Talk to the average financial advisor, and they’ll say there’s no way to earn a safe 12% yield on your investment these days.
After all, bank accounts yield around 2% … government bonds yield less than 3%. And if you buy a stock with a yield of 8%, there’s a good chance it’s very risky.
That’s why most financial advisors will tell you that there’s no such thing as an investment that yields a SAFE 12%.
I’m here to tell you that they’re wrong.
If you’re “in on” one of the world’s most powerful investment secrets, you know these investments exist. You know it’s possible to earn a very safe 12% yield on your money. And you know regular investors earn these huge, safe yields all the time.
If you don’t know this secret, read on.
I’ll show you how to start putting it to work immediately …
How Modest Yields Grow Huge
To get your head around this powerful investment strategy, I’d like you to picture a tree in your mind.
Trees are one of nature’s greatest creations. They provide us with shade, food, and beauty. Since they produce oxygen, trees are often called the “lungs of the planet.”
Once you plant a tree, you don’t have to do anything else with it. The tree will sink its roots into the ground and start growing. Air, rain and nutrients in the soil are all the tree needs to thrive.
You don’t need to check on the tree every day. You don’t need to trim it or clean it. You just leave it alone and let the incredible forces of nature do their work over the years. The tree will eventually provide you with shade, food and beauty for many, many years.
Do you have that picture in your mind?
The investment strategy I’m talking about is like planting trees … and it produces “fruit” known as cash dividends.
As you’re probably aware, dividends are cash payments distributed to a company’s shareholders. They are often quoted in dollars per share, as in “McDonald’s (NYSE:MCD) pays a dividend of $1 per share.”
Dividends are also quoted as a percent of the current stock price. This percentage is referred to as the “yield.” You might say, “McDonald’s pays a dividend yield of 3%.”
The investment strategy I want you to know about focuses on stocks that not only pay dividends but dividends that grow.
You see, great companies don’t just pay the same dividend every year.
They grow them every year … for decades.
For example, as of 2018, discount retailer Walmart (NYSE:WMT) has increased its dividend payment every year for 45 years. Oil giant ExxonMobil (NYSE:XOM) has increased its dividend payment every year for 36 years. Soft-drink giant Coca-Cola (NYSE:KO) has increased its dividend payment every year for 55 years.
These businesses paid and increased their dividends through bear markets, recessions, wars and real estate busts. They paid their dividends during the 2000 Nasdaq crash. They paid their dividends during the 2008-2009 financial crisis.
As I detailed in this essay, stocks that consistently raise their dividend outperform all other types of stocks.
The chart below shows how a $10,000 investment in non-dividend paying stocks in 1972 would be worth just $30,136 now.
But that same $10,000 in stocks that are increasing their dividend would be worth a whopping $630,024.
The Power of Dividend Growth
When you accumulate shares of companies that steadily increase their dividends year-after-year, an incredible thing happens. You harness the power of time and put it to work for you.
Here’s how it works …
Let’s say you buy Benson Foods, a (hypothetical) elite, dividend-paying business, for $20 per share. Benson Foods has increased its dividend payment every year for the past 30 years. Currently, it pays a 5% annual dividend, or $1 per share.
Now, let’s say that dividend grows at 10% per year for the next 10 years (this rate of dividend growth is common with elite businesses).
After 10 years of growing at 10% per year, your annual dividend is now almost 12% of your initial investment.
After 15 years of growing at 10%, your annual dividend is 20% of your initial investment.
After 20 years of growing at 10%, your annual dividend is 32% of your initial investment.
In the chart below, you can see the power of the dividend growth described above.
By now, you can see why I use a tree analogy when it comes to describing this strategy. You “plant” some money now and reap huge harvests later.
Here’s How to NEVER Worry About a Stock Crash Again
If you’re earning 12%, 20% or 32% from a super high-quality business, you develop a whole new view of market crashes and recessions. You also experience a lot less stress than the average investor.
Let me explain …
Most investors freak out over every scary headline coming out of Washington D.C. They watch the blips on their computer screens and worry about every 5% or 10% move in the Dow Industrials.
Now … picture yourself earning a SAFE 20% yield from one of the world’s best businesses.
If you’re earning a safe 20% annual yield, do you really care if the stock market declines 10%?
Do you care about an uptick in inflation?
Do you care about a 5% decline in home prices?
If you’re earning 20% in a safe, stable company like Coca-Cola, you’re probably comfortable knowing that no matter what the stock market does, folks are still going to be buying products from Coca-Cola … and you are still going to get your fat dividend checks.
The broad market could decline by 15%, and you will still get that 20% yield on your shares. They could shut the market down for a year and you’d still get your money.
That’s the peace of mind accumulators of elite, dividend-paying businesses enjoy.
By combining the power of an elite, dividend-paying business and the power of time, you are able to generate massive yields on your original investment. You just have to let time work its magic. That’s why it’s critically important for people under 60 to learn about and use this strategy. They need to start planting money trees right now so they can earn safe 12%, 20%, and 32% yields later.
If you buy an elite dividend-paying business at a good price and leave it alone, it will grow large in your portfolio. Give it enough time, and it will throw off huge annual dividends on your original purchase price. And it will do so safely.
P.S. I recently put together a list of “elite dividend payers” you can buy immediately to start earning safe income. Thanks to Donald Trump’s new tax law, I expect these stocks to not only produce large amounts of income but to also produce large capital gains as well. You can click here to view my online presentation about how the new tax law is going to create a bonanza for investors.