Got $100,000 sitting in cash? Here’s how I’d double is ASAP with safe dividend stocks.
Option 1: “Grind it higher” with cash flow. Put the money into stocks and funds paying current yields of 7.3% and grab a little bit of upside to boot.
Option 2: Double it in four or five years (turn $100,000 into $200,000!) thanks to yearly total returns of 16.3%.
You choose. The “buy and hope” obsessed folks on Wall Street provide us with these two free lunch options. However, this isn’t an entire buffet! We must choose course one or course two.
So, let’s first figure out how much of a yearly “dividend salary” we’re looking for from this pile of money. Our Contrarian Income Report portfolio yields 7.3% as I write, so an investment in these dividend machines will net you around $7,300 per year. Or $73,000 per million–you get the idea.
On the other hand, we can grow this capital faster by smartly buying dividend growth stocks. Stock prices tend to rise along with their payouts, which means the surest and safest way to make money in the stock market is to buy the shares of companies that are growing their dividends the fastest.
For example, a firm growing its payout by 5% or so per year will see its share price rise by about 5% annually. It will always seem to yield the same amount (say, 3%) because investors are willing to pay more for each share as the dividend per share rises. Simply put, a 3% payer growing its dividend by 5% per year will return about 8% annually.
(Of course, we wouldn’t roll out of bed for 8% total returns. We can double that to 16%+ using my Hidden Yields formula. More on this in a minute.)
Two Pullbacks Per Year: The New Normal?
Over the last 13 months we’ve experienced not one but two market fits. Both provided us with excellent buying opportunities:
Gotta Buy the Pullbacks
And this, I know, is what probably makes you nervous about slapping down a full $100K today. What if this pricey market drops 10% after you do? You’ll wish you’d have waited!
But sitting in cash doesn’t help you, either. You’re losing income and upside potential with each passing week that you sit on your hands while the market steps higher. (Plus, studies show that no one knows when to “get back in,” either!)
So why not dip your toe in the water? Buy the best bargains at any given moment and get the most dividends for your dollar. This is what we did for each “payout buffet” strategy on our menu. Here’s how each played out.
Current 7%+ Income: 18 Best Buys in One Year
Last year around this time, I recommended a new bond fund to our Contrarian Income Report readers. I also shared my top seven places to put new money on that first Friday in April. The eight-pack yielded 8%.
They weren’t all winners, but they didn’t have to be to deliver outstanding gains. Our average returns between then and now have been 14.3%, which means we’ve enjoyed 6.3% upside on top of our 8% yields (all while the broader market merely treaded water):
8% Yields and 14.3% Total Returns in One Year
Of course, let’s not pretend that every reader went “all in” last April. With the sharp February ’18 pullback barely behind us, I wouldn’t blame anyone for taking a measured approach.
And that’d have been fine. Between then and now we highlighted 10 more unique new recommendations and best buys. (We also spent our December and January issues discussing how serious income investors should buy everything on the board!)
Holiday stock sales aside, our investor could have put $5,000 (or 5% of their portfolio) into each stock or fund as it was recommended as a best buy. That would have neatly deployed $90,000 of the initial $100,000 over twelve months, securing many prices “on dips.”
Plus, we have since sold two of the positions. That would leave $80,000 spread across 16 income investments (paying 7.3% on average) and $20,000 in “dry powder” ready to be deployed.
Hidden Yields: 21 Best Buys in One Year
A similar strategy would work well for dividend growth investors who subscribe to my Hidden Yields research. This time last year, I had 10 best buys for readers (thank you, Feb ’18 pullback). A 5% stake in each position would have put the portfolio in 50% dividend growth stocks and 50% cash to invest in future dividend deals.
Over the next 11 months we came across 11 additional best buys. We also sold seven positions (our HY strategy moves faster than CIR), which means a HY portfolio that started this time last year would be 70% invested and 30% dry powder today.
7 Dividend Stocks That’ll Double Your Money Every Few Years
Since inception, our HY portfolio has returned 16.3% per year. This means our inaugural subscribers are well on their way to doubling their money with safe dividend stocks! With patience and persistence, you can enjoy the same types of returns by following our dividend double strategy.
Today, I want to share seven of my recession-proof ‘Hidden Yield Stocks’ with you.
My research indicates each of these investments could easily pay you 15% per year. That’s enough to double your money in under 5 years. Imagine, turning a retirement ‘pot’ of $250,000 into $500,000… or… $500,000 into $1,000,000… and on it goes.
Imagine no more fear of your savings running dry… no more worrying about wild market swings or crashes… no more risky-bets on penny-stocks or cryptos… no more penny-pinching in your golden years.
So, if you’re not quite as wealthy as you hoped you’d be… if you wish you had more money in your retirement account… and… if you’re looking for safe, secure growth over the next 5, 10, 15, even 20 years—as well as predictable income—this could be the most important investment advice you ever read.