In today’s Digest, we discuss one of the most useful pieces of research you’ll read all year. It’s about an idea that can safely make you a huge amount of money in stocks.
Best of all, reading this research… learning a key investment secret… and understanding exactly what this secret is telling you to buy, right now, is 100% free.
More on this in a moment…
Before we discuss this research, we need to briefly cover a core belief we have at S&A… something we’ve gone to great lengths to help our readers understand.
This core belief is the idea that capitalism is about capital – how much you earn and how much you keep.
To achieve long-term investment success, you must own companies that efficiently produce cash… and that pay out that cash to shareholders or invest it wisely into growing the business.
If the average investor doesn’t take this idea to heart, he is unlikely to ever make money in stocks. If he doesn’t focus on cash flow and how much gets to him – the shareholder – the investor will spend his life chasing hot tips, buying overpriced initial public offerings (IPOs), and falling for every scam Wall Street banks can dream up.
Regular Stansberry & Associates readers know that, ideally, you want to own companies with excellent brand names. You want to own companies that produce high returns on assets. These are the companies you can own for decades… and compound your wealth at high rates… like 15% a year. Porter has termed this idea “capital efficiency.”
If there is a secret the “little guy” can use to build a lot of wealth in stocks, this is it.
This secret allowed Warren Buffett to build the largest investment fortune on Earth. Buffett has a made a fortune owning capital-efficient businesses like Coca-Cola.
This secret has also brought Stansberry’s Investment Advisory subscribers a 170% gain in Hershey (HSY). When Porter recommended Hershey in 2007, he pointed out its incredible ability to return capital to shareholders. He said Hershey would end up being the greatest recommendation of his career. And so far, Hershey is proving him right.
The secret has also brought Porter’s readers a 57% gain in less than three years on the capital-efficient video-game maker Activision Blizzard (ATVI).
With the idea of capital flowing to shareholders in mind, we urge you to read a brand new piece of research from our friends at The Palm Beach Letter…
As many Digest readers know, The Palm Beach Letter is a corporate affiliate of S&A founded by our friends Tom Dyson and Mark Ford.
Tom is a former S&A analyst who has put his expert accounting skills to work finding the world’s safest income-producing securities. Mark is a legendary entrepreneur, New York Times bestselling author, and wealth-building expert. He has mentored many of us at S&A, including founder Porter Stansberry. Together, Tom and Mark have started the most successful new company in our industry.
Tom and his research staff just published a report on a huge inefficiency in the stock market… one you can use to find some of the market’s safest, biggest dividend yields. Some of the securities Tom is recommending because of this inefficiency are paying yields of more than 6%.
However, you’ll never find these yields on a stock screener. You’ll never see them reported by major financial news and data providers like Bloomberg or Yahoo Finance.
That’s because – as many investors don’t realize – there are two types of dividends. Many financial sites only report one type. That’s a huge opportunity for investors who know what’s going on…
Most investors only know about regular dividends – what companies pay regularly to investors, normally on a quarterly basis. But some companies use a second type of dividend called a “special dividend.” These are nonrecurring payments – you can’t expect them as you can with regular dividends.
A company pays a special dividend when it has excess cash but it doesn’t want to lock itself into a dividend increase. It’s a way for management to return cash to shareholders, while not committing to an ongoing, increased regular dividend payment.
Because special dividend payments are unpredictable, most websites and stock screeners don’t factor them into the current yields they report. But this little-known inefficiency could mean a great deal to you…
It means you can earn giant dividend returns from safe, high-quality stocks that most investors overlook. Because cash-starved income investors don’t know about these companies, they haven’t piled into them, driving up stock prices. That means you can get these huge “stealth” dividends without overpaying.
Our colleagues at The Palm Beach Letter are tracking down the best secret dividend-paying companies for their readers. And these companies are making big payouts. They can be two or three times larger than a single quarterly dividend.
When you combine special and regular dividends, the true yield is far greater than what the media report…
According to Yahoo Finance, one company has a regular dividend yield of 2%. That’s about the same regular yield it has offered over the past few years. But from 2009-2012, it paid a lot of special dividends.
That means the true dividend yield (combining special and regular payments) during those years was actually 8.2%, 8.7%, 7.5%, and 12.3% – but you would have never known it from looking at Yahoo Finance.
The financial research firm Morningstar shows another company’s dividend yield is 2.4%. But it pays multiple special dividends every year – 12 special payments in the past two and a half years alone. That means the combined yields are 6.4%, 6.7%, and 5.7% for the past three years, respectively. So the various financial websites are missing more than 70% of the company’s real yield.
Then, Tom and his team also recommended a third company just two weeks ago. But they tell me this company has paid a special dividend for 11 straight years. That’s unheard of. To my knowledge, no other company has a special-dividend streak of this length. The Wall Street Journal reports a dividend yield of about 1%. But combine regular and special dividends… and it’s closer to 8%.
And Tom and his team also recommended one of these special-dividend payers in February 2014. Since then, it has already paid a special and regular dividend. In our current low-yield environment, that extra income makes a big difference.
But perhaps the most attractive thing about owning these stocks is the lack of worry and stress that comes with them…
If you’re worried about the economy slowing, you want to own these businesses. They typically sell basic products like household consumer goods and petroleum products. These products enjoy constant demand. This ensures repeat business and reliable cash flows (which support reliable dividends). You’re not investing in companies that depend on a roaring economy to make money.
If you’re concerned that the broad stock market is set to head lower, you want to own these businesses. It doesn’t matter if the Dow falls 10% or 20%. These businesses will continue producing large cash dividends for their shareholders.
If you don’t want to spend time trying to pick which tech company will have the next hot product, these businesses are for you. Again, they typically sell basic products. Many people aren’t attracted to basic businesses like this. But to sophisticated investors interested in cash flow and dividends, boring is beautiful.
These companies won’t double overnight because of a new innovation. But they don’t sell products that could be rendered obsolete next year. This is often the tradeoff in stocks. Sophisticated investors would rather own the company that isn’t going to double overnight… but won’t go out of business in a few years.
By owning these companies, you don’t worry about startups coming out with better “apps” or better forms of social media. This is a constant worry for shareholders of companies like Twitter and Facebook. One day, you’re enjoying share price gains, the next day your stock drops 20% because competitors are cutting into its growth.
These “low stress” attributes mean you don’t need to check price quotes every day… or every week… or every month.
With these businesses, you might check in on them every quarter, just to check in on how business is doing. Of course, anything can happen in business. But these quarterly checkups usually amount to hearing about modest growth and the latest dividend payment.
At The Palm Beach Letter, Tom has compiled all of his research on this idea into one special report titled: “5th Payouts: How to Boost your Income 503% Overnight.” Inside the report, you’ll learn how special dividends work, why some companies often pay them, and exactly which “habitual special dividend payers” to buy right now. This is a list of elite, extremely valuable businesses.
Even if you don’t buy a single recommendation in this report, it’s important to learn about the key concepts of special dividends. It’s important that you learn the attributes these businesses have… like safe payout ratios… and strong insider ownership.
To encourage folks to read this report and try The Palm Beach Letter… we invite you to take advantage of us. Take advantage of our 100% money-back offer for a subscription to the Palm Beach Letter. Take advantage of this opportunity to access hundreds of dollars’ worth of Tom and Mark’s educational material on wealth building. Read through their work on special dividends. Take a full year if you like.
If you don’t find an incredible amount of insight on wealth and personal security, we’ll refund 100% of your subscription. There is zero risk for you… and a lifetime of wisdom to gain. You can watch a detailed video about this idea, and learn how to access Tom’s research – right here.