Martin’s out of town today, so he asked me to fill in for him again. I’d like to use this opportunity to tell you more about a topic that too many analysts have neglected for too long: Dividends.
See, I’ve been passionate about dividends for a long time. In fact, with a little help from my parents, I bought my first dividend-paying stock when I was in the sixth grade! Those initial five shares of IBM sparked a love affair with the stock market, and with companies that reward shareholders with regular payments.
It’s no surprise that I ended up working on Wall Street. In fact, before I came to Weiss, dividends were my specialty at Standard & Poor’s for more than half a decade.
Why do I love dividends so much?
- Dividends give you a great cushion for down markets; that’s a great comfort in today’s volatile markets.
- Dividends can represent concrete, hard-nosed proof that the company’s making good money. No fancy promises. No fluff! Just a nice dividend check in the mail.
- Dividends can go up year after year after year. And with every increase, the yield on your original investment rises as well. Even if you start with, say, a dividend yield of 3% or 4%, you could wind up with a yield of 9%, 10%, or 12% on the cost of your shares.
- Dividends can even give you double-digit yields right away. They’re harder to find, to be sure. But if you dedicate the time to hunting them down — like I do — you can dig them up.
And perhaps most intriguing of all …
- Dividends know no borders. I like international dividend-paying stocks. But I also like domestic dividend-paying stocks. Provided the yield is good and the company is secure, I don’t discriminate either way.
Indeed, even when the dollar is falling, I still recommend SOME U.S. dividend-paying stocks. Here’s why …
First, no matter how promising international stocks may be, it’s not prudent to put ALL your money overseas. In fact, I think practically every investor should have at least some money invested in the U.S. at nearly all times.
Never forget: The U.S. is still the world’s largest economy. America’s public companies are still worth almost as much as all the shares traded on Europe’s 24 major markets. And American companies still set the trends and standards that many foreign firms scurry to copy.
What about the falling dollar? Actually …
The Dollar Decline Is Great News
For SELECT American Companies!
I absolutely hate watching my home currency lose value. My overseas trips get more expensive. All the imported goods I buy cost me more.
However, there’s a silver lining that you don’t hear too much about — a weak U.S. dollar actually helps SOME American companies that derive a large portion of revenues from their overseas operations.
Take Johnson & Johnson, for example. It sells a vast line-up of products, including Listerine, Band-Aids and baby products to overseas consumers. In fact, I dug into the company’s 2006 annual report and discovered that a whopping 44% of J&J’s total revenues came from international consumers!
Naturally, when J&J sells those products in foreign markets it prices them in euros, Japanese yen, Australian dollars or Brazilian reals. But when it comes time to tally those sales and bring the money home, they get translated back into U.S. dollars.
Result: A weaker dollar means companies like Johnson & Johnson collect more dollars on every foreign sale. Moreover, this same phenomenon allows American companies to charge less for their products in foreign markets and STILL get the same dollar amount in sales.
That’s a huge advantage in today’s fiercely competitive markets!
The kicker: Johnson & Johnson has been able to pay out higher and higher dividends for 44 straight years!
And guess what! Most of the U.S. companies getting the most out of the weak dollar also happen to be the strongest dividend-paying companies in America.
Why do the two go virtually hand-in-hand? Because it takes a well-established business to be able to make inroads into overseas markets. And, at the same time, it also takes an established business to write dividend checks to shareholders.
You ask …
“But What about the Weak U.S. Economy?
Won’t That Hurt ALL U.S. Companies?”
No. Let’s stick with Johnson & Johnson for a moment. Since 44% of its sales are coming from international markets, it’s not just benefiting from a weaker dollar, it’s also partially insulated from economic weakness in its home market … or any single market for that matter!
Look, the U.S. economy might have only increased a paltry 0.6% in the first quarter of this year. But as we’ve been telling you, there are many other robust regions of the world that are enjoying tremendous expansion. And large dividend-paying companies are embracing those growing markets with open arms. That’s why …
When a Chinese construction worker quenches his thirst, he’ll reach for a Coca-Cola …
When an Indian programmer gets ready for work, she’ll grab a tube of Colgate …
And when a Brazilian corn farmer tends to his crops, he’ll ride a John-Deere tractor.
