The other morning, I drove myself half-crazy looking for my car keys. It must have taken me almost a half hour to find them. And when I did, they were sitting — in plain sight — on my hall table.
The reason I had trouble finding my keys, of course, was that they weren’t where I usually put them. I’m so used to looking in the same places that I walked right by my hall table without a glance.
The same thing happens to securities that pay irregular — or special — dividends.
I call them “Wall Street Irregulars.”
These dividend payers offer above-average yields, yet most investors skip right over them.
That’s because popular investment resources like Yahoo! Finance rarely reflect the total yield these companies offer.
Most brokerage and investment websites only take a stock’s most recent dividend payment and multiply it times the payment frequency to get a stock’s annual dividend. The websites then use the computed annual dividend to calculate the yield.
So while the “posted yield” — the yield investors see listed — may show something south of 2%, a stock’s “trailing yield” — the yield based on the company’s actual dividend payments over the last 12 months — may be much higher.
There are various types of Wall Street Irregulars.
There are quarterly irregulars, which pay a modest dividend in three out of four quarters. One quarterly payment, however, is quite significant. There are also semi-annual irregulars, which pay one large and one small dividend each year.
Take a company like The Buckle Inc (NYSE:BKE) for example. It’s a quarterly dividend payer with a posted yield of 5% on websites like Yahoo! Finance.
That’s actually pretty good.
However, in the screenshot below you can see that earlier this year BKE actually paid a massive quarterly payment four times bigger than its regular quarterly dividend.
That gives BKE a trailing yield of over 10% — nearly twice as high as what many potential investors see by simply looking at the stock’s stated yield on the website.
BKE is just one example. And the stock isn’t without its risks. This apparel company specifically caters to teenagers, a notoriously fickle fashion group.
Instead, I prefer RLI Corp. (NYSE:RLI), a Wall Street Irregular with a more dependable revenue stream.
RLI is a specialty insurance company with a track record of delivering underwriting profits for over 20 years — quite a feat in the insurance business.
This has allowed the company to make more than 160 consecutive quarterly dividend payments and hike its dividend for each of the past 40 years.
On the surface, RLI appears to pay a measly 1.36% dividend yield.
But when you dig a little deeper, then you’ll find the company recently paid a quarterly dividend nearly 10 times bigger than its typical quarterly payout.
In reality, RLI pays a whopping 4.8% trailing yield — nearly four times bigger than what most financial websites report. And if you think that’s not impressive, remember we’re talking about one of the most well-run specialty insurance outfits in the country — they typically don’t hand out dividends like candy. And this one yields more than twice as much as the average S&P 500 stock.
Wall Street Irregulars like the ones I’ve just mentioned can be a valuable contributor to any income investor’s portfolio. It takes a little digging to find them, but the results are often worth it.
That’s where my newsletter, The Daily Paycheck, comes in. We started this retirement plan nearly six years ago as a low-risk investment strategy for investors looking to increase the size and frequency of their portfolio’s payouts.
Since we began, the results have been nothing short of spectacular. So far we’ve turned an initial $200,000 investment into more than $347,000 today — good for a total return of about 74%. And my entire portfolio currently yields an average of 5.3% — much more than the S&P 500’s paltry yield of about 2%.
To date, we’ve collected more than $117,000 in income — and those numbers climb by the day. That just shows you the power of my Daily Paycheck strategy. And it’s something I want you to experience, too.
That’s why I’m currently offering a risk-free way for you to try my system. It’ll give you complete access to my entire Daily Paycheck portfolio, including a full slate of special reports to help get you started.
To learn all about this special offer — and how to gain access to all of my Daily Paycheck holdings — I invite you to access my latest presentation here.
Soon you could be earning bigger, more frequent dividend “paychecks” too.
StreetAuthority’s mission is to help individual investors earn above-average profits by providing a source of independent, unbiased — and most of all, profitable — investing ideas. Unlike traditional publishers, StreetAuthority doesn’t simply regurgitate the latest stock market news. Instead, we provide in-depth research, plus specific investment ideas and immediate action to take based on the latest market events. Visit us at StreetAuthority.com.
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