How to “Front-Run” Share Splits for Fast 40%+ Gains (and Surging Dividends)

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Ignore anyone who says share splits have no impact on your portfolio (or your dividends!).

They absolutely do set you up for a nice price bump. I’ve seen it time and time again. It’s easy to see why: when a company—especially a top-notch dividend grower—splits its shares, the move draws in folks who’ve been holding off, seeing the pre-split price as too expensive.

Let’s be honest: we’ve all done this. How many times have you avoided a stock because it trades for $300 a share? Or $500 (or whatever your idea of expensive is)? Never mind the really high traders, like Alphabet (GOOGL), at $2,700, or Berkshire Hathaway (BRK.A),Read more

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Stocks are floating higher daily, and that’s prompted a lot of readers to ask me when they should sell a dividend stock and take profits—and when they should let it run.

You’re probably sitting on some nice capital gains these days, too, thanks to the COVID rebound rally, and have asked yourself the same question.

Today I’m going to give you three indicators I always use when making buy/sell decisions for my Hidden Yields dividend-growth advisory. It’s a simple setup that lets a too-often-ignored factor—dividend growth—dictate our next moves.

Buy (and Hang on!) When Dividends Outrun Share Prices

If you’re a regular reader of my columns on Contrarian Outlook, what I’m about to say won’t surprise you: dividend growth is the No.Read more

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Sometimes investors forget that dividends are funded by actual cash flows.

Consider General Electric (GE), whose outsized yield tempted investors to mistakenly buy shares in this “blue chip” as disaster was unfolding. The stock losses started well before the actual dividend cut and continued on from there:

(Accounting) Imagination at Work

This focus on yield rather than cash happens too often. It’s what prompted me to warn readers about the sky-high yield of Frontier Communications (FTR) a year ahead of its 2017 cut:

A Broken Telecom (and Broken Dividend)

The “not enough cash” problem also prompted me to sound the alarm on L Brands (LB) several times ahead of its 50% dividend cut in late 2018.… Read more

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At some point, someone probably gave you the following investment “advice”—or some version of it:

“All you need to do to make money in stocks is buy a company with a big-name brand, sit back and let the gains roll in.”

Sounds logical, right? After all, a household name is critical if companies want to keep their millions of fanboys (and girls) hooked.

Well, not anymore. Here’s the proof.

Big Brands: Falling Left and Right

Just look at the worst performers last year: this rogue’s gallery was stuffed with companies boasting so-called “unbeatable” brand names.

Like General Electric (GE), whose banner ranks No.… Read more

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It’s a pitfall that can slash your income and your nest egg overnight—and this hidden trap is particularly dangerous to your financial health right now.

I’m talking about a snap dividend cut, something poor folks still sitting on General Electric (GE) shares learned again last week, when the stock tanked 9% in a single day after GE slashed its quarterly payout 92%—to a token penny.

The sad part is, anyone could have seen this massacre coming for miles.

All you had to do was look at GE’s cash flow, which kept staggering after the company sideswiped investors with a 50% dividend cut a year ago.… Read more

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Even legends can lose their edge. This applies to acclaimed investors and dividend aristocrats alike.

2018 was an explosive news year that will be remembered for many reasons. But one thing that will go under the radar is how this year has been a turning point for numerous old-guard dividend stocks. These companies have been no-brainer holdings in countless retirement portfolios for years – in fact, chances are you hold one if not several of them.

I’m going to highlight five of these revered but poorly aging blue chips in a minute. But first, I want to show you the danger of avoiding warning signs, even in legendary investments.… Read more

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Earlier this week, the Fed raised short-term interest rates for the third time this year, to a range of 2% to 2.25%. History suggests that higher rates can hurt dividend stocks in two ways:

First, companies that regularly borrow a lot of money (like REITs and utilities) now have to pay more to do so. Second, money market accounts, CD’s and short-term bonds are actually paying meaningful returns for the first time in a decade, offering a competitive alternative to dividends.

However, higher interest rates don’t have to sound the death knell for all dividends. By looking for the companies whose earnings expectations have actually been rising of late, you can sometimes find a healthy yield today and a business that is either resilient to, or even benefits from higher rates.… Read more

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Do you own the next GE? I’m talking about five dividends that are not as sacred as their shareholders mistakenly believe. We’ll review them in a minute.

First, the warning signs. Many investors were kicked in the gut by General Electric (GE) last year, no thanks to pundits who ignored numerous red flags and encouraged people to buy GE and its historically generous yield. Sure, 5% isn’t “high,” but in a sleepy industrial like General Electric, that’s certainly attractive at a glance.

It also was downright dangerous.

Anyone keeping tabs on the all-important payout ratios for General Electric’s dividend had to see the writing on the wall.…
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Lazy financial writers like to say that higher bond yields will hurt dividend stocks. This blanket statement may sound reasonable, but it’ll cost you money if you take it at face value.

Pundits have called sleepy dividend stocks like General Mills (GIS) “bond proxies” in recent years. GIS has paid 3% (more or less) over the last three years. That compared favorably with the 10-year note, which paid 2% (more or less) over that time period.

So, the story goes, investors had been buying stocks like GIS instead of safe bonds like Treasuries to scrape an extra 1% or so. But with Treasuries rallying to 3%, these same investors have “demanded” a higher yield from GIS.…
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Most investors are familiar with stock splits, but the real money is made when dividends “split.”

I’m talking about secure triple-digit returns in just 5 years (or less). And you could wind up with two dividend streams instead of one!

I’ve seen this strategy pay off time and time again.

And there’s really only one step: buy a recently spun off dividend-growth stock (or hold on to the “new” company if one of your holdings splits up) and tuck it away. Then watch as one—or both—take off into the stratosphere, cranking up their payouts as they go.

In the next few paragraphs, I’ll show you 2 spinoff stocks that have done just that, handing shareholders a 123% average return since they broke off from their parent companies no more than 5 years ago.…
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