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Rome was not built in a day, and there is no way to get it. For investors, building this often requires time, commitment, patience, and making smart decisions along the way.
Warren Buffett embodies this long-term approach. With decades of investment experience under his belt, he is steadily growing his wealth, as well as that of his company’s shareholders.
Here is one lesson I would take from Buffett if I were starting my investing journey today.
Find deep grooves
For decades, the Oracle of Omaha has recommended investing in businesses with strong ‘moats’ (competitive advantages) and few competitors.
Over the years, [Buffett] he followed his philosophy of buying industries with little competition. If he can’t buy a monopoly, he will buy a duopoly. And if he can’t afford the duopoly, he will pay for the oligopoly.
The Myth of Capitalism by Denise Hearn and Jonathan Tepper
We can see this in his company’s investment portfolio Berkshire Hathaway. It’s catching up Coca-Colawhich is part of a global duopoly in the soft drinks market, and PepsiCo. It is owned by shareholders Visa again MasterCardincluding creating a dominant duopoly in payment processing.
Berkshire is also a long-term shareholder Moody’sa credit rating agency that shares a successful duopoly with Standard & Poor’s. It also owns several utility companies that operate as regulated monopolies.
Dominating a growing niche market
While no return is guaranteed forever, I like to see a solid track record from companies that pay dividends. For example, Coca-Cola has increased its annual payout for over 60 years!
One UK stock I think is worth the debt Games Workshop (LSE: GAW). This is the creator of the most popular fantasy game Warhammerwith a dedicated and growing fan base around the world.
Games Workshop has spent four decades creating rich fantasy worlds that are nearly impossible to replicate. Importantly, this enables the company to use various licenses, especially for video games, comic books, and TV content.
A major development in the field of licensing recently has been the agreement Amazon The studios. This is intended to deliver Warhammer content on Amazon Prime, which has more than 200m subscribers worldwide. Cooperation can attract many new followers to Warhammer franchise.
As things stand though, both sides are still releasing creative details. So nothing is certain.
Decent dividend yield
Whether the deal is successful or not, incredible loyalty among customers is likely to endure. That’s because many fans spend hours painting their miniatures, making this a labor of love.
Add in real-world competitions, which provide a sense of community, and this gives the company a unique competitive position, in my opinion.
That said, it’s not a cheap hobby, as the cost of building an army is hundreds of pounds. So there is a risk that the company is pushing its pricing power too far, which could force customers to seek out 3D-printed copies.
The stock is also trading at a premium, though I think that’s reasonable considering how profitable Games Workshop is (29% of earnings).
I think this would be a good choice to build income for years to come. The company has an excellent record of increasing its dividend and the initial yield today is 3.6%. I plan to hold my shares for years.
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