Plus …
Most of the Best Dividend-Paying
Companies Enjoy Steady Demand,
In Good and Bad Economic Times
Even during a recession, nearly all U.S. consumers still take their medicine, buy groceries, and pay their heating bills.
Some examples:
- Eli Lilly has been selling its prescription medications through booms and busts. So it comes as no surprise that the company has been paying dividends for more than a century!
- Supervalu is one of the largest food wholesalers in the U.S. (as well as one of the largest supermarket retailers). And the fact that people always have to eat has allowed the company to reward shareholders with dividend payments as far back as 1936.
- Like clockwork, everyone in my neighborhood writes monthly checks to Florida Power and Light. And like clockwork, the company writes out checks of its own … to its shareholders.
- Smokers? They reach for cigarettes day in and day out. Thus, Altria (formerly known as Philip Morris) enjoys steady demand for its major product. No wonder the stock currently yields almost 4%!
I could go on and on … but you get the idea. Another thing …
Even in Turbulent Stock Markets,
Dividend Payers Hold Up Better
The good news is that these kinds of companies can also help your portfolio weather the very same storms. In fact, even when Wall Street hits the skids, dividend-paying stocks hold up far better than shares that don’t have yields.
The evidence is abundant, but let’s look at a recent example:
- 2002 was one of the worst years for stocks in decades, with the S&P 500 falling 23%
- Non-dividend-paying stocks in the index plummeted even more — 30%
- In contrast, the index’s dividend-paying stocks lost only 11%!
Am I saying that you want to be holding lots of dividend-paying stocks just because they’ll lose less money than other issues? Of course not! Rather, the fact is that, historically, they have performed much better during rough patches.
Plus, when the markets are trading sideways, you’ll be getting paid to wait.
And when U.S. shares resume their climb (as they always have), your portfolio will be ready and willing to move higher, too.
Now, the companies I mentioned today really demonstrate how and why some of America’s top companies are able to weather a falling dollar and a weak U.S. economy. But they’re not my current favorites …
Consider Beefing Up Your Portfolio
With These 16 Dividend Superstars
I’ve told you why I think adding some dividend-paying stocks to your portfolio could really help you stay invested in the U.S. through thick and thin.
But perhaps the best part is that investing this way is not rocket science. You don’t need an exotic stock trading system. All you have to do is buy what I call “dividend superstars” and hold them.
I’m such a big fan of this approach that I’ve just written a series of special reports on some of my favorites …
My first report, Seven Dividend Superstars to Double Your Income Over Time, includes strictly companies that have not only been paying dividends for at least 25 years, but have also been raising their dividend payments for at least 25 years straight.
These seven well-established firms, with economically insensitive businesses, are just the kind of companies I told you about today. The kind that are well-prepared for economic storms, stock market turbulence, and more. In fact, they’ve consistently rewarded shareholders with regular payouts no matter what.
I’ll tell you how to get my report, Seven Dividend Superstars to Double Your Income Over Time, for free, in just a moment.
First, I want to point something else out …
Dividends Are Sweet! But Don’t Forget the
Icing on the Cake: Capital Gains.
Total Yearly Average Return:
20.8%, 21.2%, 23.5%, 32.1%, 45.2%
So far, I’ve just been talking about dividends. That’s my focus, and I believe in them so strongly I won’t recommend a stock unless it pays them!
But that doesn’t mean I ignore the icing on the cake — capital gains. Quite to the contrary, I also look for stocks that I feel are the most likely to deliver market-spanking total returns — the combination of steady dividends AND increasing share prices.
Here’s how I find them:
First off, I insist that ALL companies I recommend to you pay YOU handsomely just to own their shares, through steadily, nonstop, inexorably rising dividends. That’s the fundamental starting principle I never veer from.
Second, with that kind of track record, it ALSO follows that these are the companies with the greatest likelihood to let you sit back, while your capital grows.
Third, for maximum income and growth, I pick smaller, off-the-radar stocks that have the best growth potential in terms of sales and earnings. The combination of the two — dividends plus growth — gives you the double-bang for your buck I call “Superstar Total Return.”
Right now, there are only 21 stocks in America that meet my criteria for Superstar Total Return. And among them, I have picked out my six favorites with the best dividend history, the best capital appreciation and the best potential for much more of the same.
