You’ve seen them, I’ve seen them. These advertisements from newsletter authors, and journalists, all promising riches and returns from the promised land.
“Make money while you sleep!”
“Earn 20% per year for doing nothing!”
“15% returns guaranteed”
“Get paid for owning stocks, find out how”
Don’t be fooled. Hold onto your wallet. These screaming headlines are all flashy ways of drawing your attention to something simple and basic.
No gimmicks, no lies, the secrets are exposed here – free of charge! What is the secret? It’s simple.
It’s dividends.
Back before the latest subprime mortgage debacle, the internet boom, the oil crisis, and the lunar landing, investors invested for one thing and one thing only – cash. Back at the turn of the century, it was very uncommon for the average American household to own any stocks.
As a matter of fact, when the average American had money to invest their investment of choice was bonds. Bonds that paid cold, hard, cash. People focused on their yield and the quality of the company. Over the decades this simple way of looking at investments was lost in all of the hype.
Now the equities market is all the rage, and yet the tried and true method of looking to your cash on cash return is as relevant as ever. Let’s consider for a moment the stock Altria (MO) formerly Philip Morris and Kraft Foods. Now, according to my research, if you had purchased $ 10,000 of this stock back in 1970, you would have received a few hundred shares and a dividend of about $ 70.
Fast forward to today. That same investment is worth more than $ 2.5 million, but more importantly you would be getting over $ 90,000 every year in dividends.
You would be making a 900% return on your investment in dividends alone!
The key here is that the dividend continued to grow and build year after year – and all you, the smart investor, had to do was collect the dividend checks.
Amazingly, Altria carries today a dividend yield of just over 4%.
One interesting stock to look at is National City (NCC) a growing financial institution focused on commercial and retail banking it currently yields just over 5.5% on its dividend, and amazingly has grown that dividend consistently over the last five years.
Brian Mikes is the editor of the Dynamic Wealth Report, a free investment newsletter that offers investment ideas and news you can’t get from the mainstream investment press. Brian and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you can use today.