Thoughts For The Dividend Investor: Importance Of An Economic Moat

In reading the news last week of Eastman Kodak (EKDKQ.PK) filing for bankruptcy, I was reminded of the importance of an economic moat. For newer investors, economic moat is a term that Warren Buffett made famous that describes a company's competitive advantage. For nearly a hundred years, Kodak was the preeminent photography company in the United States. Some can argue that other companies made better cameras, lenses, or film, but no company was better at bringing photography to the masses. Its developing process, associated patents, and distribution centers provided an unparalleled model for dominating an industry. As a result of its dominance, Kodak paid shareholders handsomely with consistent dividends for more than forty years. Ironically, it was one of Kodak's own patents that became its undoing: digital photography. That is, Kodak literally invented how to digitize photographs and while it still rakes in money for some of those patents, it... Read more