I name them in my second free report, Six Fast-Growing Dividend Superstars. Here’s just a glimpse of what you’ll discover …
A New Chew Toy for “Buddy”
— and an Extra 21.2% PER YEAR for YOU!
I’ll tell you about PetSmart, and why I think adding its shares to your dividend superstar portfolio is one of the easiest, no-brainer moves you can make right now to plump up your income and your portfolio’s value.
In the past five years, if you had simply reinvested the dividends this stock paid out, you’d have made an eye-popping total return of 21.2% PER YEAR!
Yet, I believe this could be mere chump change compared to what’s ahead for the company’s shares. The pet care market is huge and growing, thanks in part to the mushrooming number of baby boomers who are spending more money on their pets than ever before in history — especially now that their kids are out of the nest.
Already, households shell out an average of $1,571 a year on their dogs alone. And according to the American Pet Products Manufacturers Association, sales of pet products topped $38.5 billion in 2006 — more than double a decade earlier. Reason: More than 69 million U.S. households (63%) own a pet, and 45% of those own two or more.
PetSmart is perfectly positioned to maximize its share of this booming market. Not only is its stock set to enjoy rising capital appreciation, the company’s dividends — already up 44% just in the past three years — are also likely to soar even higher.
I give you specific instructions on how and when to buy it in my second free report, Six Fast-Growing Dividend Superstars.
Plus, I’ll also show you how you could be getting total returns of …
- 20.8% per year from an overlooked investment banking firm …
- 23.5% per year from a little communications company sitting in the sweet spot of the defense spending boom with billions of dollars in backlogged orders …
- 32.1% per year from a diversified manufacturer of heavy equipment used by fire departments, sanitation companies, and the Department of Defense, and …
- 45.2% per year from an industrial metals company that’s racking up solid growth thanks to rising demand and smart acquisitions!
- And more!
These companies illustrate the amazing power of combining dividends plus capital gains, and I’d like to get this FREE report into your hands as soon as possible.
Reason: Any one of these unsung heroes could add an extra digit or two to your income — and your portfolio. My view: The earlier you get in, the bigger your potential gains.
By the way …
With Dividend-Paying Stocks, It’s Even
Possible to Get Annual Yields of
7.5%, 8.1%, and 13.1% IMMEDIATELY!
I’m not the kind of person to take big chances. Yet I’m not opposed to calculated risk if the rewards can be great — everything in moderation.
I’ve already shown you how to conservatively rack up ever-increasing income over time. And I’ve shown you how capital gains are the icing on the cake.
But in these times of rising inflation, it’s also prudent to seek out a full arsenal of investments with varying degrees of risk in order to maximize your income.
That’s why I’ve pulled out all the stops in my third free special report, Three High-Dividend Stocks to Double Your Income IMMEDIATELY. In it, I name my three top picks that could increase your income by anywhere from 100% to 400% starting right now.
High-yield stock #1. Earn 7.5% immediately! The first mega-yield stock I name lets you profit from the kind of big-money, behind-closed-doors Wall Street deals you read about but never seem to get a piece of.
This high-dividend company earns double-digit returns by funding leveraged buyouts and making other deals happen. And it passes along the rewards to its shareholders via fat, generous, growing dividends.
Its current dividend yield is 7.5%. And with some nice capital appreciation, it has generated a 35% total return for its investors in the past year — just the beginning of the trend I see ahead.
High-yield stock #2. Earn 8.3% immediately! In my special report, Three High-Dividend Stocks to Double Your Income IMMEDIATELY, I also name a telephone company that’s grounded and solid — like a mini-“Ma Bell” — a savvy counter-play to the cell phone madness sweeping the country.
A pending deal with one of the major players is set to fatten up the company’s cash flows and bottom line … PLUS boost its dividend payments. It’s already paying 8.3% a year in dividends. And just in the last year, its total return was a whopping 46.3%. I foresee more of the same till at least the end of the decade.
High-yield stock #3. Earn 13.1% immediately! Now, sit down for this last one! In your free copy of Three High-Dividend Stocks to Double Your Income IMMEDIATELY, I also name a stock paying a current yield that will blow your mind — 13.1%!
Think about that yield for a moment: If this company continues to pay out that kind of dividend — not guaranteed but very likely in my opinion — in just a few years, your dividend checks alone will cover your entire initial investment. Everything you earn thereafter will be on the house.
