The external business blog, “Five Stocks Building Future Yields,” states an interesting view on five companies currently building higher future yields: Wal-Mart, McDonalds, PepsiCo, Philip Morris International, and Medtronic. This blog was useful in clarifying the decision-making process of investors. Investors consider not only the price of the portfolio today, but if it will maintain purchasing power in the future and create a long-lasting dividend producing portfolio. After discussing finance in class, a stock is a legal contract signed between an investor and a company; investors receive access to future cash flow. Cash flow is usually presented as dividends, which is a return on capital where profits are paid out to shareholders of a corporation. I have learnt from this blog that future dividend income is dependent not on the yield, but on the payment that the security distributes. Investors should evaluate a company’s ability to generate higher-earnings over time. Companies generating high-earnings in the future will be able to increase dividend payments. Without this crucial step anyone could collect a portfolio of stocks that have a high current yield. A main concept learnt in class defines finance as paying more money today to generate higher-earnings in the future. For example, Wal-Mart stores are a good investment as the company has raised dividend for thirty-seven years now, whilst differentiating themselves from competitors by offering the lowest retail price to customers. Wal-mart maintain this competitive advantage through its scale of operation by commanding lower prices from suppliers indicating low supplier power because Wal-Mart has the power in this relationship.

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