In 2013, Warren Buffett’s holding company, Berkshire Hathaway (NYSE: BRK-B), collected over $4 billion in “tax-free dividends.” These weren’t distributions from tax-exempt securities like municipal bonds. The dividends I’m talking about came from big, blue-chip companies like International Business Machines (NYSE: IBM) and United Parcel Service (NYSE: UPS). Now to be fair, these distributions weren’t dividends in the traditional sense. Buffett didn’t see any extra money in his bank account because of them. #-ad_banner-#​But don’t be fooled. Even though he didn’t get any cash, it doesn’t mean those… Read More

In 2013, Warren Buffett’s holding company, Berkshire Hathaway (NYSE: BRK-B), collected over $4 billion in “tax-free dividends.” These weren’t distributions from tax-exempt securities like municipal bonds. The dividends I’m talking about came from big, blue-chip companies like International Business Machines (NYSE: IBM) and United Parcel Service (NYSE: UPS). Now to be fair, these distributions weren’t dividends in the traditional sense. Buffett didn’t see any extra money in his bank account because of them. #-ad_banner-#​But don’t be fooled. Even though he didn’t get any cash, it doesn’t mean those payments weren’t beneficial. In fact, each time Buffett’s holdings paid one of these tax-free dividends, the value of that stock went up — regardless of whether its share price increased or not… That’s because these tax-free dividends I’m talking about are actually better known as share buybacks. We call it a “tax-free dividend” because each time a company buys back shares, your stake in that company becomes more valuable due to the declining number of shares outstanding. The value you get from that transaction, is tax-free. Read More

Companies that have recently declared their first-ever dividend may be one of the best investing barometers in existence. At least that’s how Peter Hodson, a former hedge fund guru at Sprott Asset Management, feels. In fact, after more than 25 years in the investment management industry, he swears by it. There’s some logic to all this.  A company doesn’t have to pay dividends, it chooses to. And if a company that has never made payments before suddenly decides to start, then it’s probably a profitable company whose underlying business fundamentals are strengthening. Read More

Companies that have recently declared their first-ever dividend may be one of the best investing barometers in existence. At least that’s how Peter Hodson, a former hedge fund guru at Sprott Asset Management, feels. In fact, after more than 25 years in the investment management industry, he swears by it. There’s some logic to all this.  A company doesn’t have to pay dividends, it chooses to. And if a company that has never made payments before suddenly decides to start, then it’s probably a profitable company whose underlying business fundamentals are strengthening. No sensible management team will commit to millions in recurring obligations if the prospect of future cash generation looks iffy.  That’s true with any dividend increase, but particularly the first one. Anybody can make their 50th or 60th monthly mortgage payment without much thought. It’s buying the house and committing to the first monthly payment that takes some number-crunching and forecasting.  In much the same way, a company doesn’t enter into a new dividend without a confident outlook. Now, there are some skeptics… Read More

When it comes to beating the market, dividends have always reigned supreme. If you’d invested $100,000 in the S&P 500 back in 1982, it would have been worth $2.3 million by the end of 2011. If you would have invested that same amount in dividend payers, you’d have $4.3 million. Not bad. That’s where most investors stop… But if you’d invested the same amount of cash using a simple strategy that too many investors often ignore, then it would have been worth $6.7 million. Many investors searching for the best total returns will simply look for… Read More

When it comes to beating the market, dividends have always reigned supreme. If you’d invested $100,000 in the S&P 500 back in 1982, it would have been worth $2.3 million by the end of 2011. If you would have invested that same amount in dividend payers, you’d have $4.3 million. Not bad. That’s where most investors stop… But if you’d invested the same amount of cash using a simple strategy that too many investors often ignore, then it would have been worth $6.7 million. Many investors searching for the best total returns will simply look for stocks with high dividends. That makes sense. But dividends don’t tell the whole story — not even half of it. If you’re looking for more cash from your investments, you should be looking at all of the ways a company distributes its cash. Don’t get me wrong — dividends can be a great indicator of company health. From 1972 through 2011, members of the S&P that don’t pay dividends returned just 1.4% per year, turning a $1,000 investment into just $1,710 according to research by Ned Davis. Meanwhile, companies that pay dividends returned 8.6% annually — significantly more than those… Read More

