This Billionaire’s Secret Could
Double Your Income Overnight
Forget 2-3% yield – You’ll bank 7%+ dividends
with Howard’s little-known approach
Two decades ago, Howard wasn’t satisfied with pedestrian returns. That’s why he decided to leave his cushy high-six-figure job to start his own firm – and execute a new investment approach he’d excitedly developed.
It wasn’t a no-brainer decision by any means. He’d toiled for years in the trenches as an equity analyst on Wall Street, rose through the ranks to become Director of Research, then VP and senior portfolio manager for convertible & high-yield securities, and finally the coveted Chief Investment Officer role.
All he had to do was stay in the position and he and his family would never have to worry about money again. But he just knew he could make millions if he made the leap and implemented the “calculated contrarian approach” he’d uncovered.
Howard was wrong there. He didn’t make millions… he made billions.
Fast forward to today, nearly 20 years later. His firm has averaged 19.9% annualized gains. This former rising star is regarded as one of the shrewdest investors on Wall Street… yet few outside of the investor-class know his name.
Over the next few minutes, I’m going to tell you more about Howard AND share how his secret could double your dividend income. But first, a bit about myself…
My name is Brett Owens and I’m an unabashed dividend investor. Ever since my days at Cornell and all through my years as a startup founder in Silicon Valley, I’ve hunted down safe, stable, meaningful yields.
For the last 10 years, I’ve been investing my startup profits using the very same approach as this guru-of-gurus. It’s helped me find 6%, 7%, even 8%+ dividends with plenty of double-digit gains along the way.
This billionaire’s secret doesn’t involve options trading. And there are no obscure tax issues to deal with. It’s simply a system for picking the right stocks at the right time, to maximize your income and minimize your downside risk. In fact, most dividend investors could increase their income by 50% or even 100% with just a few simple trades… if they only knew how.
But before I go into further detail, it’s important you understand something…
I’m Worried about Your Future
Nearly every one of the independent investors I talk to are so desperate for dividends that they’re piling into practically any large stated yield they find.
On the surface this may seem like a sound approach with the markets at elevated valuation levels – to buy companies that are paying out real cash to their shareholders. But my research shows this is one of the most dangerous strategies to employ today.
Fewer than 40 companies in the S&P 500 currently pay more than 4% annually…
And many of the companies that do pay 4% or better today will soon find themselves in a bind. Many of their payout ratios are too high – and heading higher. Which means they’ll have to stop raising – or worse – lower their dividend. And that will wipe out gains from income and appreciation.
That’s exactly what happened on February 9 when Diamond Offshore (DO) announced it was cutting its regular quarterly dividend payments by 86%. Technically the company was only chopping the “special dividend” payment portion of its quarterly check to shareholders – but that was 75 out of the 87.5 cents it’d paid every quarter since July 2010.
Investors should have seen this coming. Oil prices had dropped by 50% over the previous 6 months, which meant that Diamond Offshore would most likely have to rent out its oil rigs at much lower prices as its contracts came up for renewal.
But many investors conveniently turned a blind eye to this minor business detail, and instead bid up DO higher than it should have been simply for the 10%+ trailing yield it had paid over the previous 12 months.
This rear-view mirror strategy proved costly, as DO’s stock plummeted 34% over the ensuing 5 months.
DO Tanks on Dividend Cut
Consol Energy (CNX) investors have seen their money cut in half after the company cut its dividend in half in October 2014. As with Diamond Offshore, investors who went beyond the first-level data would have figured that spiraling coal prices were going to impact Consol’s ability to pay its shareholders. Most, however, missed this nuance, and saw their shares decline in value by 50% over the subsequent 21 months after the dividend cut.
CNX Cuts Its Dividend – and Share Price – in Half
Gaming mogul Steve Wynn believes as I do that dividends should be paid from profits. On April 28, he told investors in Wynn Resorts, Limited (WYNN) that it would be “foolish to issue dividends on borrowed money” – as he cut the company’s dividend by 67% after the company failed to post a profit that quarter
In the two months following his announcement, his company’s shares dropped 21%. And Wynn’s investors were left wondering why they blindly bet on his gaming stock for a 4.8% trailing yield without considering whether there would be consistent profits to fund these dividends.
WYNN Suffers a Profit Bust – Its Yield and Share Price Follows
Are there dividend disasters like WYNN, DO or CNX hiding in your portfolio? I come across more of them every day, many of which are well-known companies that have done investors reasonably well for years, but whose circumstances have recently changed.
