7%+ Yields Invisible to
99% of Investors
Use these 3 Payout Loopholes
to double – even triple – your income!
As I write this, the Dow is DOWN by 4% for the year and the S&P is off by nearly 2.5%.
The recent commodities crush, the Chinese market rout and loss of investor confidence at global behemoths Glencore and Volkswagen, are just a few of the reasons the most recent quarter has been labeled the worst since 2011.
And just recently, the folks over at Credit Suisse informed us their Global Risk Appetite Index had dropped into “panic” levels for the first time since January 2012.
It’s tough to find stable income or build your nest egg in this environment.
But the potential for profit is out there if you know where to look…
… and it’s much easier to find than you might expect.
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 had a passion for safe, stable yields.
For the last 10 years, I’ve been investing my startup profits through a proprietary system that uncovers 8%, 9%, even 10%+ yields, using three very simple dividend payout loopholes.
And there’s little to get in their way in the coming months… regardless of what the Fed does next, or events in China and Europe.
They don’t involve options trading and there are no obscure tax issues or forms involved. If you simply understand what they are – and how to play them – you could increase your income by 150% or more.
Over the next few minutes you’ll learn the secret behind all three loopholes and the exact steps you can take to achieve double-digit yields, even in today’s 2% world.
But first, I want to tell you why I’m such a fan of dividends…
Dividends Deliver 90% of Stock Returns
Studies by two global investment heavyweights, BlackRock and GMO, have shown that 90% of U.S. equity returns over the past 100 years have been thanks to dividends and dividend growth.
Ned Davis Research also conducted its own 43-year study on stock returns (from January 1972 through December 2014). The conclusion? You’re only going to make money if you buy stocks that pay dividends:
Dividends Required to Beat Inflation (Ned Davis Research)
43-Year Annual Return
Stocks that didn’t pay a dividend barely kept up with inflation, while stocks that paid a growing dividend delivered double-digit returns. Over time, this compounding really adds up:
Dividend Payers Pull Away Quickly Over Decades
Most recently from 2000-2012, dividend paying stocks outperformed the broader S&P 500 more than four-fold during a period that included two nasty bear markets. The dividend payers returned 7.7% annually versus just 1.7% for the S&P 500:
It’s obvious what you need to do to make money in stocks: You need to buy stocks that pay dividends.
Historically, that’s been the foolproof formula. But historically, the S&P 500 paid 4.4%.
Today’s Problem: The S&P Pays Barely 2%
If you’re screening for high yielding stocks on your favorite financial site such as Yahoo! Finance, you’re not going to find many yields worthy of your money. Less than 40 stocks in the S&P 500 pay more than 4%. And many of these companies are at risk of dividend cuts due to shaky earnings outlook.
The lack of safe 4% payers probably has you concluding that you’re not going to be able to build a portfolio that delivers secure high single-digit returns or better.
That’s a logical conclusion if you’re “just” looking at things at face value. However, some of these stated yields are actually understated by 50%… 75%… or more.
Which means these stocks appear to yield, say, 2%… while actually paying out 7% or better annually!
For example, one of my favorite dividend payers has a reported yield of 2.8%. But the company actually pays 7% annually in cash to its investors.
In a moment I’ll show you how you can receive a free copy of my special report on this stock, A Steady 7% from the Company with Too Much Cash, which includes the ticker, buy-under price and detailed analysis on why I think it’s such a great opportunity.
But first, let’s discuss why these payouts are available in the first place. We actually have three accounting loopholes to thank for the opportunity to collect real, meaningful yield in today’s low-interest-rate-world.
Payout Loophole #1: “Invisible Income”
Most investors settle for traditional quarterly dividends. They might perform a basic stock screen and buy the run-of-the-mill S&P 500 stock, which pays 0.5% quarterly (or 2% annually). For example, take a look at Apple – which has plenty of earnings power to pay:
Where’d Yahoo! Finance get that yield from? It took Apple’s last quarterly dividend of 52 cents per share and multiplied it by 4.
