Look, I know it’s heartbreaking to invest in this dumpster-fired market. Well, even if you do everything right and only buy high quality dividend stocks, they Even then It seems that a day later (or at most two!)
This is why, in Last Tuesday’s article (The first in a series on how my proven “dividend magnet” plan can increase your returns), I urged people to keep a healthy cash pile to invest on the other side of this crash—and at that point. Will Come! I’ll tell you that we’re going to put our hoard entirely on my . when will i deploy hidden yield dividend-enhancement service.
In the meantime, we will continue to trade lightly—buying only in smaller lots and longer periods only. but for cash we Doing Deploy today, what exactly should we be looking for?
Beyond P/E Ratio
one thing we do No Want to stock too much (sorry, I couldn’t resist!) into a measure that’s practically a religion for many people: the price-to-earnings (P/E) ratio. Many investors look for stocks with a P/E they think is “cheap” – below 10 or whatever.
And in this mess of the market, sub-10 p/s abound!
The trouble is that a “cheap” stock can always be cheap. Consider General Motors
Sure. Its P/E has dropped to a disappointing six (six!) times, except today.
Do I hear three?
Look, I’m not saying you should throw out P/E—not for a long time. But we have to bear in mind that they are just one piece of the puzzle. Another, more important, predictor of share-price growth is one that few people pay attention to: dividend increase.
I know that sounds weird. Most people consider dividends and stock prices to be independent of each other. Even worse, many ignore dividends altogether (the meager 1.5% yield on typical S&P 500 stocks is the main reason—especially with inflation roaring north of 8%).
but as hidden yield Members know, the present produce itself is quite useless to us. More important than this are: 1) do you reinvest your payments over the long term, and 2) the payment growth rate, Which is tied into the share-price gain I mentioned a second ago.
Dividend reinvestment may distribute millions More in benefits and payouts
We’ll dive into that dividend-growth/share-price relationship shortly. First, a quick aside on dividend reinvestment. Because if you roll your dividends back into your portfolio (perhaps through an automatic) Dividend Reinvestment Plan, or DRIP), the power of compounding kicks in.
When I say “power,” I’m not kidding. The Hartford Funds looked at 60 years between 1960 and 2021 and found something startling: An investor who put $10,000 back in the S&P 500 would have $795,823 at the end of the period, based only on price gains.
That’s not bad: an increase of 7,858%. But if they had reinvested their dividends, the magic of compounding would have left them with $4,949,663 or almost $4.2 million more!
Most people stop here (if they even get this far!) when thinking about dividends and stock returns. But they shouldn’t, because it’s just Act 1. you can give yourself space for even stronger Profits if you buy stocks whose dividends are not only increasing but accelerator
The correlation between rapidly rising dividends and share prices powers my “dividend magnet” strategy, which is the secret behind the gains we’ve seen. hidden yield,
TXN’s “Quick” Dividend Drives Us to 148% Return
To see what I get, consider Texas Instruments
You can clearly see that TXN’s dividend magnet is going to act on its share price, point for point!
You can also see this pattern in the returns of the insurer. Assurance
is then American Tower
We love a management team so much we bought in November 2018 (the last time the market sold in a rate-driven panic) and rode AMT’s strong dividend magnet straight through the COVID crisis, bringing a total of 57% Received returns, driven by 65% payout growth.
Again, our dividend-up, share-price-up pattern is clearly evident.
My Dividend Magnet strategy also has an added benefit: it is the surest way to create a large yield over time. To see what I mean, consider the semiconductor play broadcom
Buying then would have given you the current yield of 1.3%; The stock’s yield is a little more than double today’s 2.8%. It’s obviously a lot better, but it’s still too vague for us Dividend fans. But get this: Thanks to Broadcom’s Ridiculous Dividend Growth, You’ll Yield astonishing 48% On your initial purchase today!
Brett Owens is Chief Investment Strategist Contrarian Outlook, For more revenue streams, get your free copy of their latest special report: Your Early Retirement Portfolio: Huge Dividends—Every Month—Forever,
Credit: www.forbes.com /