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The recent bear market just wiped out 13 years of capital gains.
In March 2009 -- as the S&P 500 hit its lowest level since 1996 -- millions
of investors around the world sat in shock -- numb, as they witnessed their
portfolios deteriorate in synch with the general market.
Maybe you were among them.
Teachers, lawyers, farmers, accountants, business owners, realtors, retirees, you
name it. Hardly anyone who owned stocks didn't feel the pain.
But somewhere in the outskirts of Austin, Texas...
one investor was able to avoid the worst of the turmoil.
That's because -- in the depths of the worst stock market of our lifetimes
-- this man's portfolio was quietly churning out "paycheck" after "paycheck"
-- providing him with a steady stream of income and a healthy dose of confidence,
comfort, and optimism amidst the economic panic.
 He was concluding a 24-month long "real money" case study with a
new investing strategy -- one that focuses on safety and security, but that
also offers a steady flow of cash to your bank account -- nearly every
single day.
It's proven to be an overwhelming success...
This man has collected 281 dividend
checks worth a total of $21,491.71 since January 1st -- the
equivalent of getting a $65.72 paycheck every single day this year
(including weekends!).
In October alone he's collected 32 checks worth $2,707.97 --
for an average daily paycheck of $87.35!
His name is Paul Tracy, and he is StreetAuthority's Co-Founder and Chief Investment
Strategist. The revolutionary income strategy he's discovered can turn
your portfolio into a daily income machine -- offering you either
stable cash flow through practically any market blowup or huge $1,200-plus
"paydays" on other occasions -- just like it has for him.
But this is just the beginning.
Paul's goal is to collect $10,000 a month from dividends only. That
sounds a little ridiculous, but as you'll see in a moment, it's entirely possible
-- thanks to his "daily paycheck" strategy:
"By following Paul's eight 'no-brainer' dividend investing rules... and then
reinvesting those earned dividends... you're able to get a more frequent income
stream that grows larger and larger each month."
He swears that your income stream can become more frequent and grow larger by the
month, too -- just like his.
And the best part is, you can start with a portfolio of ANY size.
Just follow the same
eight "no-brainer" rules that Paul does... and within weeks your
nest egg
could transform into a daily income machine that dishes out up
to 32 or more checks a month.
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"Forget chasing
growth stocks. Invest in dividend payers." |
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It's a rule that should be etched into the granite
walls of the NYSE: Never underestimate the power of the lowly dividend.
Although little respected and often ignored, more than
137 years of data point to the inescapable conclusion that owning
humdrum dividend-paying stocks... and then reinvesting those
dividends... beats all other investment approaches hands down. So if
dividend-paying stocks make you yawn, it's time to wake up and smell the
cash.
In the go-go high-tech boom 10 years ago, income
investors were laughed at as fuddy duddies.
Guess who's laughing now? Dividend-paying stocks are so
far ahead of the non-payers that it's not even funny.
Over the past 10 years NYSE-listed stocks that pay
dividends are up +7.7% a year. Meanwhile, those that don't pay dividends eked out
gains of just +1.7%.
That comes to a huge difference in total return: +96.7% vs. +18.4%.
Don't be surprised. Since 1926 dividends have
contributed 42% of the total return delivered by the markets. This makes
a massive difference over the long haul. Underestimating the awesome
edge income-paying securities give you is the biggest mistake you can
make in your investing life.
In fact, the odds are so heavily stacked in their favor
that income investors almost always come out ahead.
In the 100-yard dash to wealth, income investors start
on the 50-yardline. What's more, every time the stock market corrects,
growth investors are forced to run backwards for 10 yards. How can they
win?
This jump-start is precisely why Paul Tracy has spent the last two years developing his
strategy to get even more (and larger) dividend payments from his portfolio.
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"It's tempting to take the
cash... but more profitable to reinvest it." |
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When you start collecting $60... $70...
$80... even $300 dividend checks on a daily basis, your first instinct will
be to cash them.
But unless you really need to, don't.
Dividends are one of the most powerful wealth-building tools
in an investor's arsenal because of the phenomenon of compounding.
By reinvesting your dividend checks (instead of cashing them), you can buy more shares,
which leads to even larger dividend checks.
These larger checks can then be used to buy even more shares and so on. In
time, even a small stake in such stocks can grow into a tidy sum.
(Reinvesting your dividends is a cinch. In fact, many dividend payers do it
automatically -- and if they don't, just give your broker a call and he'll take
care of it for you in a matter of seconds.)