I don’t need to tell you that this isn’t very much income. It can easily be lost in a volatile last hour of trading these days.
To stay ahead of the market, and inflation – and actually collect income that you can save or reinvest – you must do better than 2 or 3%.
Payout Loophole #1 does exactly that with what I like to call “invisible income”, because most of their cash distributions never show up on Yahoo! Finance or many other stock screening tools.
You may have already heard of the these distributions by another name: Special Dividends.
These are typically one-time payouts that companies give to shareholders following a period of high earnings, a recent windfall or when making changes to its financial structure.
Some companies, however, consistently pay special dividends like clockwork every year… or even multiple times a year… but most investors will have a hard time finding them.
Let me show you an example of what I mean…
Invisible Dividends Deliver 9.2% Annual Return
Last October, a colleague and I came across a small holding company with a stated yield of 2.5%. It was a product of its then 7.5 cent quarterly dividend. As you can see in the chart below it’s paying 2.82% today, which is still not terribly exciting yet – but stay with me.
The problem with this stated yield was that it only represented 40% of the money the company had put in shareholders’ wallets in previous years! Yahoo! didn’t include these two payments because they were technically “one-time” in nature:
November 19, 2014
June 10, 2015
Thanks to these special payouts, management gave investors 51 cents per share more than financial websites are reporting. This totals up to an actual yield of 7% over the last 12 months (“hidden” dividends in bold):
November 5, 2014
November 19, 2014
February 4, 2015
April 29, 2015
June 10, 2015
August 5, 2015
Even though this company has paid investors a special dividend every year since 2011, it still doesn’t “count” as a regular dividend in the eyes of the financial media. So, it continues to pay under the radar. Shareholders earn 7%, while investors continue to overlook this stock because it appears to yield less than 3%.
Since my original recommendation back in October, we’ve earned an easy 7% in cash. With price appreciation over that time we’ve achieved a total return of 9.2% in less than a year (outpacing the S&P 500’s 2.5% return four-fold).
I’m recommending this pick to my premium subscribers so it would be unfair to reveal the name here. Regardless, the real challenge to taking full advantage of this loophole remains the same: simply finding potential opportunities in the first place. You need to evaluate special dividend history against current performance, and assess the likelihood of a future payout, none of which is easily done with run of the mill screening tools.
My new special report, “Invisible Dividends: How to Uncover 7% Yields in Today's 2% World”, shows you how to locate companies like this one. Keep reading to find out how you can get your copy absolutely free.
Now you may be wondering why the company wouldn’t just bump its quarterly dividend to garner more attention from Wall Street?
The big advantage of the special dividend model is that it preserves financial flexibility. While Wall Street loves companies that continuously increase their dividends (as shown by their 10.1% return over the last 43 years) it hates companies that cut dividends. Recent dividend cutters like Consol Energy (CNX) and Wynn Resorts (WYNN) saw their share prices decrease by 50% and 21% respectively in the months following their payout reductions.
This financial flexibility also gives management the opportunity to take advantage of our second loophole. At certain times, this can be an even more lucrative opportunity for shareholders. Let’s explore exactly how right now…
Payout Loophole #2: “Fixing” Earnings Growth
Stock prices can do anything in the short term, but over the long run, they tend to follow earnings growth. Most investors know this – but there’s a small yet critical nuance they miss when chasing earnings growth.
Stock prices are quoted per share. When you buy a stock, you’re not buying the entire company. Instead, you’re buying a very small percentage as represented by your shares.
As a shareholder, it’s actually irrelevant to you whether or not your company’s earnings go up in absolute terms. What matters to you is that its earnings per share go up year-after-year.
Perennial earnings growth is a tall mandate. But perennial earnings per share growth is actually a much easier hurdle to scale – thanks to share buybacks.
During a share buyback, a company simply buys up their own shares, either through a tender offer directly with shareholders or on the open market, just like you and me. When this happens, shares that are bought back are typically cancelled or kept as treasury shares. Either way, it means there are fewer shares outstanding.