I’ll bet the “next WYNN” is storage company Iron Mountain (IRM). It pays a 5.8% dividend yield today – but over the last three quarters, it’s only earned $0.28 per share in net income, while paying out $1.66 in dividends per share!
This is simply not sustainable – and when something gives, it’s going to be IRM’s yield. And its stock will decline by 20% or more as a result of its upcoming dividend cut.
Dividend disasters like these have forced many income investors to move to the sidelines and to accept the paltry returns of traditional safe havens.
Others, in a typical sign of an over-enthusiastic equity market, are rushing to stocks they would normally shun in search of much needed income.
They’re looking at the usual statistics such as trailing yield, stated yield and other “simple” data points, but failing to dive deeper into the real business behind the numbers. They’re buying issues with serious skeletons in their respective closets.
When these skeletons appear, they’re sending share prices down 20% or much more – which, again, completely defeats the point of buying for income in the first place.
This isn’t an either/or choice. There is safe, meaningful yield out there, with potential appreciation to boot, but it requires a different way of thinking about the market.
It requires what’s known as “Second-Level Thinking.”
Howard’s Billion-Dollar Secret:
Back to Howard Marks, the intrepid billionaire I mentioned earlier. He’s probably the richest and smartest money manager that most individual investors have never heard of.
The firm he and his colleagues started back in 1995 is Oaktree Capital Group (OAK) – which today has a cool $100 billion under management.
And his four decades of investment experience have earned him a regular spot on Forbes’ World Billionaires list for several years running.
Though you may not know him, Marks is well known among investment insiders – not only for his giant returns, but also for his prescient writing. He publishes regular commentary in his Oaktree Memos – which are read religiously by many of the greatest investors in the world.
What I find fascinating about Marks, however, is outlined in an obscure chapter of his excellent book The Most Important Thing: Uncommon Sense for the Thoughtful Investor. It’s a work that won acclaim from legendary investors Joel Greenblatt, Jeremy Grantham, Seth Klarman, and even Warren Buffett.
Marks identifies the typical value investor’s first-level thinking: If you analyze a stock and it looks cheap, you should buy it.
And the typical dividend seeker’s first-level thinking: If you’re looking for yield, and you find a stock paying 5%, you should likewise buy it for income.
The problem, he says, is that everyone is already doing this in one form or another. Growth, value, dividends – all investors look at the same data.
Marks introduces what he calls “second-level thinking” with a few examples:
On buying good companies…
- First-level thinking says, ‘It’s a good company let’s buy the stock.’
- Second-level thinking says, ‘It’s a good company, but everyone thinks it’s a great company, and it’s not. So the stock’s overrated and overpriced; let’s sell.’
On market forecasts…
- First-level thinking says, ‘The outlook calls for low growth and rising inflation. Let’s dump our stocks.’
- Second-level thinking says, ‘The outlook stinks, but everyone else is selling in panic. Buy!’
On earnings projections…
- First-level thinking says, ‘I think the company’s earnings will fall; sell.’
- Second-level thinking says, ‘I think the company’s earnings will fall less than people expect, and the pleasant surprise will lift the stock; buy.’
According to Marks, when investors accept higher risk in hopes of higher return, their entire thinking is flawed. He explains: “If riskier investments could be counted on to return more – they wouldn’t be riskier!”
Instead, he believes “investments that appear riskier have to appear to offer higher returns, or nobody will make (invest in) them. But that doesn’t mean it has to come true.”
In fact, Marks explains, there are always a range of outcomes that are much different than those investors envision, or merely “hope” will happen. And the riskier the investment, the wider the range of possible outcomes – good ones, and bad ones.
In his September 2014 investor memo, Marks wrote:
“The probability of loss is no more measurable than the probability of rain. It can be modeled, and it can be estimated (and by the experts pretty well), but it cannot be known.”
No one can claim to know with 100% certainty what his investments are going to return before he buys them – but Marks can model and estimate the probabilities exceptionally well. He and his team are experts at creating statistical models that identify investments which, over a large sample, will constitute a great portfolio.
Oaktree’s primary goal is “achieving attractive returns without commensurate risk.” It’s secret is that it assesses risk based on actual probabilities rather than perception.
It’s a calculated contrarian strategy that’s helped Oaktree make a number of gutsy, profitable moves – like the $10.9 billion distressed debt fund it raised in 2008, the largest to date.
Oaktree has earned its clients an astounding 19% after fees on its distressed debt funds, and Howard Marks has made himself a billionaire twice over using this approach.
Alas, Oaktree’s services are only available to pension funds, sovereign wealth funds, institutional investors and ultra-high net worth clients.
