You’ll be receiving an urgent message from me tomorrow.
Expect the message to hit your inbox precisely at 2 p.m. EST.
Inside that message, you’ll find the culmination of my life’s work (to date).
Let me explain…
For the last six years, I’ve poured my soul into one very specific project.
Quite honestly, the project has become my personal obsession.
What’s the object of my fixation?
I’ll reveal everything tomorrow at 2 p.m. EST.
For now, let’s just say the following…
I’ve been hunting a certain kind of stock — ones virtually invisible to the naked eye.
I call them “MARKED” stocks.
Simply put, MARKED stocks don’t behave like ordinary stocks…
Hot: In one 24-hour period, MARKED stocks can beat the 10-year gains on any blue chip.
Hot: MARKED stocks go up 100% of the time.
Hot: Any MARKED stock that gains less than 1,000% over a 24-hour period is considered an underachiever.
Such outlier metrics easily justify my obsession with MARKED stocks.
And tomorrow at 2 p.m. EST, I plan to formally declare victory.
After 12,480 hours personally invested…
I’ve perfected a detection tool that spots MARKED stocks with laser-sharp accuracy.
On the merits of this revolutionary detection tool, I’m launching a brand-new research publication.
No such individually unique publication exists in the world.
Again, this launch is the culmination of my life’s work.
Here, maybe this will better qualify the opportunity for you…
Do you regard Steve Jobs as a genius?
Well, MARKED stocks have historically crushed the performance of Apple.
Heck, when you add together 10 years of Apple gains…
They’ll still lose to the 24-hour gains on the best MARKED stocks.
I suspect that you’d like to own such a stock.
I’ll tilt the world on its axis at exactly 2 p.m. EST.
Ahead of the tape,
Chief Investment Strategist, Wall Street Daily
Question: Martin, as you know, you’ve helped me compile a library of the most important investment catalysts on Earth, baseline concepts that everyone needs to know before they even think about investing.
Today we’ll be discussing dividends and the merits of dividend investing.
Let’s jump right in, Martin. Why are dividends so important to an overall investment plan?
Martin Hutchinson: Dividends, which are cash or stock payments for stockholders normally made out of earnings, were traditionally the main returns on equities.
If you bought shares in the 19th century or the early 20th century, you bought them for the dividends. You didn’t think about capital gains at all.
Until 1958, dividend yields on common stocks were always more than the yield on 30-year Treasuries. After the 1950s, dividends were also important because they tended to rise with inflation, because stocks were from companies that made things. If the price of the things goes up, then the stocks should go up with inflation.
The stocks may or may not do so, but at least their dividends should. Dividend stocks were ideal retirement vehicles because the dividends went gently up with inflation and you covered your inflation risk.
The problem with that is the period of funny money, or low interest rates, since 1995 has pushed up stock prices and reduced dividend yields.
Furthermore, the proliferation of stock options for management has discouraged dividends, because management with stock options don’t get the benefit of the dividends. If they own the actual shares, they do, but not with the options.
Companies have tended to do stock buybacks instead, or indeed sometimes both.
Question: Hutch, have dividends become less important to the market and companies overall?
Martin Hutchinson: In the last 30 years, that’s right, most stock returns have come from capital gains.
Investors seeking yields, seeking dividends, have been pushed to find riskier and riskier stocks, because these days you’ve got a lot of stocks that pay dividends out of capital.
For example, in the real estate investment trusts sector, mortgage real estate investment trusts not only pay dividends out of capital but have a huge risk as interest rates go up. Energy master limited partnerships also tend to pay dividends out of capital.
That looks fine for a few years, and then you discover that the capital has disappeared, so you’ve been eating your investment, so to speak. REITs and master limited partnerships have a special tax treatment. They pay more than 90% of their income as dividends, and they don’t pay corporate tax.
Dividends still have a tax advantage. They currently pay 20% tax plus 3.8% Medicare tax, so that’s 23.8%. That’s against the 39.6% normal income tax rate.
Then REITs and MLP dividends pay the full income tax rate.
That at least is one advantage for dividend investing.
Question: Hutch, conventional wisdom tells us that as we get older and closer to retirement, we should be pushing less toward growth stocks and more into high-yielding stocks, but does that still hold up today?
Give us the bottom line on dividend investing.
Martin Hutchinson: The problem with dividend investing these days is if you invest for dividends alone, it’s too risky and you can’t get a decent return.
But I still have one exception to this, which is a special class of stock, the dividend aristocrat.
Those are companies that have increased dividends every year for 30 years or more. There are about 50 or 60 of those. They make very good heirloom stocks that you leave to your grandchildren because the income, while it’s low, tends to increase.
I’ll give you one good example of this.
There’s a company called Emerson Electric that has increased its dividend every year since 1957 and today yields 3.2%, which doesn’t sound all that much, but if it’s going up every year, pretty soon you’ll find you’ve got 5% or 6%.
The other nice advantage of Emerson Electric is that it’s only had three chief executive officers in the last 63 years as well. It’s on its third since 1954.
There’s a wonderful stability about that company that’s managed out of St. Louis, and at the same time it’s some pretty high-tech stuff, electrical connectors and so on.
You’ve got something there that you really could buy and hold for retirement in the traditional way, but there aren’t many others of those.
Question: Wow, heirloom stocks, Hutch. I love it. Thanks for your time today.
Martin Hutchinson: Great to be with you.
Question: This is Wall Street Daily, signing off.
Senior Analyst, Wall Street Daily