Look what happens to a $10,000 investment earning a 10% annual yield and
generating an +8% capital gain each year over three decades.
 As
you can see, steady compounding yields amazing results over the long haul.
If you cashed all your dividend checks you'd end up with $222,972.
But if you reinvested them, your initial $10,000 investment swells into
more than $1.7 million -- without ever adding another penny.
At the end of the 30-year period, you'll be collecting annual dividend payments in excess of
$170,000.
In other words, your annual dividend
income alone would amount to more than 17 times your $10,000
outlay!
This is precisely why Paul Tracy calls reinvesting your dividends a
"no-brainer" -- and why this investing style is the foundation for his new
"daily paycheck" strategy.
One of Paul's personal holdings -- AllianceBernstein Global High income
Fund (NYSE: AWF) -- is up +88% this year. What's remarkable is
that by reinvesting his checks -- instead of cashing them -- his total AWF
share count has jumped by almost +10% in just 10 months!
It doesn't take a genius to see how quickly your income stream can grow when
you invest this way.
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"If you've got a
choice between a 5% yield
and a 10% yield, take the higher yield." |
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One of the easiest ways to increase your
income stream is to invest in high-yielding securities.
All else equal, higher yields will pay you more.
This rule is such a "no-brainer" that it doesn't require further explanation. Clearly, higher yields put more
cash in your pocket....
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Portfolio
Size |
Annual
Cash Dividends at 5% Yield |
Annual
Cash Dividends at 10% Yield |
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$1,000 |
$50 |
$100 |
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$10,000 |
$500 |
$1,000 |
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$100,000 |
$5,000 |
$10,000 |
Just a word of caution:
One of the biggest mistakes income investors make is to flip open their copy of
The Wall Street Journal and only buy the securities with the highest yields.
Although ultra-high-yielding securities paying 20% or more are tempting,
keep in mind that common stocks don't guarantee yields or payouts. At any time, a
company's board of directors can decide to cut its dividend distributions or eliminate them
entirely.
So if you want to separate the high-yield gems from the high-yield junk,
you need to look for a few traits of strong dividend payers. These include
payout ratios below 80%, a strong history of payments, and strong cash
positions.
Fortunately, there are still plenty of companies that meet this criteria AND
pay out hefty double-digit yields.
These are exactly the kinds of securities you'll want in your portfolio if
you want to collect monthly dividend checks of $2,000... $3,000... even
$5,000 or more.
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"Small-caps beat
large-caps.
So invest in the small guys." |
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It's only common sense that a small
company with $10 million in earnings can double or triple that figure much
easier and faster than a corporate giant with $10 billion in earnings.
And history agrees...
Over a recent 33-year period, small-cap stocks outperformed
their large-cap counterparts, averaging +14.8% annual gains vs. +10.8%
annual gains.
Over the long haul, that difference can add up to a substantial amount of
money:
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Long-term Growth
of Investing in Small-Caps vs. Large-Caps |
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Growth
of $10,000 |
10
Years |
20
Years |
30
Years |
40
Years |
| Large-Cap (+10.8%/yr) |
$27,886 |
$77,766 |
$216,866 |
$604,770 |
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Small-Cap (+14.8%/yr) |
$39,757 |
$158,065 |
$628,429 |
$2,498,477 |
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That's why, if given the choice, Paul Tracy prefers to skew his portfolio toward
promising small-caps... especially high-yielding ones, like Main
Street Capital (Nasdaq: MAIN), which yields 10.6%, makes monthly
payments, and has returned +62% so far this year.
He says, "These firms are like tiny acorns that will one day
become towering oaks. But not surprisingly, most income-seeking investors spend little
time hunting for acorns and prefer their stocks to be
full-grown. Unfortunately, they're missing out on a lot of cash."
Attention Dividend
Opportunities Readers: I hope
you've enjoyed this introduction to the "daily paycheck"
strategy. As you can see, it's one of (if not the)
most profitable way to invest.
But I've got even more to share with you.
In next week's issue I'll bring you "No-Brainer" Rules 5-8,
which cover the best places to look for income... the
misunderstood secret that can add 35% to your income
stream... and the lynchpin for building a portfolio that
pays you income for every day of the month.
Stay tuned!
Have a wonderful Thanksgiving,
Lou Betancourt
StreetAuthority, Publisher
P.S. If you just can't wait, you can get more details on
this "daily paycheck" strategy by
following this link.
P.P.S.
-- Don't miss a single issue! Add our address,
Research@DividendOpportunities.com,
to your Address Book or Safe List. For instructions,
go
here.
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