But that’s no reason for the rest of us to be left out in the cold.
I’ve spent the last decade developing and refining a second-level investing system that identifies the very same types of contrarian market opportunities. It’s backed by my own proprietary software algorithm that calculates the second-level investing math behind the basic numbers to determine the probabilities of various financial outcomes actually happening.
This system recently turned up several remarkably safe income opportunities hiding in plain sight.
Let me tell you about one of my favorite plays right now…
Second-Level Stock Paying 7.3% Dividend That’s Ready To Double
My current favorite stock that I discovered using Marks’ system pays a secure 7.3% dividend today that’s well supported by the company’s cash flows.
Yes, you read that right – 7.3%. While regular investors get worked up about 2.5 – 3% yields, we’re clearing that every two quarters.
And it’s got plenty of upside ahead. More, to be frank, than most of the so-called Dividend Aristocrats. You see, this company is cashing in on the biggest demographic shift in history.
There’s simply a bull market in elderly Americans unfolding, and it will run for at least two or three decades. Here’s what’s driving the America-is-getting-older trend
- There are 77 million Baby Boomers who just started retiring.
- Roughly 8,000 of them will turn 65 every single day for the next 17 years.
- We are living longer than ever but require more care in the process.
- The 85+ population will triple over the next 30 years.
The Bull Market in Elderly Americans Will Continue for Decades
The longer everyone lives, the more likely it is that they’ll need someone to help take care of them. About 70% of Americans who reach age 65 will need some form of long-term care and for an average of three years.
This company helps provide this type of care for elderly Americans. Business is booming, and it should only get better in the years and decades ahead. Rising cash flows will power healthy annual dividend increases (5 or 6% annually, at minimum).
And the company boasts an extremely conservative dividend payout ratio today. I like management’s discretion – after all, why “reach” to pay more than an already robust 7.3% – but it’s nice to know they could actually support a dividend today as high as 8.5% or so.
Why haven’t the money lords on Wall Street cashed in already? Because the consensus outlook on the sector – the perception Marks warned us about – is pessimistic. The first-level thinkers believe every stock of this type is going to get crushed by debt and rising interest rates.
That makes right now the perfect time to buy. First-level investors have bailed on this entire sector because they’re concerned that the Fed will raise rates meaningfully. I don’t believe that will happen – at least not to the point where a safe 7.3% yield isn’t attractive.
Also, this company in particular just began trading publicly on August 17. Most investors aren’t even aware it exists. As they discover this reliable, generous dividend payer, they’re going to bid up its price, which is why I’m encouraging my subscribers to lock in that juicy dividend while the stock is still cheap.
Of course, if would be unfair of me to tell you the name of the company here since this is an active recommendation for to my premium subscribers. I’ve prepared a report on this pick titled “The Safest 7% You’ll Find Right Now.” It includes the company name, ticker, buy-under price and the full backstory on why I like it.
I’ll tell you how to get a copy of this report absolutely free in just a moment, but let me tell you about some of my other winners from a “beta test” of this system that we recently ran for 2,000 individual investors.
Second-Level System Delivers
Real (& Safe) Yield
In mid-2013, the City of Detroit filed for Chapter 9 bankruptcy. It was the biggest – and most expensive – municipal default in U.S. history. It inspired the return of perma-municipal-bond-bear Meredith Whitney, who started crowing that she was finally right and the municipal bond market was finally melting down.
Five days after the bankruptcy, Whitney penned an op-ed for the Financial Times in which she warned that Detroit “should not be regarded as a one-off in the U.S. municipal market.” Investors became just as spooked as Whitney warned, and sold their muni bonds without a second-thought.
On the chart below you can see the fallout using the Nuveen Muni Opportunity Fund (NIO) as an example. The red “A” marks Whitney’s bear call.
By year’s end, first-level thinking was aligned with Whitney and other muni-bears. There should be more municipal defaults, which mean municipal bonds are risky and should decline in price.
That’s when my second-level strategy kicked in. My system revealed that NIO was trading at an 8.4% discount to its net asset value – which meant investors were quite pessimistic. It also led to a deeper look at the bonds that the fund held, and found that these were loans that were going to easily be paid back. For example, the City of Dallas was paying over 5% on bonds it had issued to fund its airport expansion. This was good money that wasn’t affected by Detroit.
The “B” on the chart indicates where my readers and I stepped in and bought NIO, collected a safe 7% annual yield, and within six months earned an additional 5% in price appreciation, too.
The following month, my second-level investing system uncovered a utility stock that exactly ZERO out of the 23 analysts that covered the issue rated as a “Buy.”
