Welcome back, everyone. Today on the Joseph Carlson Show, it's time we talk about dividends and how I grew this portfolio into a monster dividend portfolio. We'll be going over how much money this $750,000 portfolio earns in dividends every single year, how many dividends it will earn specifically in 2024, how many dividends it's earned all
time. And we'll be looking at each holding in My Portfolio, laying out which ones are the biggest dividend payers, which ones have the highest and lowest dividend yield, which of these companies are growing their dividend the fastest and what yield on cost is and which companies have the highest yield on cost. Every company in this portfolio pays a dividend. And as these companies generate continual cash flow, their dividends grow.
So we'll be looking at this overall and getting an idea of how to grow a dividend portfolio. Now, of course, we have some other news to get to as well in this episode. Adobe's getting hit today. It's down nearly 9% after their Q3 earnings. They beat on their earnings per share estimates and their revenues. So the past quarter looked good, but the problem is they gave week forecast Adobe's supposed to be growing in part because of AI tools.
They're developing all of these signature creative software AI tools, but apparently that isn't enough to help the stock grow faster than expected. This brings us back to the question of whether or not Adobe's being helped by AI or hurt by AI. We have news that Uber and Waymo are once again teaming up and offering driverless ride sharing trips in Austin and Atlanta. Why is a company as big as Google that owns Google Maps, it's as big as Waymo teaming up
with Uber? We've also heard the news recently that MasterCard is doing an acquisition and they're buying a company that's a cyber security company for a $2.65 billion price tag. We'll be looking into the details of this deal and also going over what this means for MasterCard and Visa. So we have a lot to get to in this episode. If you like this type of content, just make sure you're subscribed to the channel and like the video. Both of those things are
completely free. Now. Let's go ahead and jump into the portfolio here. This portfolio, the passive income portfolio, is a a normal equity portfolio. I don't use any leverage, I don't use any margin. This is all money that I have contributed or earned in dividends. The total value is $752,000. The total gains is $261,000. So we've passed the point of a quarter $1,000,000 primarily through gains, which is just incredible.
Looking back six years, this seems like it would be impossible to do. But through a history of steady contributions, continually adding money, dollar cost averaging, buying every dip I could and getting continual dividend payouts that are quickly reinvested back into new opportunities and having capital appreciation, this portfolio has grown and grown and grown. This portfolio's origins are a dividend growth portfolio. That's where things started off.
In fact, if we go back to my oldest videos, the very first ones that I made, they're still live on this channel. The very first one, episode 1, was an introduction to My Portfolio. The current value at the time was $25,000. I give an update on my companies, explaining why I thought Apple and Microsoft, Home Depot and Costco were good investments. Five years ago I had a video called Building a Winning Dividend Portfolio. It went over the core aspects of
dividend growth portfolios. The premise of it was to invest in quality companies that could grow their dividend overtime. I think the content was OK for the time, but this was five years ago. A lot has happened over half a decade. I've learned a lot of lessons. I've been through a lot of market volatility. I've seen a lot of investors do a lot of different things.
And with investing, like any discipline, if you actively work on it, study it, increase your vocabulary, read about it, learn from other great investors, you get better at it. Over the past five years, I think each consecutive year I've grown as an investor, I've learned some things and I think
most of my audience has as well. I've gotten better at doing a lot of analysis on companies, understanding the true fundamentals, understanding long term durable moats from weak moats, understanding which businesses are likely to increase in value more than others. I've also gotten a lot better at identifying quality dividend companies from ones that are dividend traps or value traps.
The accumulation of time and experience and knowledge over making hundreds of videos on investing, learning from community members, studying great investors has an accumulative effect of improving your investing philosophy overall. And recently I've put all of what I've learned is the best investing lessons into a simple investment philosophy presentation. This is only 8 pages long and I think it goes over the most core basic lessons of how to create a very high quality portfolio.
In many ways, my investing philosophy has changed from looking strictly at dividend growth companies to looking at compounding machines. Compounding machines is a more nuanced, holistic term of looking at a company. It doesn't just focus on the dividend payout, it focuses on the core fundamental components of a company that allows for a company to pay a growing dividend. But the interesting thing is, in most cases, compounding machines
are dividend growth companies. In most cases, compounding machines make for the best dividend companies. So this isn't a change of strategy shifting away from dividends to a different type of company. This has been a shift of strategy of better identifying the best type of dividend growth companies. As it stands right now, every single company in the passive income portfolio pays a dividend.
