One-time Charges and 'Fintech'

Q. What's this "one-time charge" I'm seeing on a company's financial statement? -- S.T., Dover, New Hampshire

A. It's an accounting adjustment meant to reflect unusual nonrecurring expenses, unrelated to the company's normal business operations. It might, for example, be tied to restructuring (including layoffs or a plant closing), or to legal proceedings.

Investors often disregard such charges because they don't reflect the company's usual business. Some companies report frequent one-time charges, though, which can be problematic, making the company's finances look better than they really are.

If you notice that a company you're following is reporting a lot of one-time charges, dig deeper to see what's going on and whether there are problems afoot. You might focus on its operating profits instead of net profits, as operating numbers don't include one-time charges.

Q. What does "fintech" refer to? -- D.R., Tacoma, Washington

A. The "fintech" term is a mashup of the words "finance" and "technology." Thus, a fintech business is one that permits consumers or businesses to manage finances digitally, via technologies such as mobile apps, desktop software and/or cloud-computing platforms. These companies are disrupting traditional financial businesses with newer, faster and arguably better financial services.

Fintech enterprises are involved in a wide range of activities, including digital banking, contactless payments, payment processing, lending, wealth management, robo-advising, blockchain technology, cryptocurrencies and brokerage services.

Fool's School

Tread Carefully With Annuities

To secure fairly reliable pensionlike income, you might consider buying one or more annuities. Note, though, that some annuities are preferable to others.

When buying an annuity, you typically fork over a hefty sum to an insurance company that promises to pay you according to specified terms -- such as for 10 years, or for the rest of your life. The payments might start immediately or, with a deferred annuity, at some point in the future. (At recent rates, a 65-year-old woman in Illinois might pay $100,000 to receive around $634 per month for the rest of her life, beginning immediately.)

There are many kinds of annuities, generally classified as fixed, fixed indexed, registered index-linked or variable. Fixed annuities are fairly straightforward, offering to pay interest on your account at (at least) a predetermined rate for a specified period. Indexed and index-linked annuities tie your payouts to the performance of a certain benchmark, such as the S&P 500 index. Variable annuities let you invest the money in your annuity account in securities such as mutual funds, with payouts linked to their performances.

Annuity guarantees are only as safe and sound as the insurers that make them, so shop around and favor companies with strong credit ratings. It's also smart to learn about the pros and cons of each type of annuity. For example, indexed and variable annuities can be particularly complex, and you may lose money with some of them. Some variable annuities may offer extra goodies, such as long-term care insurance or a guaranteed minimum income, but these features will come at a cost.

When considering an annuity, look into the fees it charges; they could be steep, potentially costing you $900 per year or more on a $50,000 annuity. Also beware of commission-seeking salespeople who stress that your gains and income earned in an annuity account will accumulate tax-free until you withdraw the money. That's true, but it's also true of traditional IRAs and 401(k) accounts.

Read all the large and fine print before buying an annuity. Learn more at Investor.gov.

My Dumbest Investment

Missed Out on Bitcoin

My most regrettable investment decision? Not buying and holding bitcoin at $0.05. -- A.M., online

The Fool responds: Yes, looking back now, with bitcoin recently priced around $70,000 per coin, it's clear that anyone who bought bitcoin way back when would have made a tidy sum. But while hindsight is 20/20, things were much murkier a decade or more ago. Bitcoin's price was below $0.40 per coin throughout 2010, and no one could have known exactly how it would perform.

Of course, the question for investors today is how the cryptocurrency will perform in the future. It certainly has plenty of fans and advocates, but do a lot of research and thinking before jumping in. For one thing, it's very volatile. It doesn't have a long track record to assess, having debuted in 2009. It's also rather complicated, and it's best not to invest in anything until you understand it well.

Note, too, that bitcoin and other cryptocurrencies are generally stored in digital wallets, which can be vulnerable to being hacked -- and some people have simply lost their passwords, and, therefore, their investments. Remember that many other kinds of investments, such as stocks, bonds or real estate, can offer more safety and reliability.

(Do you have a smart or regrettable investment move to share with us? Email it to [email protected].)

Foolish Trivia

Name That Company

I trace my roots back to 1972, when I was launched in Buffalo, New York, as a steel company serving the construction industry. I went public in 1993. Today, with a recent market value around $1.2 billion, I'm focused on developing more sustainable ways to do things such as growing food, harnessing renewable energy and building global infrastructure. I recently bought OmniMax International in order to expand in residential building products. I rake in more than $1 billion annually. I have a ticker symbol that evokes a feature on Spain's south coast. Who am I?

Last Week's Trivia Answer

I trace my roots back to 1802, when a French immigrant set up a gunpowder factory on the banks of the Brandywine River near Wilmington, Delaware. I became the largest supplier of gunpowder to the U.S. military, supporting the Union army during the Civil War. I later began making dynamite. I introduced the synthetic fiber Lycra (spandex), in 1958, and debuted Tyvek in 1967. I developed bullet-resistant Kevlar in 1965. Today, with a recent market value close to $19 billion, I'm a major global chemical company, primarily serving the health care, water, construction and industrial markets. Who am I? (Answer: DuPont)

The Motley Fool Take

Mmm, Mmm Good Dividends

The Campbell's Company (Nasdaq: CPB) is known for its flagship soup label, but it also owns several meal and snack brands, including Prego, Rao's Homemade, Pace and V8, as well as Goldfish, Lance, Snyder's of Hanover, Pepperidge Farm, Cape Cod and Kettle. It has been diversifying by relying less on salty meals and snacks and by offering products specifically catering to health-conscious consumers.

Shares of Campbell's (Nasdaq: CPB) are down more than 40% over the past year, though, presenting a tasty opportunity for long-term believers. The depressed stock price has also pushed up the dividend yield, to a recent 7.4%.

What's going on? Well, Campbell's overpaid for its 2018 Snyder's-Lance acquisition. Costs are going up due to inflation, while management is tempering growth expectations. Campbell's earnings have been ticking down -- though the company has kept its industry-leading market share across many of its key brands.

Although Campbell's recent results have been poor, the company's struggles reflect industrywide challenges, not execution errors. Meanwhile, its strong dividend is intact and seems sustainable.

Best of all, Campbell's stock is attractively valued, with a recent forward-looking price-to-earnings (P/E) ratio of 11.2, well below its five-year average of 14.2. (The Motley Fool recommends Campbell's.)

COPYRIGHT 2026 THE MOTLEY FOOL, DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION, 1130 Walnut, Kansas City, MO 64106; 816-581-7500