might actually keep people invested much longer. 🙂

    Thanks for dropping by.

    Best regards!

  97. DM,

    Always a pleasure dropping by 🙂 . Almost as fun as DRIPing stocks. Just joking. I don’t drip. I grab the cash und invest them somewhere else for purpose of diversification.

    [RANT]There probably really are those benefits of taxes and fees. Legend says the local stock market here kept doing fairly well during the Black Monday of 1987. The stocks fell but the trade never stopped, if I recall correctly. No doubt because the local investors feared the tax-man more than the market. And rightly so. Back then the taxes here were totally perverse. The interested people may want to google “Pomperipossa in Monismania” to read about the absudity 😮 Thank heaven there were some tax-loop-hooles,and ordinary people had slightly lower taxes, otherwise the country would probably have collapsed 😮

    Anyway I don’t enjoy it but I think our currrent 30 % tax is almost acceptable. It does cost a lot to run a country and not ALL the money government takes in is wasted on useless stuff. Just a huge portion 😮 Also we as citizens and the companies we own shares in benefit a lot from the legal system, public roads, and education etc. Guess it’s kind of the price we have to pay for living in a fairly well organized country. Of course I’d prefer for example a 10 % tax and a both richer and more efficiently managed state but I’m afraid that’s too much to ask for for us high-tax Europeans. [/RANT]

  98. I see that the Armanino stock has gone up 4.84% since your recent purchase. I know you don’t pay too much attention to the stock prices, as opposed to the dividends, but it’s hard not to notice.
    I’m still waiting to hear back from Schwab regarding the reduced trading fees…

  99. Actually, I just noticed that you bought at 1.84, and not 1.89, so actually it’s gone up by 5.98%.
    Good move.

  100. Went to the opposite end of the spectrum today! Picked up one of the bigs companies in the world in XOM. Not quite as low as I would like, but I have this feeling they aren’t going anywhere.

  101. Joel,

    Hey, that’s pretty good stuff there. However, I actually hope the stock moves to less than $1.80 from here so I can add to my position. I think it’s particularly cheap based on the fundamentals and potential, so I’ll likely add even if it moves up a bit. But I’d LOVE it to go down. 🙂

    Good luck on getting a fee reduction!

    Best wishes.

  102. Dan,

    Nice! I also believe XOM will be around for a long, long time. Glad to be a fellow shareholder, albeit with a small position on my end. 🙂

    Thanks for stopping by.

    Take care!

  103. teppo42,

    I can’t say how your brokerages work over there, but these shares trade “over-the-counter”, or off-exchange. Stocks that trade off-exchange don’t have to meet the minimum requirements to file with the SEC. Therefore, some of these stocks are hard to analyze, if their financial statements aren’t available. That adds risk. Otherwise, buying and selling them (for US investors) works the same as a stock on the NYSE or other exchange.

    Cheers!

  104. LMT just increased dividends by 13%, I initiated position in LMT just 1.5 years ago, and my Yield on cost is already 6.9% …also, considering numerous US military operation around the globe , imho LMT has excellent potential ans still have reasonable valuations… Jason, do you hold LMT? Thinking to buy at some point?

  105. gibor,

    I regret passing up on LMT a while back. One of my big misses. I remember not liking a few things, like frequent overruns, pension obligations, a slightly heavy debt load, and an uneven dividend growth history (a cut, then static dividend about a decade or so before I started looking at the stock). But I regret that because it’s been on a tear, aggressively increasing the dividend in the interim. I don’t think it’s particularly cheap right now, so I’m not interested here. But with the right valuation I’d reconsider the stock. 🙂

    Great job, though. It’s been a very strong holding over the last 18 months or so!

    Cheers.

  106. No fee reduction for me. Schwab was very rude and only offered 5 free trades. Might have been due to my low balance. Might switch over to Scottrade.

  107. Joel,

    Sorry to hear that, bud. That’s unfortunate. Five free trades is better than nothing, though. 🙂

    If you do decide to switch to Scottrade let me know. There’s a referral code I can give you that will give us both three free trades when/if you open and fund an account.

    Best regards!

  108. Most brokers may allow you to buy at OTC (over the counter) market place, but this usually needs to be done by phone, and it adds an additional costs to your purchase price. There also may be an additional fee, for holding an OTC stock. But this varies on different brokers, so you should consult your broker about buying at the OTC market place.

  109. DM, Good luck with the purchase!. Great to see you branching out into some slightly smaller company’s. I’ve had my share of a few misses in the space, but a few multibagger home runs have more than made up for it. My 2c, watch the gross margin trends over the next few years. You may have some insights here, but for some reason there appears to be some steady deterioration? I’m personally doing a little less with microcaps (<$500M), and a bit more with smal caps, <$5B, but you can really make some good money and some nice dividends if things take off with company's the size of AMNF. Best wishes!

