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  5. BCE: Hello, I have done very well and am very happy with my investment in CSU - thank you. [BCE Inc.]
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Investment Q&A

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Q: Hello,

I have done very well and am very happy with my investment in CSU - thank you.

I would appreciate your insight on characterizing the return one receives from a co. like this.

Einstein called compound interest the 8th wonder of the world and IMO the return from CSU seems to be a phenomena beyond that.

With SHOP your return is based on capital appreciation. If it goes up you win - goes down you lose.

With BCE your return is based on a dividend and possible capital appreciation. Almost a paid rent for your money invested and with a hoped for capital gain.

With CSU the actual dividend (rent) is miniscule, however the spin-offs are like a special dividend (equity rent?) with a shared equity multiplier plus capital appreciation of the mother co.

In the past 4 yrs my CSU stock has tripled in capital value and spun off co's that their current value works out to 16% annual return. The annual growth of these co's are also expected to grow.

You have long spoke positively of CSU and maybe now, with some data, I am just seeing why.

Thank you
Asked by Delbert on June 14, 2024
5i Research Answer:

We agree with these comments; CSU is quite a unique company in that it has never raised money and all its growth has been funded internally. It doesn't waste money on confernces and confernce calls. It requires executives to use their bonuses to buy stock. There is a big debate on dividends and buybacks. Generally, we side with buybacks over dividends, as dividends are paid with after-tax dollars, and the receiver also gets taxed, and if a company is growing, we would prefer to keep money 'in house' to allow for greater compounding, which very much is a miracle wonder of the world. We think all companies should study the CSU model to see how a public company should be run: it doesn't cater to brokerages and lets its numbers dictate its stock performance. It does not use its stock like an ATM. Its capital allocation is exceptionally disciplined.