I’ll give you the names, the details, and very specific buying instructions on each of these companies in your free copy of Three High-Dividend Stocks to Double Your Income IMMEDIATELY.
Download Your 3 FREE Reports
And Start the Checks Rolling
Into Your Mailbox Right Now!
I know you’ll want to move right away on the companies I’ve told you about so far. And I also know you’ll want to continue to reap the benefits of these kinds of dividend superstars each month for years to come.
To make that possible, I’ve arranged for you to download my three special reports immediately, at no charge whatsoever, with your risk-free trial subscription to my new service, Dividend Superstars.
Each monthly issue of Dividend Superstars is devoted to the top, high-yielding dividend opportunities around the world. In each issue you’ll get …
- My virtually bullet-proof Income Portfolio, including my top blue-chip high-yield selections designed to double your income over time, plus …
- My Super High-Yield column with my choices of top high-yield plays that could multiply your income immediately, plus …
- My wealth-building Total Return Portfolio — fast-growing companies that pay solid dividends AND give you the opportunity to earn big capital gains to build your wealth!
- My favorite dividend-paying international stocks — buy them like you would any other stock, right on North American exchanges … and go for the triple benefit of dividends, capital appreciation and even currency appreciation.
- Plus much, much more!
One of the great benefits of Dividend Superstars is that, by focusing so resolutely on companies with a proven dividend-paying track record, you rarely have to check your portfolio more than once a month.
Instead, you can just relax and enjoy all the things in life that you treasure, while your dividend checks keep rolling in.
But, needless to say, we don’t live in a perfectly predictable world. Once in a while, the unexpected happens. It may be an unusually attractive dividend-grabbing opportunity that pops up out of the blue. Or it may be an unexpected danger that temporarily threatens even a sturdy dividend-paying stock.
The solution: My vigilance. Watching out for special on-the-spot opportunities — and dangers — is my job. And on the few occasions when I spot something, I’ll simply rush you a special flash alert via e-mail.
Your Total Yearly Cost for
The ENTIRE Package: Just $39
What’s the value of a service that could double your income yield over time with safe, conservative companies … that can give you 23.1% yields right now … that could give you total returns averaging as much as 45.2% per year … and that could double your total wealth in seven years or less?
Some investment publications charge you $200 a year or more for this kind of service. In fact, the last newsletter I edited with a different publisher sold for $298 a year!
But that’s not my approach. Mine is not a high-roller trading service. Nor do I want to restrict it to a small group of investors who already have all they need to live a very comfortable lifestyle. I want to reach out to as many people as I can, including those who must make changes in their finances right now to achieve their retirement goals.
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FREE REPORT #3: Three High-Yielding Stocks to Double Your Income IMMEDIATELY — stocks that are yielding anywhere from 7.5% to 13.1% right now! (Value: $39.)
Look. If you’ve got my dividend superstars that have been steadily increasing their dividends for at least 25 straight years …
You’ve got my favorite fast-growing stocks that are giving you the potential for up to 45.2% in total returns per year and …
You’ve got my high-yielding picks designed to at least double your income right away …
Then one year from today, I’m pretty certain you’re going to want to renew your subscription, which will be at the standard rate of $78.
So I have a better suggestion: Lock in my deeply discounted $39 rate right now with a two-year subscription. For just $78 …
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Extra Bonus #2 (a $69 value). The Single Hottest Dividend-Paying Tech Stock in America. In this special report, I’ll tell you about an innovative company that makes self-contained computers residing on tiny chips — the brains behind hundreds of items you use every day, from the airbags in your car to the remote control for your TV. And unlike nearly every other tech company in America, it’s not only paying a steady dividend, it’s boosting that dividend steadily every year.
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I repeat: If for any reason you’re not completely convinced my Dividend Superstars newsletter is doing everything I’ve promised, just drop me a line at any time during your subscription! I’ll send you a full and unconditional refund for every penny you paid for my service.
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About Dividend Superstars
For more details, see our terms and conditions at http://dividendsuperstars.moneyandmarkets.com/tc/.
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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Kristen Adams, Jennifer Moran, Red Morgan, Adam Shafer, Jennifer Newman-Amos, and Julie Trudeau.
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