And that's typically the case with compounding machines because in most cases, when you find companies that are monopolies, they have ample pricing power and operating leverage and organic revenue growth and are capital efficient. These are the type of companies that can afford to pay a dividend, and they're also the type of companies that can grow a dividend overtime. So every single company in this portfolio is paying a dividend
and growing it overtime. Even though there's always a lot of talk about buybacks and companies buying back their own shares, even though that's a great aspect of a company, we shouldn't leave out the compounding impact of a stable and growing dividend that's continually reinvested back into a portfolio. Now we can better understand the role that a dividend plays in compounding a portfolio by looking at a breakdown of the returns.
For example, in My Portfolio right now, we have $261,000 in all time gains. Now the gains do not include contributions. So none of this money in the green is because I put money in the portfolio. Gains only come from two things, capital appreciation or dividends. That's it. So the all time gain is another way of saying the capital appreciation plus the dividends. Now it's true that you have to buy stocks to have something to appreciate, but this is from the
appreciation or the dividends. For example, if I was to hypothetically deposit $1,000,000 into My Portfolio today, if I somehow had that money and I threw it into My Portfolio, the all time gains would stay the exact same. It wouldn't move a penny. The only way that this number goes up or down if there's capital appreciation or if they pay me a dividend. We can better understand this
performance here. If we look at a breakdown of my portfolio's performance as of right now, it has a 158% money weighted return. That's based off the inflows and outflows of capital, meaning that since the beginning that is my rate of return of this portfolio. We look at the market gain. The market gain is another word for capital appreciation. This is where the majority of gains come from. Right now the capital
appreciation is $229,000. So that is the lion's share of the gains in this portfolio, but we can't count the effect that dividends have the entire time this is happening. Dividends are being paid out every single month. And so far a total of $32,300 in dividends have been earned and paid by this portfolio. This is Money that's reinvested back into the portfolio. So part of the net cash flow here includes the dividend payments.
The dividends continually being reinvested back into the portfolio buys more shares, which also helps increase the market gains. So this is what I first do. I buy companies. Those companies pay me dividends. Those dividends are reinvested back into the portfolio. Those reinvested dividends earn me more capital appreciation. And over and over again, this
cycle grows. Now in my brokerage M1, they tell me how many dividends I'm earning every single month, my projected earnings, and what I've earned historically. We can take a look at the dividend income overtime. For the full year of 2024, I'm going to earn $8718 in dividends. So if you think that dividends are just a small part of the portfolio, that's true. But 8700 dollars is not a meaningless amount of money. That is a significant amount of capital.
And keep in mind, it's not like I get one payout at the end of the year. This is Money that's paid out on average $700.00 per month. That money gets reinvested back into the portfolio and have bigger and bigger dividend payments in the future. Now, if we look at this on a month by month breakdown, we can see better what's really contributing to this massive dividend payout. A lot of it comes from January. So January is the best month of dividends by about double for My Portfolio.
Why is January so big? Why do I earn over $2000 in January? Well, there's one company in particular that has a relatively large payout in January. That company is Costco. As you can see in the breakdown there, we have three major companies that pay dividends in January, Costco, VICI, and Intuit. Intuit's the smallest, making up an $84 dividend. Then you have VICI paying a staggering $755.
VICI is a real estate company. The majority of returns from real estate typically comes from dividends, or in the case if you own the real estate, directly from the rent and then you have Costco. Costco paid A1 $1296 dividend in January. Does Costco really pay that big of a dividend? Or do I own so much Costco that it should be paying me $1000 per quarter? My Costco position is only $80,000. Now that's a big position and the majority of that is from games. It's $44,000 in the green.
But an $80,000 position is not enough to earn $1000 per quarter. If we use Qualtrum to look at the dividend history of Costco, we can see this illustrated. The dividend is this, this one right here, a $15 per share dividend that was paid out in Q1 of 2024. Notice how it's much larger than any other dividend before or after it? That is because this is a special dividend. This one right here is a special
dividend. This one back in 2020 is a special dividend, and this one and this one and this one. These abnormally large dividends are when Costco management says, hey, shareholders, we have way too much cash. We can't distribute it through our normal dividends every quarter. We're stockpiling this cash and we think that you should have it.