  110. Integrator,

    Yeah, I remember you putting together a nice list of some smaller stocks a while back. Sorry to hear FHCO turned out to be a dud. I remember liking what I saw with HCSG, but the stock was way too expensive for my tastes.

    I didn’t really see anything concerning with margins or ROE. They’ve both been pretty high for the last few years, although I can only go back so far with this company. It’s not like I have access to 10 or 20 years of financial statements. And it’s tough to say if 6-7 years of financial data is enough, especially considering its size. But I think the bet is worth the potential reward. We’ll see. 🙂

    The Freedom Fund doesn’t have a lot of exposure to companies this small (it’s the only one like it in my portfolio), so I really like this little investment here. It’s exciting!

    Hope all is well over there. Thanks for dropping in.

    Best regards.

  111. Hi!

    I have a quick question regarding your portfolio. I see you have mentioned General Mills (GIS) in several articles over the last couple of years. What is the reason that you haven’t initiated a position?

    All the best from Norway,

    Rune

  112. Rune,

    Well, I missed out on a great chance to buy GIS around $40. That was just a miss on my part. However, after the Heinz deal was announced GIS took off like a rocket. I don’t find the stock a particularly compelling buy right now, especially in the face of substantially slowing sales and headwinds against processed foods in general. I love their brands and their recent acquisition of Annie’s is a move in the right direction, but I’d like to see the stock come down by 10% or so before getting real interested. Not to say I wouldn’t buy right now, but I’d do so knowing that it’s not a great deal here.

    Thanks for stopping by from Norway. My significant other, Claudia, spent some time in Oslo many years ago. She loved it there. I hear it’s crazy expensive, though!

    Best wishes.

  113. I will let you know. When I was doing a chat with Scottrade, they provided me with a code for 3 free trades. But I’ll instead go through you, so that you also get 3 free trades:)

    With my first(of five) free trade, I bought three shares of Chevron. I know it’s not a lot of money(around $350), but my monthly taxable account contributions/investments will increase, as I decrease my 401k contributions and increase my taxable account contributions. Given that I’m planning on retiring “early”, I’m having second thoughts on my current contributions(almost maxing out) to my 401k, and not be able to touch it until “normal” retirement age. Also, quite frankly, 401k investing is quite boring and the investment options are very limited.

    Armanino will be next.

  114. Actually we don’t pay 30% tax, but rather 25,5% or about 28% if the income is above certain level – 85% of dividends are taxable so the net rate is 25,5% or 28%. But yes, it is too high anyway 🙂

    I use Interactiver Brokers as my brokerage for all U.S. or Canadian stocks. It is dirt cheap and very reliable. Lynx Broker is also quite popular here, albeit a bit more expensive. They might be offering Finnish customer support later this year or next year. At least the opened a Finnish website. (But they won’t offer Finnish stocks because of our super bad legislation…)

  115. late bloomer,

    Sorry! I missed this comment completely.

    I’m thinking of adding to my AMNF stake in November. They just had another record quarter and this company is firing on all cylinders. Not much to dislike here.

    Best regards!

  116. What a fascinating discovery! I am curious: now that it is almost one year later, how do you feel about this investment? Do you want more or are just going to hold steady? I am also curious if you have come across any other smaller companies that pay solid dividends (like AMNF or TIS…). Have you considered doing an article on small or micro cap companies with significant dividends? I would be fascinated to read it! I love the idea, as you mentioned, of growth, value and high yield all in one place! I would love to begin looking into some more stocks like this!

  117. JaC,

    That’s a good question. I feel great about AMNF now a year later. Operationally, they’ve been fantastic. And that’s all I can really ask for. Should be announcing a dividend increase in about a month, so I’m excited to see how that turns out.

    There really aren’t many smaller companies (market caps less than $100 million) that have quality, yield, growth in that right mixture along with a solid track record for dividend growth and little apparent risk. Not many I’ve come across, anyway. AMNF was one of those rare gems, which is why I invested there. But I think it’s also important to remain prudent when it comes to investing in these really small companies. The risk is obviously heightened rather significantly compared to multi-billion-dollar multinationals.

    Most of the dividend growth stocks I’ve seen on the CCC list that are really small but have pretty decent track records are local banks. I invested in SBSI a while back and that’s been a great investment for me. But, again, it’s just not common to get that right combination of everything.

    I’ll see if I can come up with a list at some point, but I’m not sure there’s enough there.

    Best regards!

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