Remember, stock prices work like all prices – they are a function of supply and demand. So, fewer shares outstanding relative to the same earnings means increased EPS.
The implications are significant for investors like you and me. It means a company can all-but-guarantee earnings per share growth simply by taking enough shares off the market.
Buybacks have actually overtaken dividends in terms of how companies return cash to shareholders. In 2013, repurchases accounted for 60% of all cash returned to shareholders.
What kind of returns can share buybacks deliver to shareholders? As with any stock purchase, the value you receive is a function of what you pay. Companies that buy their shares back on the cheap can easily achieve double-digit price growth. On the other hand, management teams that overpay for their own shares can actually destroy value.
Regardless of price paid, companies that buy back at least 5% of their net outstanding shares yearly (as tracked by the PowerShares Buyback Achievers Portfolio) have outperformed the broader market by more than 20% since 2007:
Even “Dumb” BuyBack Indexes Outperform the S&P 500
If this is what a broad screen returns, can you imagine what a smarter set of criteria can do?
Over the last 10 years I’ve developed a system for identifying buyback programs that are most likely to deliver shareholders the most bang for the company’s buck.
Let me tell you about one play this system recently uncovered…
Buybacks Help a 3% Grower Return 9.5%
Back in December, we recommended General Mills (GIS) to readers as a safe income play. On the surface, this company looked like dead money. It was paying a mere 3.1% while only growing sales at 3% annually.
You probably don’t need me to run the numbers to show that 3% annual growth on a 3.1% payout is going to take forever to add up to much.
But Wall Street was missing a couple of key points about GIS:
- The company was growing earnings slightly faster than sales (by mid-single digits) thanks to cost cutting. And most importantly:
- It was buying back its own cheap shares like crazy.
The share buybacks (it averaged a 4.4% “buyback yield” over the past decade) were creating a virtuous cycle for shareholders. The company was able to boost earnings-per-share by high-single digits while affording higher and higher dividend increases because it had less shares to pay out on.
This resulted in a secure 9.5% gain for shareholders within 10 months (while the S&P lost 5.5% over the same time period).
You can get access to all of the details on how to profit from buybacks, including my 3-step Buyback Yield Screener, in my report “Shareholder Yield: How to Identify Double-Digit Returns From Buybacks.”
More on this in a bit. But first, let’s talk about the third loophole for hidden yields that most investors miss.
Payout Loophole #3: Einstein’s Favorite
It’s been said that Albert Einstein once referred to compound interest as the 8th wonder of the world. Whether or not he actually said it is up for debate, but that statement rings true when you consider the power of Loophole #3.
When applied to dividends, some pundits will claim that dividend growth is all that matters – thanks to the powers of compounding. And the Ned Davis numbers back this up, with dividend growers returning 10.1% over their 43-year time period.
Modern day Dividend Aristocrat disciples have taken this doctrine to the extreme. They buy any stock that pays an ever-increasing dividend – regardless of the absolute yield, or the rate of growth.
This is far from optimal. It will take a 2% payer significant time to pay you 10% or more on your initial investment, regardless of the rate of dividend increases. But it could take a 5% payer two decades to double its dividend with a 3% annual increase. And in today’s “desperate for dividends” investment classifieds, even the slow growers get attention as aristocrats.
In reality, there is a “Goldilocks” sweet spot where yield today and growth tomorrow will deliver you the most income in the years ahead.
The Goldilocks Yield
The swiftest of Dividend Aristocrats is only as good as its initial yield. Even a company that increases its dividend 12% annually – which means its payout doubles every six years – will lose a multi-decade race to a slightly slower “Goldilocks payer.”
Let’s look at $10,000 invested with three dividend payers over 20 years:
- Company A is our swift Dividend Aristocrat. It pays 2% initially but increases its dividend 12% annually.
- Company B is a Phillip Morris-style dividend stalwart. It pays 5% initially and nominally increases its dividend 3% annually.