So we're just going to throw this money out to you, the shareholder, to give you an idea of how much a $15 dividend per share is. That is the equivalent of Costco paying out a full year of earnings of the company, a full calendar year, earnings they paid out in a single dividend. So this was a massive dividend they're paying. I can tell whenever Costco is going to do this because you can see that the cash balance rises way above their levels of debt.
We had it right there. Their cash was $17 billion. Their debt was 5 billion. They had way too much money. So what did they do? They gave some of it back and that's why their cash went down from 17 billion to 10 billion. Then what happens after that? Costco earns too much money. It goes from 10 billion to 11 next quarter. It's going to go up more and more and more, and eventually they're going to have excess cash and they'll pay a special
dividend again. So $1300.00 of this year's earnings is because of the special dividend. Now, we're probably not going to have a special dividend every single year, but I think on average we'll have them around every three years based on the rate that Costco's growing and the amount of excess cash they generate. If we move on to February, we had an ETF called S Gov pay a dividend. That's when I still owned a little bit of cash. We have MasterCard and Costco
paying their normal dividend. So Costco got done paying their special dividend, then they paid their normal dividend. We move on to March. In March, I earned $688 in dividends. Texas Roadhouse paid 265. S&P Global paid 175. Microsoft paid 122. Texas Roadhouse has turned out to be a great dividend payer company. If we glance at their dividend growth history over time, they are growing their dividend far
faster than the market average. Last quarter they only grew it by 11%, which is still really fast. But for the past five years, they've averaged growth of 15%. That's really quick growth from a restaurant company. Like I said, if you buy a compounding machine, a company that can grow its free cash flow at a high rate, they can afford to grow their dividend at a high rate. So the best dividend growth companies are free cash flow
growth companies. The best free cash flow growth companies are compounding machines. Moving on to April, we have another dividend payment from VICI, one from Union Pacific. This is a company that I've since sold. And then we have Intuit, which is an $84 dividend payment. Intuit does not pay a lot in dividends right now. They're mostly doing buybacks. May we have MasterCard, Costco again and Apple. In June we have Texas Roadhouse again, S&P Global and Microsoft.
And then we start to see a little bit of cycling care where the same companies are paying out their quarterly dividends. The new one in July is Salesforce. That's a new holding to the portfolio. They're also a dividend payer. And then we have the projected dividends in September, all beginning of $122.
One from Microsoft, S&P Global will be 188, Texas Roadhouse will be 265. The ones that are projected throughout the rest of the year are $700 in October, 263 dollars in November and in December it will be 773. And again, whenever these companies pay dividends, that money immediately ends up in my cash balance. Right now I have $800 in cash. 100% of that money is from
dividends. I'll look over the dip Finder and see which companies are doing well and doing poorly in My Portfolio in terms of their performance. When I look right now, I see that the companies that have the most momentum, the ones that are rocketing to the moon, are Costco, Moody's, S&P Global, Apple, and VICI. This group of companies are just doing fantastic. They're the ones that are carrying My Portfolio right now.
Moody's is crushing the market. S&P Global's having a great year, and of course, Costco is up 40% year to date, not counting their massive dividends. So these companies are doing so well that I typically look at them and I think, you know what? I'm just going to hold my share in these and focus on reinvesting my dividends and ones that haven't rocketed up quite as much. When I look at the other end of things, the only company that's not doing well right now is Salesforce.
This one is having a bad year. The company has yet to gain any market momentum. I do analysis on the company and from the fundamentals, everything looks really good. So this is a company that I look at as a potential buy. And of course, if we look at my trade history in 2024, one of the companies that I've been buying the most with every dividend payment and with new contributions is Salesforce. I'm buying into this company because it's not doing well
right now. It is a great company fundamentally that the stock price isn't following, but Salesforce of course is not the only example. The point is the dividends don't need to be reinvested right back into the company that paid them, and in many cases, the company that just paid a dividend is not the best one to reinvest the money back into. For example, again, one of the biggest dividend payers this year has been Costco. But Costco's trading at an all time high multiple.
Costco's very expensive looking at its historical multiples. So out of the companies that I have to pick from, even though Costco's paying a lot in dividends, it's not the one that I'm reinvesting the dividends back into. I'm buying companies that have less positive sentiment, like Salesforce and Booking. To better understand a dividend, it's important to know where the dividend comes from. What affords a company's ability to pay for a dividend?
