Don’t let the pundits deceive you. Despite their endless bleating about an overheated market and an imminent crash, now is a great time to buy.
But you need to look beyond the breathless reporting about the S&P 500’s daily push higher—or its ratchet-tight P/E ratio.
Because the real winning stocks are cloaked behind something most folks don’t pay nearly enough attention to: dividends—particularly dividend growth!
Let me explain.
Dividends Are Great Again
A quietly released report from investment manager Janus Henderson Group (JHG) tells the tale—and it’s a happy one for American investors.
According to Janus, global dividends jumped 5.4% year-over-year in the second quarter. Buried under that headline was a 9.8% surge from US companies, to $111.6 billion, as fatter corporate bottom lines started flowing to investors in the form of fatter dividend checks.
It gets better: the suits at Janus now expect a record $1.208 trillion in global dividends this year, up 3.9% from 2016 and $50 billion more than the last estimate.
A Shortcut to a Safe Double-Digit Yield
In a moment, I’ll reveal 3 all-American stocks that are leading the pack on the dividend-growth front. All 3 are ripe for buying now.
I’ll also show you a simple strategy for uncovering the dividend growers that can put you on the path to grinding out a steady 12% yearly total return from your portfolio for life.
That’s enough to double your portfolio’s value every 6 years! And it’s nearly twice the 7% or so the market’s doled out, on average, over the long term.
Plus you’ll build an ever-growing income stream, too.
In fact, what I’m about to show you will have you raking in 10% dividends in short order! So even if you have a relatively modest nest egg and a few years to go till retirement, you’re looking at a real chance of living on dividends alone when you do clock out.
So let’s get going, starting with how a relentlessly rising dividend can ignite your income and your gains in one fell swoop.
The Curious Case of the “Hidden” Yield
For most folks, dividends always take a backseat to capital gains.
It’s easy to see why: when you own a stock that could explode for gains of 5%, 10% or more practically overnight, it’s tough to get worked up about a sub-2% dividend—particularly when the dividend yield on your average S&P 500 stock is shrinking:
The S&P 500: Thin Gruel for Dividend Fans
But the herd has it backwards. Because when you look past the current yield and focus a completely ignored number—the yield on your initial investment—the picture changes dramatically.
This is where dividend growth comes in.
Stick with me for a moment and I’ll show what I mean using biotech player AbbVie (ABBV), a stock I recommended on June 2. (It’s up more than 12% since then and still has room to run).
If you bought AbbVie in January 2014, a year after it was spun off from Abbott Labs (ABT), you were pocketing a $0.40 quarterly dividend, good for a 3.2% trailing-twelve-month dividend yield.
Not bad! That’s way ahead of both inflation and the S&P 500 average.
But fast-forward to today—not even four years later—and the income stream on your original buy would have surged to 5.1% thanks to a 60% increase in AbbVie’s quarterly payout, including a monster 12% hike announced last October!
That’s only half the story, though.
Because we haven’t talked about capital gains—and big dividend hikes like these have a huge (and underappreciated) impact here. Check out how AbbVie’s stock marched higher in lockstep with its dividend increases:
AbbVie Investors Win Twice
There’s plenty more to come.
The company owns rheumatoid-arthritis treatment Humira, the world’s top-selling drug, and spends a massive 18% of revenue on R&D. Management has translated that cash into a pipeline that’s the envy of the biotech world, with 17 treatments in Phase 3 trials.
AbbVie also pays out 59% of earnings per share as dividends—easily manageable in light of rising adjusted earnings per share (up 12.7% year-over-year in Q2). That, plus its low valuation of 13.6 times expected earnings, makes this stock ripe for buying now.
Now let’s move on to…
Another Overlooked Dividend-Growth Play
Alexandria Real Estate Equities (ARE) is a real estate investment trust (REIT) with a current yield you might also be tempted to ignore: 2.8%.
But Alexandria—which owns 202 labs and other tech centers in innovation hotbeds like Boston and San Francisco—has an ace up its sleeve: one of the tightest correlations between share price and dividend growth I’ve ever seen!
Check out how its surging payout has driven an almost identical rise in the share price over the last five years:
60% Dividend Increase … 60% Gain
Here’s what I love about Alexandria: management is crying out for us to take cash off their hands, which is why they regularly boost the dividend multiple times a year. Over the last five years, they’ve pumped the gas on ARE’s payout 12 times!
A fast look at second-quarter financials shows why: per-share funds from operations (FFO, the REIT equivalent of EPS) jumped 10.3% and occupancy clocked in at a healthy 95.7% (set to rise as high as 97.7% for the full year). The dividend is also well covered at a low (for a REIT) 56% of trailing-twelve-month FFO.
Alexandria’s tenant list is a who’s-who of the tech and pharma elite. For extra ballast, it includes mainstays like the US government, MIT and New York University:
There’s more growth ahead: the company is setting out on a five-year plan to expand beyond its main hubs in Boston and San Francisco, sniffing out strong properties in San Diego, Seattle, New York and smaller cities across the country.
The time to buy is now—before that growth drives the share price, and the dividend, higher.
The King of the Airwaves
Much as I love Alexandria, American Tower (AMT) beats it in two crucial ways: it hikes its dividend even more frequently: every quarter. It also trumps its REIT cousin in dividend growth, with a payout that’s surged 178% in five years.
Here’s the best part: due to overdone interest-rate fears that have weighed on all REITs, AMT’s share price hasn’t kept pace with those dividend hikes.
The opportunity here is obvious.
AMT’s Wide-Open Buy Window
The company also boasts a growing portfolio and top-flight tenants, including nearly 150,000 communications sites leased to the likes of AT&T (T) and Verizon (VZ).
More payout growth is dialed in: AMT’s adjusted per-share FFO surged 18.8% in the second quarter, and it sends just 35.8% of its adjusted FFO out the door as dividends—ridiculously low for a REIT.
So don’t be thrown off by AMT’s 1.7% current yield. It’s a smokescreen for a company whose dividend—and share price—have lots of jump left.
7 Quick Buys to DOUBLE Your Money in 6 Years or Less
I’ve just uncovered 7 more stealth dividend growers poised to keep rising while handing you solid income right away.
Together, these 7 low-key income plays can easily grow your money 12% a year FOREVER—doubling your portfolio every 6 years!
You could even throw them together in their own “mini-portfolio” and lean on them for immediate payments, growing retirement income and solid capital gains year in and year out!
If that’s not the holy grail of investing, I don’t know what is.
I’m ready to share my complete research in a special investor report I’ve just published here.
Here’s a quick look at just 3 of these all-star dividend stocks:
- The Dividend Doubler: This company starts out with a gaudy dividend yield—4.7%—but it’s already hiked its payout TWICE in the past year! If it keeps up that pace, you’ll be in line for a 9.4% yield on your initial buy in short order. But you need to make your move now.
- The 800% Income Machine: This company’s dividend has exploded eightfold since a dynamic new management team took over four years ago, PLUS they’re expertly buying back stocks to goose the share price even more. This one is a complete no-brainer for anyone looking to pocket bigger and bigger dividend checks from here on out!
- The 250% Gainer: This one trades for a ridiculous 6 TIMES cash flow—and the last time that number fell below 10, the stock exploded on a monster 252% run! The stars are aligning for a repeat, but the dividend and management’s smart buybacks alone could push your investment up 12% or more.
I’m ready to share full details on these stocks and 4 more red-hot dividend-growth plays. All you have to do is CLICK HERE go get my complete research, including each stock’s name, ticker and buy-under price.
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