How To Get Rich With Dividends
By Alexander Green, Investment U Chief Investment Strategist
When I first got started in the investment business 27 years ago ? as a novice stockbroker ? I had an awkward conversation with a client.
She was an elderly, income-oriented investor with a substantial sum tied up in an oil stock with a fairly low yield. I suggested that she could do a lot better than the 2.5% dividend she was earning.
"Son," she replied ? I had already come to recognize that it was likely to be a teachable moment, and an embarrassing one, when a more-experienced investor called me "son" ? "that stock is paying 2.5% based on what it is selling for now. But for me, the annual dividend is more than my entire original investment."
Oh.
It was an early lesson in magic of investing in blue-chip companies with steadily rising dividends. To this day, it still astonishes me how many investors ? even experienced ones ? don't realize what a powerful opportunity this is ? or how cheap dividend payers are right now.
That's why you should pick up a copy of Oxford Club and Investment U analyst Marc Lichtenfeld's new book, Get Rich with Dividends: A Proven System for Earning Double-Digit Returns. Here's why...
Dr. Jeremy Siegel, a professor of finance at The Wharton School of the University of Pennsylvania, has done a thorough historical investigation of the performance of various asset classes over the last 200 years, including all types of stocks, bonds, cash and precious metals. His conclusion? Dividend stocks have outperformed everything else over the long haul ? and almost certainly will in the future, too.
In Get Rich with Dividends, Marc explains why ? and shows you exactly how to identify the most promising income stocks. He also demonstrates that even during market declines, dividend-paying stocks hold up better than non-dividend-paying stocks, often fighting the broad trend and rising in value. The reason is obvious. These tend to be mature, profitable companies with stable outlooks, plenty of cash and long-term staying power.
Bear in mind, U.S. companies are sitting on a record amount of cash right now, more than $2 trillion. Most corporations are not hiring and they're not boosting spending. So a lot of this cash is rightfully going back to shareholders. The Dow currently yields more than bonds. And dividend growth among U.S. companies has averaged 10% per year over the last two years, more than double the long-term dividend growth rate.
The current outlook is especially promising. Over the last 50 years, for instance, the highest 20% yielding stocks in the S&P 500 returned 14.2% annually. That's good enough to double your money every five years ? or quadruple it in 10. And if you were even more selective, say investing only in the 10 highest-yielding stocks of the 100 largest companies in the S&P 500, your annual return would have been even better, 15.7%.
Marc makes a strong case that dividend stocks today represent an historic opportunity. Not only are U.S. companies flush with cash, but payouts are less than one third of profits, a historic low. This is exactly where most investors, especially income-oriented ones, should park their money right now. After all, bonds ? which should carry a warning label at the moment? are sporting record-low yields. Money market funds pay almost nothing, less than one-tenth of one percent. But many dividend-stocks are dirt-cheap and will boost their payouts substantially in the months ahead.
In short, if you're looking for growth, invest in dividend stocks. If you're looking for income, invest in dividend stocks. If you're looking to reduce your risk, invest in dividend stocks. And if you're looking to build your fortune ? safely and securely ? invest in Get Rich with Dividends. It's a classic.
Good Investing,
Alex