That is called free cash flow. Free cash is the amount of money that's leftover after a company pays for all its operational expenses and capital expenditures. When you you factor in operational expenses like paying employees, paying for logistics, paying for all those random expenses a company has. And then you also factor in paying for capital expenditures, buying warehouses, paying for office space, paying for vehicles to ship things back and
forth. It's the money left on the table after all those cash flows are accounted for. That is your free cash flow. We're running MasterCard and after we pay for basically everything to run this company, we have $11 billion leftover. We're very profitable company. We have a lot of free cash flow leftover. Well, what can we do with that money? Companies do one of two things with their leftover free cash
flow. One of the things they do, and they do it frequently, is they buy their own stock. Buying their own stock reduces the amount of shares over time, increasing investors equity. As the share count goes down, your value in the company increases. So buybacks are one of the things they do with their extra cash. But then some companies are so profitable that they also dish out money through dividends, and this is where the dividend payouts come from, the free cash
flow. Now, knowing that, we can look at the companies in My Portfolio and see what they've paid out in dividends over the past 12 months. The top one is VICI. And that makes sense because again, this company is required to pay out the majority of its profits and dividends. So far, in the past 12 months, VICI has paid me $2742 in dividends. Vici's not a flashy holding. This company doesn't do anything
too spectacular. They just own a lot of iconic real estate and they collect rent checks. It only takes a handful of employees to run this company. They buy real estate, they collect checks, and then they look for other investment opportunities. So the gains from this company aren't astronomical, but they were never supposed to be. This company was never going to be a growth monster company. It was going to be one that paid a steady rate of return with continual dividends and
continual reinvested dividends. So far I've gained around $12,000 from this holding. The dividend yield is 5.15% today. The yield on cost or what I got and my yield based on the price I paid for it is 5.86%. So it's very close to the current dividend yield. Meaning that I got this company on a discount, but not an amazing discount. The average price paid was $29.52. So the majority of my return over owning this company has been from dividends.
Now if we move on to Costco, this is actually my second biggest dividend paying company over the past 12 months, and that is of course because of their massive special dividend. I've earned $1673 from Costco in dividends in the past year. My yield on cost is 1%. So based on the price that I got Costco, I paid half as much for the dividends that I'm getting. As if you're going to buy it today.
My average price paid for Costco is $431.00 and that's for a company that's currently trading above $900. Between the dividends paid and the low cost basis for this company, this has been one amazing investment. If we look at Texas Roadhouse, this is the third largest dividend payer in My Portfolio. I have earned 1011 dollars in the past year from this company and they keep raising their dividend paying more every single year.
Also, like Costco, I haven't sold any shares in this company so it just keeps stacking up and accumulating gains. The current dividend yield is 1.5% which I think is a bit low for this company. Right now. My yield on cost is 2.8%, so I got a much better deal when I was buying this company and that's because of course, my average share price paid is $86 for Texas Roadhouse. Today, Texas Roadhouse trades for 164. So this is one of the opportunities that I went for.
I was pounding the table saying that I think this company's a great investment. I made multiple videos on it and it's turned out to be a spectacular one. Between the doubling and capital appreciation, the 2.8% dividend yield on cost, this has been one of my better investments. The 4th largest dividend payer in My Portfolio is S&P Global. This one's paid. $718 over the past year. Now the current yield is only .7%. My yield on cost is a bit higher because this stock has gone up.
My average cost on this one is 366. Today a share will cost you $520.00. So I feel like I got a good deal on this one. The interesting thing about S&P Global is this is one of the most through and through compounding machines. It means every characteristic. It's a super high quality company that's incredibly efficient, but it also happens
to be a dividend growth machine. The company has paid a growing dividend since 1985. You have 3040 plus years of the company paying growing dividends. That's incredible. So again, in many cases, the best dividend payers are free cash flow growth machines. The best free cash flow growth machines are compounding machines. Microsoft of course shows up on the list as #5 this company has been one with me for a long
period of time. I've had it since day one of My Portfolio. In the past, trailing 12 months, it's paid me 590, $8 in dividends. The current yield is .71. My yield on cost is 1.11. My average share price for Microsoft in this portfolio is 271. So I bought this company, I believe at the right times. I had videos going out when Microsoft and all of big tech were trading down to unreasonably low territory around 2:20 and 2:50.
