Revenue doesn't pay dividends.
Earnings don't pay dividends.

Cash pays dividends.

Focus on free cash flow generation.

Can the company raise prices without losing customers?

If yes: margins are protected
If no: inflation kills margins over time

Pricing power matters most.

The goal isn't finding the highest yield today.

It's finding sustainable cash flow that can grow for decades.

Yield on cost is what matters long-term.

The fastest way to find good investments?

Eliminate the bad ones quickly.

Don't understand it? Pass.
Doesn't interest you? Pass.
Can't predict where it'll be in 10 years? Pass.

Save your energy for the ones that pass all three.

Dividend growth checklist:

✓ Free cash flow growing?
✓ Payout ratio sustainable?
✓ Pricing power?
✓ Capital efficient?
✓ Strong balance sheet?

These create 25+ year streaks.

Debt isn't bad.

But too much debt kills companies in downturns.

The secret to survival? Conservative balance sheets.

You don't have time to research every stock.

So learn to say 'no' quickly.

If you can't answer yes to all three:
• I understand this business
• This interests me
• I can see this in 10 years

Move on.

You can't predict the future.

You also can't calculate the odds of what already happened in the past.

All you can do is make good decisions with incomplete information.

Some of the best investment advice I've seen.

Some of these took me years to learn the hard way.

How wealth compounds:

Stage 1: You earn money
Stage 2: You buy assets
Stage 3: Assets pay you

The goal? Get to Stage 3 and never look back.

That's what dividend growth investing is built for.

Not all great companies stay great.

The difference? A moat.

Here are Pat Dorsey's 4 Moat Categories to help you find businesses built to last:

This chart covers 60+ years of data.

The green bars (dividend growth) are taller than the gray bars (inflation) in almost every period.

Even during the worst inflation decades, dividends eventually caught up.

Dividend growth is a long-term inflation hedge.

It's amazing how well Buffett's net worth tracks the exponential curve you'll see on a compound growth calculator.

Wise words from Peter Lynch

6 Investing Rules Every Investor Needs to Know

How to analyze stocks:

Michael Burry's Investment Strategy One-Pager

•  Buy roadkill
• Sell when it looks less bad
• Care little about general market
• Focus on FCF & Enterprise Value
• Hold 12-18 Stocks
• Buy within 10-15% of 52-week low

That's a wrap!

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1. Follow me @tj-terwilliger.bsky.social for more of these
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This isn't perfect, but it filters out most bad investments quickly.

If a stock fails any of these checks, move on.

Your job isn't to find reasons to buy.

Your job is to find reasons to pass.

6. Don't overpay

A wonderful company at a terrible price is a terrible investment.

Compare current valuation to its 5-year average.

If it's way above, you might be buying at the top.

5. Analyze the growth

Stocks follow their intrinsic value over time.

Look for:
• Revenue growth > 8%
• Earnings growth > 10%

Without growth, you're just hoping someone pays more for the same business later.

4. Search for winners

Winners keep winning. Losers keep losing.

Look for stocks that compounded at more than 10% annually over the past decade.

Past performance doesn't guarantee future results, but it shows what's possible.

3. Look at capital allocation

This is where long-term value gets created.

ROIC > 15% is the baseline.

If management can't generate strong returns on the capital they deploy, they'll destroy shareholder value over time.

2. Study the profitability

High margins = pricing power.

Look for:
• Gross margin > 40%
• Profit margin > 10%

Companies with strong margins can weather storms better and compound faster over time.

1. Look at the company profile

Stay within your circle of competence.

If you can't explain what the company does in one sentence, you probably don't understand it well enough to invest.

Most investors spend hours analyzing stocks and still make bad decisions.

Here's a framework to analyze any stock in under 5 minutes:

“My only plan is to keep coming to work each day. I like to steer the boat each day rather than plan ahead way into the future.”
- Henry Singleton

Bottom line:

Selling should be a business decision, not an emotional one.

Most of the time, the best move is to do nothing.

Let your winners run.

Now here are BAD reasons to sell:

• The stock went up X%
• The stock went down X%
• You're comparing to your purchase price
• One bad quarter
• Macro concerns
• Trying to make a quick gain
• Other people are selling

Don't let emotions drive the decision.

7. You need the cash

Life happens.

If you need money, sell your least attractive holdings first.

But remember: the best returns come from holding quality companies long-term.