{"id":49591,"date":"2023-08-17T10:09:30","date_gmt":"2023-08-17T14:09:30","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/follow-this-dividend-hack-for-113-annualized-profits\/"},"modified":"2023-08-17T10:09:33","modified_gmt":"2023-08-17T14:09:33","slug":"follow-this-dividend-hack-for-113-annualized-profits","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=49591","title":{"rendered":"Follow This \u2018Dividend Hack\u2019 For 113% Annualized Profits"},"content":{"rendered":"
\n

Please<\/em> keep this between you and me. I don\u2019t want to have to explain this again to every vanilla income investor out there.<\/p>\n

But it\u2019s important. And timely, thanks to the current revival<\/em> in volatility.<\/p>\n

Dividend stocks, at times like these, can do more than simply dish out income. They can make us filthy rich, too<\/em>.<\/p>\n

Yeah, I know. The promise of price gains can be \u201cover the top\u201d here in Dividendland. Most of us are content to grind, grind, grind. Send us our payouts and keep our portfolios intact.<\/p>\n

If you\u2019re a current Contrarian Income Report<\/em> subscriber, you are well versed in this approach\u2014and better than most! While fellow \u201cfirst-level\u201d investing friends fawn over 4% Treasury yields, we are banking 8.1% average dividends in CIR<\/em>.<\/p>\n

Put a million dollars into these picks, and we\u2019re projected to receive $80,870.77 in dividend payments over the next 12 months. Nice<\/em>.<\/p>\n

12 Month Projected Income for Balanced CIR<\/em> Portfolio<\/strong><\/p>\n

<\/fbs-ad><\/p>\n

But what if we don\u2019t have a million dollars? Or what if we have a million and don\u2019t need the income today?<\/p>\n

In this case, we\u2019re in luck. We can apply my favorite \u201cget-rich safe wealth building\u201d strategy for bigger gains.<\/p>\n

Is extra risk required? Not really. We\u2019re still buying dividend payers. We\u2019re simply shifting our focus to favor upside over current income.<\/p>\n

Hidden Yields<\/em> stocks are the safest, surest way to retire rich. Our priority here is price gains<\/em>. We buy dividend stocks that are likely to gain in value.<\/p>\n

Obvious, sure\u2014to us! But let\u2019s remember that most income investors mentally cap their own returns to the yields that they are buying.<\/p>\n

They\u2019ll buy a 3% yield hoping for 3% returns. Or a 5% payer aiming for 5% yearly gains.<\/p>\n

\u201cJust pay me my dividend and don\u2019t slash it,\u201d they say!<\/p>\n

At HY<\/em>, we aspire to more<\/em>. We forego a bit of dividend cash today for the sake of larger price gains tomorrow.<\/p>\n

Don\u2019t worry, we\u2019re not ignoring payouts. Dividends are an important fundamental driver for stock prices. In fact, they are the<\/em> driver. We take advantage of this \u201cdividend magnet\u201d phenomenon to achieve gains that are even greater.<\/p>\n

The magnet is a play on payouts and prices. Over the long run (years), stocks follow their dividends\u2014for better and worse! (Divvy up, stock up. Divvy down\u2026) Fundamentals drive prices, and there\u2019s nothing more fundamental than a regular dividend payment.<\/p>\n

Over the short run of weeks and months, however, stocks can go anywhere. Beautiful insanity! We take advantage, buy low, and wait for the dividend magnet to work its magic.<\/p>\n

It may not be a get-rich-quick plan, but it builds wealth soon enough. Here\u2019s an example.<\/p>\n

In April, life insurer Lincoln National Corp (LNC) <\/strong>was about as cheap a stock as we\u2019ll ever see. The company was on track to earn $8.33 per share this year.<\/p>\n

But the stock traded for just $21. Which means the P\/E ratio was below three!<\/p>\n

That wasn\u2019t all. On a free cash flow (FCF) basis, believe it or not, the stock is even cheaper. Over the past 12 months, LNC has generated $23.24 in FCF. It trades for less than its yearly cash flow<\/em>.<\/p>\n

Why so cheap? LNC ran into some liquidity problems in late 2022. But I correctly believed the issues were clearly transitory. The company raised money by issuing preferred shares, and lemme tell ya, no one buys preferred shares of a company in trouble. The stock was way too cheap.<\/p>\n

It would likely sail once the spring financial panic subsided, because its \u201cdividend magnet\u201d was due. LNC boosted its payout 36% in the past five years. Its stock, meanwhile, had sunk about as low as it could go. The higher dividend was a great catalyst for this beaten down stock:<\/p>\n

And oh, by the way, LNC\u2019s yield was 8.4% at the time. Fantastic! So, I \u201cpounded the table\u201d for HY<\/em> readers to buy:<\/p>\n

\n These dirt-cheap shares could snap back in a hurry. Let\u2019s lock in this 8.4% initial yield and potential for a \u201cdividend magnet double\u201d now.\n<\/p><\/blockquote>\n

If you\u2019re a savvy HY<\/em> reader who did, congrats on your outstanding trade! You\u2019re sitting on 34% total returns. These gains annualize to 113%!<\/p>\n

Over the past decade, August and September have been awful for stocks. Given August\u2019s inauspicious start, we seem to be right on track.<\/p>\n

Let\u2019s use this weakness to watch for dividend magnets. \u2018Tis the season to build wealth safely with dividend stocks.<\/p>\n

Brett Owens is chief investment strategist for <\/em>Contrarian Outlook<\/em>. For more great income ideas, get your free copy his latest special report: <\/em>Your Early Retirement Portfolio: Huge Dividends\u2014Every Month\u2014Forever.<\/p>\n

Disclosure: none<\/em><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Please keep this between you and me. I don\u2019t want to have to explain this again to every vanilla income investor out there. But it\u2019s important. And timely, thanks to the current revival in volatility. Dividend stocks, at times like these, can do more than simply dish out income. They can make us filthy rich, […]<\/p>\n","protected":false},"author":1,"featured_media":49592,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-49591","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\nFollow This \u2018Dividend Hack\u2019 For 113% Annualized Profits | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Please keep this between you and me. I don\u2019t want to have to explain this again to every vanilla income investor out there. But it\u2019s important. 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