I bought a lot of shares of the company during that time period and even added to it a little bit more later. Currently Microsoft trades is at 429, so owning it at 270 I think is a good deal. I'm going to hold my shares here, but I think Microsoft shares today are a little steep. And number six, we have MasterCard. This one's paying me $444.00 in dividends the past 12 months. That's .54% dividend yield. My yield on cost is slightly
higher. My average share price for MasterCard is 384. Currently it trades at 496. You'll see the common theme here where I try to buy high quality companies, but I try to do it at times where there's opportunity. Earlier in the year and even in 2023, there were so many opportunities to pick up these companies at cheaper prices. Right now, those opportunities are few and far between. They're much more difficult to find.
So I'm looking elsewhere than companies like Microsoft, Costco, and MasterCard. These ones were good a couple years ago and I believe there holds today, but I think there's better places to put money right now. And #7 we have into it now. It's paid me $329 in dividends into. It's just it's not a big dividend payer right now and the current yield is only .64%.
My yield on cost is quite a bit higher at .9% and I own the company at an average cost basis of $463 today, a share of Intuit will cost you a sizable amount, 656 dollars. The company is moving fast. They have massive dominant platforms and they are severely underrated, especially by retail investors. We have applet #8, so we're getting down to the lower dividend payers here. This one has only paid me $233 this year. The dividend yield is a meager .45%, which is just so small.
My yield on cost, meaning the dividend yield I'm getting with the shares that I purchased is over double that at 1.12%. My average cost basis on Apple is $89.00. Apple today trades at 223 dollars. I consider my history with Apple and the calls I've made on this channel with videos over and over again on this stock as one of the best calls I've made. Owning Apple has been a significant contributor to this portfolio.
In fact, when we look at the holding now, I have around $32,000 in gains from Apple and the current position size is $33,000. The 33 $3000 I have invested in Apple is almost entirely gains. I still like Apple as an investment. I think it's a dominant company. It's a juggernaut and very difficult for other companies to compete against. But I do see the growth path is more difficult. Looking for the next 5 years.
They need to grow through software and increasing prices and continually innovating, which is going to be a challenge for the company. The valuation is much higher now than it was five years ago, and it seems like it's just a bit more limited in its growth than other opportunities. So while Apple still is a great company, I've reduced my position because I don't think it's quite as good of an investment as it was five years ago. We look at some other smaller positions in the portfolio.
Canadian Pacific. Kansas City Southern is one of the companies I've invested in in the past year, and this one has been a bit of a snooze fest. It's paid me $200 in dividends. That's a .63% dividend yield. My yield on cost is slightly higher as the stock price has gone up. My average on the company is $77. The share price today is $86, so it's gone up a little bit. We're in the green by a couple, $1000. But there's nothing to write home about here.
This one has not been that exciting of a holding. I think the Canadian Pacific is still a great company. It's growing. It's free cash flow quickly. They're going to be growing their earnings quickly. They have very low downside in terms of disruption or intrinsic value, terminal risk. I believe I have the ability to make better gains and identifying high quality tech companies in #10 we have Moody's. This is one of my favorite companies.
Moody is one of these companies where it's really boring at first glance. Your eyes will just glaze over when you're reading their investor relations. It's very mundane, very stodgy looking of a company. But the more you research this company, the more you do analysis on it, the more you like it. This is one of the ones that I guarantee the more time you spend reading about it, the more you'll like it. If we look at the dividend payment over the past year, it's
only $197.00. That's a .71% dividend yield. My yield on cost is slightly higher at .87%. The average price I've paid for it is 389. Right now it's trading at 479. Even though Moody's doesn't have the highest yield, this company represents one of the best dividend growth companies over the past 30 years. Then at the very bottom here, we have two of the newest additions. Now these companies are #11 and 12, simply because they're newer additions and they haven't had a
full year to even pay dividends. For example, Salesforce has only paid me one dividend. The yield on it is .63% and my yield on cost is .58%, meaning that I'm in the red on this company. My cost basis is 277 right now. You can pick up Salesforce for 2:56. I currently have a $56,000 position and I'm in the red by
4500 dollars. Obviously it's a bummer to be in the red in any position, but the truth is when you just buy into a company brand new, like I've done with Salesforce this year, it's very difficult to control which way the stock will trade within a single year. Peter Lynch says his best stocks really happened three to five years after buying them. So Salesforce being a brand new position, it's much more difficult to get it right, right away. I'm going to give this one more time.
