 | | | 11.3% Yields... Hiding In Plain Sight
By Paul Quinn
Managing Editor, StreetAuthority Daily
September 20, 2013
It's not a secret anymore. Dividends are one of the keys to successful investing.
For years we've been pointing StreetAuthority readers to high-yielding stocks as well as stressing the benefit of owning companies with a long history of dividend increases.
Just last week, Elliott Gue shared 14 stocks that have raised their dividends for 50 years or more. His essay showed that you could have substantially beaten the market in the past 20 years by simply buying these stocks and holding onto them.
And Amy Calistri, the brains behind our Daily Paycheck newsletter, uses three types of dividend payers to generate an average yield of 6.9% across her portfolios:
-- High-Yield Opportunities (Securities yielding 7.5% or more)
-- Fast Dividend Growers (Securities growing dividends by 15% or more every year)
-- Steady Income Generators (Some of the most reliable dividend payers on earth)
The results speak for themselves...
Amy has racked up annual returns of over 10% a year since she started The Daily Paycheck. And she's collected a total of $51,965 in dividend checks in just 44 months by focusing exclusively on dividend-paying investments.
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Of the three portfolios, stocks in the Fast Dividend Growers portfolio are doing the best. Since Amy started her portfolio in December 2009, they have returned 70%... For comparison, only 19 stocks in the S&P 500 returned more than 70% over the same time period.
But I am not here to talk about the power of dividend growth or even "normal" dividend payers. I am sure most of you already know about those.
Instead, I want to bring you a completely new idea Amy thought of to find high-yielding stocks that are "hiding in plain sight." She first wrote about them in her May issue of The Daily Paycheck, but it's an idea you may not have heard before.
We call them "Hidden High-Yielders."
The name already says plenty, but before I explain in further detail what a Hidden High-Yielder is and how you can find them, I want to show you a chart. After the StreetAuthority research staff looked at every single one of these secret, high-yielding stocks, we picked the top four to see how they performed versus the S&P 500 in the last decade. The results astounded us...
These Hidden High-Yielders crushed the market by an 8-to-1 margin while returning, on average, 25% a year. That's enough to turn a $10,000 investment into $542,100 in just a decade.
So... what are Hidden High-Yielders?
Usually, when you're researching a dividend-paying stock, most financial websites post the company's dividend yield right on the stock's summary page. But what you may not know is that some sources like Yahoo! Finance, may list a yield that's much lower than what the company actually pays.
What's happening?
How could a popular financial website be underreporting a company's yield? And in many cases, it's not just by a little -- for example, we've found a company that really had an annual yield of 11.3%, but Yahoo listed it as 1.5%.
You can look at sites like Google Finance and Dividend.com just to double-check -- and find the same thing. But in the example we found, the company's CEO said a letter to shareholders: "Additionally, the $5.30 per share in dividends we paid during 2012 provided a yield of 11.3%..." [Emphasis added]
If you were searching for a high-yielder and trusted one of these popular financial websites -- as millions of individual and professional investors do -- you could have easily passed on this fantastic dividend-paying company.
You would have missed out on an 11.3% yield -- one of the highest yields in the market, and more than four times what you can get by investing in Coca-Cola (NYSE: KO) or many other blue chips.
Luckily, we figured out the reason why, and you can use this information to your advantage, especially given the dangerous circumstances income investors are facing -- perhaps unknowingly -- today.
You see, a few years ago a large trend started developing -- one Amy thinks is going to end up burning a lot of investors.
As the stock market started to turn up from the depths of the recession, people who had been sitting on the sidelines decided it was time to make their money start working for them again.
But with Treasurys and savings accounts carrying dismal yields, these weary investors started putting their money to work in "safe" dividend-paying stocks. Every day more and more investors poured their money into consumer staples, utilities and other traditional dividend payers.
As a result, the prices of these traditional dividend stocks shot up to dangerously high levels -- with their yields falling dramatically.
That's why today's income investors face a mountain of risk. In many cases, these stocks were already priced to perfection long before they were bought up by the crowd -- meaning any negative news could send these stocks tumbling.
So when traditional income investments get crowded, and the yields are simply too low, there is an advantage in thinking a little outside the box, which is where Amy's Hidden High-Yielders come into play.
There is much more to say about these stocks... in fact, the research team at StreetAuthority has just put together a special report to fill you in on all the details, including how to find "Hidden High-Yielders." These are stocks that people across the country think yield less than 3%, but in reality they carry yields of 7%... 9%... even over 11%.
To access the report, and some of our favorite "Hidden High-Yielders," click here.
Good investing,
Paul Quinn
Managing Editor, StreetAuthority Daily | |
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Honestly, we were shocked. We didn't think it was possible for Wall Street to bungle something as critical as this.
But it's true. And as a result, we think that less than 1 in 1,000 people are investing in what we call the "Hidden High-Yielders."
And we're not talking risky either. These stocks are favorites of value investors like Warren Buffett and billionaires like George Soros and Bill Gates...
And yet, despite all these facts, most people have never heard of these stocks. That's because the real returns are muted and distorted by the financial press. | | | | | | | |
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