Two-in-five. That’s the number of mutual fund managers that have actually beaten the market over the past five years, according to the S&P Indices Versus Actives Funds Scorecard. Why, you might ask, do these “experts” so often fail to beat the market? Reasons vary widely, but there’s one simple thing these managers often fail to account for… a stock’s “Total Yield.” #-ad_banner-#And though there’s ample evidence to prove that this investing strategy beats the market — you’ll hardly ever hear about it in the mainstream financial press. I’ve been talking about the benefits of a Total Yield strategy for months… Read More

Two-in-five. That’s the number of mutual fund managers that have actually beaten the market over the past five years, according to the S&P Indices Versus Actives Funds Scorecard. Why, you might ask, do these “experts” so often fail to beat the market? Reasons vary widely, but there’s one simple thing these managers often fail to account for… a stock’s “Total Yield.” #-ad_banner-#And though there’s ample evidence to prove that this investing strategy beats the market — you’ll hardly ever hear about it in the mainstream financial press. I’ve been talking about the benefits of a Total Yield strategy for months now. In short, the strategy looks at all the ways a company rewards shareholders. It not only accounts for dividends, but also two other payment metrics: stock buybacks and debt reduction. (I talked about the importance of each of these “extra” payment methods in detail here and here.) It’s simple. Investing in companies that use all three of these shareholder-friendly practices can mean the difference between merely keeping pace with the market and beating it. To show you what I mean, I’d like to reveal one of my favorite Total Yield stocks. Since I recommended it to readers of my… Read More

Previously, I told StreetAuthority readers about two of the most famous land deals in history. And while most history buffs know the story behind the Louisiana Purchase and the cession of Alaska to the United States by Russia, my point in relating those two stories was to illustrate the timeless wealth potential of real estate that still makes for a smart investment to this very day. #-ad_banner-#I recently retold the story of another famous land deal to readers of my premium income newsletter, High-Yield Investing, to further drive home the point. I’d like to share that story with you today… Read More

Previously, I told StreetAuthority readers about two of the most famous land deals in history. And while most history buffs know the story behind the Louisiana Purchase and the cession of Alaska to the United States by Russia, my point in relating those two stories was to illustrate the timeless wealth potential of real estate that still makes for a smart investment to this very day. #-ad_banner-#I recently retold the story of another famous land deal to readers of my premium income newsletter, High-Yield Investing, to further drive home the point. I’d like to share that story with you today — and tell you about how regular investors can gain exposure to some of the most valuable real estate in the world without having to risk enormous amounts of capital… Neither of these two famous land purchases I recounted earlier compares with the real estate coup that was orchestrated by a man named Peter Minuit in May 1626. Legend has it that Minuit, a representative of the Dutch West India Co., bartered some goods worth 60 Dutch guilders to local Indians in exchange for what is now the island of Manhattan. Now, this tale is part truth and part folklore. Read More

For the past few months, I’ve been telling readers of my High-Yield Investing newsletter about the secrets of America’s privileged. You see, wealthy folks in the U.S. invest differently than most of us. And I believe it’s worth examining their investing habits and taking a cue from their practices. #-ad_banner-#After all, America’s privileged have their wealth for a reason… It’s one thing to accumulate wealth, but they’re also incredibly successful at preserving and growing it for years on end. I personally know about the perpetual income of America’s privileged because it’s also been in my family now for three generations. Read More

For the past few months, I’ve been telling readers of my High-Yield Investing newsletter about the secrets of America’s privileged. You see, wealthy folks in the U.S. invest differently than most of us. And I believe it’s worth examining their investing habits and taking a cue from their practices. #-ad_banner-#After all, America’s privileged have their wealth for a reason… It’s one thing to accumulate wealth, but they’re also incredibly successful at preserving and growing it for years on end. I personally know about the perpetual income of America’s privileged because it’s also been in my family now for three generations. Ever since I can remember, money was never a source of worry in our family. I don’t recall hard times while growing up. I know there were recessions… and I had friends whose fathers had been laid off. But somehow, we were isolated from the same hardships. You see, my grandfather came upon the perpetual income of America’s privileged 30 years ago and it has changed the way our family has lived ever since… Now, don’t get me wrong. I’m not claiming I come from a family of America’s privileged. We’re ordinary folks. The kind you meet every day. Both… Read More