And I think with their continual buybacks, with their margin increases, with their steady organic revenue growth, I see this one working its way above $300.00 per share in the future, and that will put me well into the green. The last one we have Booking, which is my newest addition to the portfolio and it's paid exactly $0.00 in dividends and that is simply because I haven't owned it long enough for it to even pay a first dividend. But this company is a dividend
payer. In fact, they have a decent yield for this good of a company, a .9% dividend yield. My yield on cost is .95%. So I'm in the green by a bit on this one. My average cost basis is $3688 Right now it trades at $3925.00. So looking over every company on this list, the important thing is to not focus on the starting dividend yield and which one has the biggest dividend starting
off. The important thing is to focus on companies that have great balance sheets that have the ability to grow free cash flow over time, which will eventually support a growing dividend. This is the reason that My Portfolio has growing amounts of dividend income every single year. It's also the reason that I avoid tragic scenarios where companies struggle, cut their dividend by 50% or 70% or completely eliminate it.
So far in My Portfolio, no company company has cut their dividend, they've only grown them. The dividends that I'm continually paid and I reinvest back into the best opportunities at the time has acted as a significant catalyst to the growth of this portfolio. So I'm going to continue to observe my companies, do analysis on different holdings and try to identify the best opportunities in the given scenarios that were given in
this crazy market. Now moving on, we get to an earnings report from Adobe and this is more of a story than an actual earnings report. It's not just the numbers being reported here, but this sparks a new debate in the continual question of what type of returns, actual returns are we getting from AI. So far, we've had significant and I mean incredible investments into AI.
The amount of CapEx spending of both large and small companies, every company in between throwing money into CapEx and employees and talent for artificial intelligence is at extremely high levels right now. And now investors are asking the question, where are the returns? What returns are we getting and where are they coming from? I've discussed this topic of the enormous amount of money being spent on AI in the most recent episode in the After Hours channel.
You can check out that entire discussion, but this is more of a continuation of it. We have the example of Adobe here, which is currently down 9% after their earnings. Now they beat on their earnings per share and their revenue forecast for the previous quarter. But obviously investors are looking to the future, especially with growth companies like Adobe. The problem that they have is that their forecast for the future was way below analyst expectations.
Adobe shares dropped after the company delivered an outlook that failed to quell investors and patience for new artificial intelligence tools to start generating cash again. That's the big question investors are asking. When is this stuff actually going to make real money?
Known for its software for creative professionals, Adobe has been adding AI features to its applications, such as embedding its proprietary technology Firefly into products like Photoshop and Illustrator. But investors are keen to see the evidence that Adobe can actually make money from these tools, especially as anxiety rises that small startup rivals will take a business from traditional software companies like Adobe Salesforce and Work Day.
These basket of companies, Adobe Salesforce and Work Day, are not only struggling right now in their stock price, most of them are trading down again. Salesforce is one that I do own and that's my worst performing holding so far this year. Investors are not only concerned about whether or not these companies can make money from their investments in AI, but they also have been outlined as the victims of AI.
Salesforce and work there are going to have all their applications replaced by AI, and Adobe could face similar pressures. Those concerns seem to be reaffirmed by the fiscal fourth quarter sales guidance that fell short of Wall Street's estimates. Adobe has, of course, a lot of different things they do, but the most important one is the Adobe Creative Cloud.
The Adobe Creative Cloud is a thing that people sign up for at companies so that they can have access to Adobe Premiere and Firefly and Photoshop. Creative professionals rely on these tools. They've built their entire business using them. They have huge network effects in their knowledge base, the amount of people using them. But it is it is true that there's a lot of competition rising for Adobe. So as investors are trying to break this down, what are competitive to Adobe?
Why isn't the sales forecast rising with all their investments in AI? Adobe has a different approach on this, a different answer. They said on their sales call that they're still focused on making sure customers use it's AI innovations rather than seeking to directly make money from the tools. So Adobe's taking the approach of implementing AI features and innovations into their already existing tools as part of the overall bundle.
They're not breaking them out and charging separately like, hey, here's the Adobe Creative Cloud and here's this separate AI tool that you can pay extra for. So investors aren't able to see the actual impacts. We're not able to drill down and see how AI is actually benefiting Adobe, but Adobe could argue that, look, the reason that our company's still growing and we're maintaining the market share we have is because of our investments in AI. That makes AIA necessity rather
than a new feature to sell. The company's also working on developing similar technology for its 3D and video editing software. So they're going to be layering upon AI into all the tools that they have. And of course they need to do this to keep an edge over rivals. Adobe has an argument of their own. They're saying that users are using these AI tools more and more. Adobe users have used Firefly, this AI tool 12 billion times. When we look at the graph, it's pretty convincing.