Exelon Corp (EXC) was in Wall Street’s doghouse for failing to execute on ambitious expansion plans. “Everybody knew” about management’s failures – and they wanted little to do with the stock as a result.
I looked at Exelon’s clean-energy business and 4.3% yield and determined the situation wasn’t quite as bad as onlookers thought. And when things went from “bad” to “a little less bad” from a first-level perspective, some analysts actually upgraded their rating on Exelon. That sent the share price up 20% in just a few months:
Exelon Had Nowhere To Go But Up When the Last Analyst Gave Up
Even reliable dividend payers can fall out of favor for the wrong reasons. In the summer of 2013, investors were rushing to sell the shares of security company Diebold (DBD).
Even though the company had increased dividends for 38 consecutive years, and had a strong foothold in a growing market (ATMs), investors hated the stock so much that its short interest (the percent of total shares sold short) rose from 1% to over 6% in just a couple of months. The four analysts covering DBD weren’t fans, either – none of them had a buy rating on the issue.
What were they missing? A much needed leadership change. Diebold’s Board of Directors had hired turnaround expert Andy Mattes a few months earlier. Mattes and his team went to work right away, focusing on growing the company’s higher margin products and shedding its lower margin professional services.
The changes soon paid off as Diebold continued to pay its dividend. We collected the 3.8% annual yield while earning 20% in stock price appreciation as first-level investors realized their mistake and slowly bought back in over the next year.
DBD Paid Us 3.8% ($1.16) Plus 20% in a Year
As you can see, this system pulled in safe 7% and 4.3% and 3.8% yields while we enjoyed 5%, 15% and even 20% in stock price rallies. Not bad, right?
Tell you what, I appreciate that people think of me as a straight shooter, so here’s a list of the final active holdings in our portfolio at the time we closed out.
Our final active holdings included 10 out of 12 winners and a 22% total return after about 1-year’s time.
Now you’re probably thinking this is all well and good, but it doesn’t amount to a hill of beans for your own portfolio.
Well, allow me to tell you…
How You Can Secure 7% Yields from
The 10-year treasury yields little more than 2% and the average S&P 500 payout is even less. It’s high time for income investors to ditch these underperforming safe havens and start profiting again.
To get you started, I’ve put together a series of special reports that outline the exact steps you can take to find your own second-level income.
The first in this series is your playbook:
Free Special Report #1
Second-Level Investing: Your Guide to the Contrarian Money Machine
Many super-investors agree with Marks on the virtues of contrary thinking. However, I haven’t yet heard one of them specifically outline how they go about finding these unpopular stocks to buy. And that’s exactly what you’ll find in this step-by-step contrarian guide.
For the past decade I’ve been refining a system that identifies and selects the top contrarian candidates for investment. By following these steps, you’ll be able to find the types of stocks that Marks, Buffett and many other greats are also sorting through.
Next, you need to purge your portfolio of the big-time losers I come across day in and day out:
Free Special Report #2
The Dirty Dozen: 12 Dividend Stocks to Sell Now
In the course of my research I don’t just unearth potential big winners; I also dig up some pretty surprising landmines too. This report reveals the 12 biggest potential disasters on my watchlist, including some of the most popular names on the street. Can you guess…
… which telecom darling has financed dividend increases with long-term debt three out of the last four years?
… the multinational manufacturer paying out nearly 90% of its earnings while EPS has been on a steady 27% decline since 2011?
… the toy company on a 3-year losing streak yet paying over 6% while its product line falls further and further out of favor?
Make sure you’re not holding any of these losers when they finally make the decision to cut payouts.
And finally, you’ll launch your second-level profits with one of my absolute favorite income plays right now:
Free Special Report #3:
The Safest 7% You’ll Find Right Now
First-level thinkers have been overly pessimistic about this entire sector, and this play in particular is severely undervalued.
It sports a stable 7.3% yield right now and will likely double that payout within a decade.
We’re anticipating at least 10% in gains as other investors uncover this new issue and bid up its price.
Armed with the exclusive research in each of these three reports, you’ll uncover a new world of opportunities that are invisible to “regular” investors.
And all three are yours FREE when you try a 60-day risk-free test drive of The Contrarian Income Report.
Second-Level Picks One Click Away
The Contrarian Income Report is my newest research service and includes all of my favorite second-level income plays.
Designed around the very same “secret” that made Howard Marks a billionaire, it’s the fastest, easiest way for you to put an end to unnecessary risk-taking in exchange for paltry yields.
Our portfolio is humming like never before, thanks to my continuous improvements, and an investment environment that’s rich in first-level thinking.