- Then we have Company C, our “just right” combination of yield and growth. It pays 4% initially, so it draws a little less attention from income investors. And it increases its dividend by 9% per year – which means it doubles roughly every 8 years.
Here’s how the race plays out over two decades. It’s not even close…
And this isn’t just theoretical. We’re watching several companies in the Goldilocks income zone today. Let me show you what I mean…
The Road to Double-Digit Yield in a Decade
Four years ago, I recommended that income investors buy Walmart and be patient. Its dividend was a modest 2.8% at the time, but given the growth I anticipated, I promised patient investors double-digit yield within a decade on their original capital.
At the time, WMT was paying 36.5 cents per share in dividends. Today, it pays 49 cents. That’s an increase of 34% over four years for a yield of 3.8% on initial capital. While shareholders were getting paid to compound, they earned a total return of 24% over that four-year period as investors flocked to Dividend Aristocrats like WMT and bid up its price.
My new special report, “Dividend Raisers: Lock in Tomorrow’s Yields Today”, reveals exactly how to play this loophole for maximum profits AND includes one of my favorite plays right now. It features a 6.3% yield right now and is poised to double that in the coming years. I’ll tell you how to get your copy absolutely free in just a moment.
But first, you need to be careful…
Don’t Make These Common Mistakes
Novice income investors buy only for stated yield, without considering the business fundamentals of the company they’re buying. Big mistake. As we discussed earlier, companies that cut their dividends can drop 20% in no time.
More mature but still adolescent income investors will look at historical growth rates and apply them into the future. They consider past performance… but they still don’t consider the underlying business. This is a slightly better approach – but not by much.
Advanced income investors don’t skate to the current (and possibly understated) yield. They consider where the dividend is heading, and they smartly secure future income.
Remember, it’s future earnings growth that drives future dividend growth.
You can’t be a successful income investor without successfully forecasting future earnings growth. Now let’s talk about the easiest way for doing this.
How YOU Can Profit from These Payout Loopholes
I’ve spent the last 10 years developing a system that taps into each of these three “invisible” dividend opportunities. It’s backed by my own proprietary software algorithm that calculates a variety of below-the-surface factors, all of which have been intensely refined over time.
It’s the very same system I used to find all of the incredible yields mentioned above, including the 9.2%, 9.5% and 9.7% returns in under a year, and the 24% total return which still has plenty of room to run.
Today, this system is uncovering 7%, 8%, even 10%+ yields that are completely off the radar of most income seekers. And I’m excited to announce that now you don’t need to get a degree in computer science or spend 10 years creating your own system to achieve these same results.
As a subscriber to my latest research service, Hidden Yields, I’ll send you the very best invisible dividend opportunities each month.
It’s the only service dedicated specifically to profiting from all three of these payout loopholes and it’s backed by my proprietary screening algorithm.
The best part about Hidden Yields is that you won’t need to spend hours in front of a computer screen staring at charts or creating spreadsheets. I’ll take care of all the research for you and send out a quick update if there’s ever any change to one of our positions.
If you think Hidden Yields might be for you, I want to give you a full 60-days to try it out, with absolutely no obligation whatsoever.
I’ll even throw in all the benefits of full Charter Membership, including:
- Income-Generating Research – On the third Friday of each month you’ll receive my latest investment analysis right in your inbox. I’ll include detailed analysis on new recommendations, updates on existing positions and an overview of trends and events that may affect our portfolio.
- Members-Only Portfolio – All of our recommendations are laid out in an easy-to-read portfolio that includes exact buy/sell recommendations and buy-under prices.
- Weekly Market Analysis – Sent straight from my desk to your inbox, you’ll get my weekly income investing ideas on stocks I’ve been watching and analysis of major market events.
- 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.
- Unlimited Access to the Members-Only 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.
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- 60-Day Risk-Free Guarantee – Try out the service risk-free for two full months. Download or print out the reports and play the stocks you like best in our private portfolio. 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.