It's just going up and up. So more and more people are actually using their AI tools. We're just not seeing a big bump in the actual metrics or the revenue from this AI tool. When we look at this most recent quarter and what really performed well, the document processing software outperformed expectations by more than the products for editing photos and videos where Adobe has created proprietary AI models.
So the part of this company in the most recent report that did really well was the part that has nothing to do with AI and that's concerning to investors. They say that that's causing anxiety for investors. Why is the document processing software where they're really not doing any AI advancements in doing so well and the creative proprietary stuff with AI that they're spending a bunch of money on not doing quite as
well. And this comes back to that debate of how AI is going to help these companies. In the case of Adobe, I do think they're going to layer upon AI into all their creative tools. And I still think there's a huge need for professional tools. But with Adobe, there is increasing amounts of competent competition.
So Adobe's face a future that requires significant investments in AI to stay current with their software and competitive during a time where they're also facing more competitive threats that are highly competent. When I look at the situation with Adobe, as much as I like the company and I certainly don't think it's the worst investment in the world, I think there's much worse companies you can invest in than Adobe.
But right now, I don't believe this company is as attractive as an investment as many investors believe, and that's because I continue to be concerned about the competitive threats. Now we also have news that Uber and Waymo are expanding their partnership and now offering driverless ride sharing trips in Austin and Atlanta. Uber's riders in those cities can be matched with driverless Waymo cars for some trips.
According to the companies, the rides will only be available through Uber's app, unlike in San Francisco and Los Angeles where riders book through the Waymo app. So Uber negotiated quite a deal here. They said, look, we'll offer Waymo rides, but only if they come through the Uber app. Now that makes sense why Uber is up 5% today. This is a great deal for Uber.
The expansion comes as Uber faces investor pressure to step up its autonomous vehicle strategy, especially ahead of Tesla's planned robotaxi event slated for October 10. Waymo's still small in this business. As of their weekly recap, they did 50,000 rides, which makes up for approximately 2% of ride sharing usage in San Francisco. Ultimately, we'll see what happens, but this is undoubtedly a good move by Uber. It makes their network effects
stronger. It makes so that the logistics they've already created have more value. And even if Tesla comes in and gives a great presentation, I think Uber will be able to make a lot of money with their massive network effects and partnerships over the next decade. But this is a new industry, and it's exciting to see what's happening now. Finally, this is some interesting news that we saw
over the past couple of days. We have the company Visa MasterCard, which I still think that a lot of investors that haven't looked into these companies view incorrectly. They view them only as credit card companies. In reality, MasterCard and Visa are not credit card companies. They're digital payment networks. They don't lend money like a bank. They are technology companies that are incredibly scaled and
globally dominant. They only play a small portion of total online digital payments, but they play a critical role and they have decent market share of the role they play. They're also service businesses that offer a variety of incredibly important technology services, one of them being cybersecurity. The financial services giant said it would incorporate recorded futures technology, including artificial intelligence, into its fraud prevention identity and
cybersecurity services. It's expected to close the acquisition by the first quarter of 2025. Now, I think that this deal is going to go through simply because regulators don't want these companies become too big and dominant. But MasterCard is not a monopoly of cybersecurity, so there's no argument that they are cornering
the cybersecurity market. Another thing that they could argue to regulators if they try to give them a tough time is that by preventing MasterCard from buying a cybersecurity firm, they're literally making cybersecurity weaker for all of their customers. So I think this is 1 acquisition that's likely to go through for MasterCard.
I don't know how the regulators would feel good about blocking an acquisition of blocking a massive company with a huge network from buying a cybersecurity firm. MasterCard said that threat Intel, which is exactly what this firm does, is critically important to understand what the threats are, how we prioritize them, and how we can be proactive. This type of acquisition proves a few things. One is that MasterCard is a tech company, it's not a credit card company.
And two, that MasterCard is still focused on growing their value added services. We know that Visa is doing this as well at a very brisk pace. When we look at the revenue by segment, it is true that majority of revenue comes from the payment network, but there is an increasing amount coming from these value added services. These are cybersecurity, know your customer identity, all different services they sell to
their customer. I'm happy about this acquisition and I think it's going to go through. That's all for this episode. See you in the next one.