In fact, with so many opportunities popping up on my radar, the biggest challenge has not been in finding safe dividends to beat or even double the S&P average. The hardest part is choosing favorites among all of the second-level stocks that will handily triple the S&P average yield.
As I write this, my five favorite “best buys” are paying between 6.2% and 8.4%… with an average yield of more than 7%!
If you’re ready to take your income to the next level, here’s a snapshot of what you’ll find in The Contrarian Income Report:
- 12 Monthly Issues – On the first Friday each month you’ll receive my latest Second Level investment research right in your inbox. I’ll include at least one new recommendation, updates on existing positions and an overview of trends and events that may affect our portfolio.
- Flash Alerts – You’ll never have to worry about missing out on breaking news on our portfolio stocks. I’ll have an eye on all of them 24/7 and email you right away if there’s ever any change in our position.
- Second-Level Coaching – You’ll profit handsomely (and safely) by following along with my portfolio, but I want you to become a confident Second-Level investor too. I’ll explain the “how” and the “why” behind each pick, with detailed explanation of our reasoning and expectations that will help you find other safe, under-appreciated opportunities on you own.
- Weekly Market Analysis – Sent straight from my desk to your inbox, you’ll get my weekly analysis of major market events, second-level ideas and stocks I’ve been watching.
- 24/7 Access to the CIR Website – Day or night, you can log into our password protected website, where you’ll find easy access to all of our resources, including the archives with each monthly issue, special reports, Flash Alerts and the full portfolio.
- World-Class Customer Service – Contact us right away if you have any questions and we’ll do everything we can to ensure you get the most out of your subscription.
- 60-Day Risk-Free Guarantee – Try out the service risk-free for two full months. Cherry pick the stocks you like best from the private portfolio. Learn my approach and prepare to profit.
If you’re not 100% satisfied in the first 60 days, simply let me know and we’ll refund every penny you’ve paid. No questions asked.
Now you’re probably wondering what a service like this is going to cost…
Profitable Advice That Doesn’t Cost a Fortune
With an average yield over 7%, we’re trouncing anything you could hope for in Treasuries. And that’s more than 3-times the S&P 500 average yield, not to mention many of the supposed Dividend Aristocrats.
The special reports you’ll get absolutely free could sell for hundreds of dollars each.
And even that would be a bargain compared with the yield I’m looking for in my very next pick.
But I’m not going to ask you to pay anything close to that.
The masthead price is just $99 a year, which your profits would easily cover in no time.
But I’m excited for you to get started, so I’ve convinced my publisher to allow the next 250 people who respond to receive a 1-year Charter Membership for just $39.
Yes, you read that correctly – over 60% off your first 12 months if you are among the next 250 members who join.
My publisher is a little nervous about this concession though, so I’m sure he’ll go back to the full price the moment all 250 seats are filled. I don’t know how long it will take to do, but I’m sure it will be a matter of days at best.
If that’s still doesn’t convince you this is an excellent deal, there’s just one more thing I’d like to add…
Our 100% Money-Back Guarantee
I’m so confident you’ll profit from my research that I’m going to give you 60 days to try The Contrarian Income Report risk-free.
Here’s how it works…
Start your Charter Membership today for just $39.
Check out the website and download your free reports (particularly the report on the 7%+ payer with nearly 10% growth potential).
Enjoy the next couple issues of The Contrarian Income Report, my weekly column, flash alerts and more.
Cherry pick a few of the plays you like… and then profit.
If, after nearly 2 months, you don’t feel the advice has more than covered your cost, or it’s just not right for you, simply let us know and we’ll refund your full membership fee.
That’s 100% money back, no questions asked.
Plus you’re welcome to keep the reports as our thanks for trying it out.
So, you get a 60% Charter Member discount, three free reports AND a risk-free 60 period to decide if you like the service.
I don’t see how you can lose here as I’m the one taking all the risk. Click the button below to get started right now.
If you’re still holding underperforming or even mediocre stocks, it’s most likely because you’ve been using a first-level mindset. Don’t miss out on this opportunity to move to the second level right now!
Chief Investment Strategist
The Contrarian Income Report
P.S. Since my recommendations are contrary to prevailing popular beliefs, they have a habit of rallying quickly as soon as the Wall Street crew realizes they are missing out. I encourage you to get started right now so that you can get into my favorite income stock at a good price.
P.P.S. Remember, your risk-free membership comes with the full details on our 7.3% dividend payer. Even a small position in this fund would yield more than enough to cover a full year’s membership… most likely before your 60 day trial even ends!