Of course you may be hesitant about trying a brand new service, and I want you to be certain this is worth your time and effort, so…
In addition to all of these Charter Member benefits, you’ll receive complimentary access to all three of the research reports I mentioned above, including:
Free Special Report #1:
Invisible Dividends: Uncover 7% Yields in Today's 2% World
Most stock screening tools ignore special dividends as they’re considered “one-time” payments. But some companies pay them like clockwork every year… or even multiple times a year. This report reveals three such payers, including my favorite, which paid out an “extra” 154% in just the past year.
Free Special Report #2
Shareholder Yield: How to Identify Double-Digit Returns From Buybacks
Buybacks, when done right, can create massive shareholder value. They can increase stock prices by double-digits and turn into a virtuous cycle in which continuously lower share counts all-but-guarantee earnings-per-share (EPS) growth.
This report reveals my 3-step “Buyback Yield Screener” to help you separate the winners from the losers. Plus you’ll see the exact steps for a 10.1% annual gain.
Free Special Report #3
Dividend Raisers: Lock in Tomorrow’s Yields Today
Learn the sweet spot between yield today and growth tomorrow to get the most income in the months and years ahead. I’ll show you exactly how I screen stocks, scrutinize earnings history and make sure you get in at a good price, (just like that 24% total return we bagged from a single trade).
I’ll also share with you one of my favorite dividend growers right now. It pays a stable 6.3% today and is poised to double that in the months and years ahead!
These reports give you all the step-by-step details you need to unlock your own hidden income. But I’m sure you’re excited to get started right now, so let me throw in one more bonus report that will hand you…
An “Instant” 2% By The Holidays
Remember the special dividend payer we were discussing earlier? Last November, management paid shareholders a 2% special dividend just before the Holidays. It’s probably going to issue another payment within the next month or two – which makes now the perfect time to buy this stock.
This special report, “A Steady 7% from the Company with Too Much Cash”, gives you everything you need to know, including the company name, ticker, buy-under price and the full backstory on why I like it.
Now you may be wondering what a service like this is going to cost…
Profitable Advice That Doesn’t Cost a Fortune
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 don’t want you to pay anything close to that.
My publisher thinks Hidden Yields is a steal at the regular price of $599 a year. And I expect your profits from even just a couple of our recommendations would easily cover that cost in no time.
But I’m excited to get my research and recommendations into the hands of smart investors who will make the most of it. So I’ve convinced my publisher to allow the next 250 people who respond to receive a 1-year Charter Membership for just $299.
Yes, you read that correctly – that’s 50% off the first 12 months for the next 250 readers who join Hidden Yields.
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. I suggest you move now before it’s too late.
If that still doesn’t convince you this is an excellent deal, there’s just one more thing I’d like to add…
Our Ironclad 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 Hidden Yields absolutely risk-free.
Here’s how it works…
Start your Charter Membership today. Download your special reports, read the latest issue and find a few winners that interest you in the portfolio.
Then, sit back and enjoy the next couple of issues of Hidden Yields, my weekly column and all of the benefits of your full charter membership.
If after nearly 2 months, you don’t feel the advice has more than covered your cost, or if you think it’s just not right for you, simply let me know and I’ll issue a full refund of your membership fee.
That’s 100% of your money back, no questions asked.
Plus you’re welcome to keep the all of the special reports with my thanks for trying it out.
So, you get a 50% Charter Member discount, all of the research 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.
The world’s most successful income investors have been quietly banking huge profits from these payout loopholes for decades. Now, with Hidden Yields, there’s no reason you can’t join them. Don’t pass up this opportunity for life changing income – start your risk-free trial right now!
Yours in profits,
Chief Investment Strategist
P.S. Recent market pullbacks have created a number of excellent buying opportunities, but this won’t last long. I encourage you to get started right now to ensure you can get into my favorite income stocks at a good price.
P.P.S. Remember, your risk-free Charter Membership also comes with the full details on that 2% special dividend I’m expecting in just a few weeks. Along with their regular quarterly dividend in early November, even a small position in this stock would yield more than enough to cover a full year’s membership… before your 60 day trial even ends!