You may or may not have heard of renowned money manager Joel Greenblatt. Over an illustrious career spanning more than twenty years, the Gotham Capital hedge fund manager racked up annualized returns of 40%, eclipsing the success of even his mentor, Warren Buffett. Investors who were on board with Greenblatt for his entire tenure at Gotham would have seen a $10,000 investment balloon to more than $8 million, earning 800 times their initial stake. #-ad_banner-#His remarkable track record didn’t happen by sheer luck, but rather through his focus on investing in a unique group of companies that shared one commonality. Read More

You may or may not have heard of renowned money manager Joel Greenblatt. Over an illustrious career spanning more than twenty years, the Gotham Capital hedge fund manager racked up annualized returns of 40%, eclipsing the success of even his mentor, Warren Buffett. Investors who were on board with Greenblatt for his entire tenure at Gotham would have seen a $10,000 investment balloon to more than $8 million, earning 800 times their initial stake. #-ad_banner-#His remarkable track record didn’t happen by sheer luck, but rather through his focus on investing in a unique group of companies that shared one commonality. Industry leaders like American Express, Liberty Media, Allstate, Expedia and Kraft Foods all carry this trait. And they each helped Greenblatt and fellow investors make millions… These companies are just a few of a long list of spin-offs that all once belonged to larger parent companies. And they all flourished after leaving the nest. Take spin-off biopharmaceutical maker AbbVie (NASDAQ: ABBV) for example. Since officially leaving its parent company, Abbott Laboratories, in January 2013, ABBV has risen more than 65%… beating the market by roughly 30%. Here’s another example. Just over two years ago, ConocoPhillips separated its upstream oil and… Read More

The 30-year U.S. Treasury Bond is quite possibly the worst investment option out there right now… even your Uncle Dave’s coin and baseball card collection might offer better long-term returns. Let’s forget for a moment about the Fed’s tapering of Quantitative Easing, which has already placed upward pressure on interest rates (and thus downward pressure on bond prices). And let’s forget that the longer a bond’s duration, the greater its sensitivity to interest rate movements. So with every basis point uptick, nothing will feel the pain more acutely than the 30-year “long bond.” Let’s even forget that Uncle Sam’s credit… Read More

The 30-year U.S. Treasury Bond is quite possibly the worst investment option out there right now… even your Uncle Dave’s coin and baseball card collection might offer better long-term returns. Let’s forget for a moment about the Fed’s tapering of Quantitative Easing, which has already placed upward pressure on interest rates (and thus downward pressure on bond prices). And let’s forget that the longer a bond’s duration, the greater its sensitivity to interest rate movements. So with every basis point uptick, nothing will feel the pain more acutely than the 30-year “long bond.” Let’s even forget that Uncle Sam’s credit rating has already been downgraded by at least one ratings agency. #-ad_banner-#Even if interest rates don’t rise and Congress miraculously balances the budget — a best-case scenario — you’re still tying up your capital for the next three decades at a paltry rate of around 3.5%. But here’s the kicker: when your principal is finally repaid in the distant future, those dollars will have lost much of their purchasing power. Just ask anyone who bought one of these bonds back in 1983. Maybe they loaned the government $30,000, enough money to buy three average new cars at the time. Now,… Read More

This year is shaping up to be a good one for those using a Total Yield strategy. For those who aren’t familiar, it’s a simple strategy I’ve been talking about for the past few weeks. I’ve been telling income investors that if they’re investing in just any company that pays a dividend, they may be leaving a lot of money on the table. That’s why instead of simply focusing on companies with high dividend yields, the Total Yield strategy looks at companies that reward shareholders with two “extra” payment methods in addition to dividends — ones that add rocket fuel… Read More

This year is shaping up to be a good one for those using a Total Yield strategy. For those who aren’t familiar, it’s a simple strategy I’ve been talking about for the past few weeks. I’ve been telling income investors that if they’re investing in just any company that pays a dividend, they may be leaving a lot of money on the table. That’s why instead of simply focusing on companies with high dividend yields, the Total Yield strategy looks at companies that reward shareholders with two “extra” payment methods in addition to dividends — ones that add rocket fuel to a dividend stock’s potential returns. (I talked about each of these “extra” payment methods in detail here and here.) #-ad_banner-#It’s simple. Investing in dividend-paying companies that give out these two “extra” payments over ones that don’t can mean the difference between merely keeping pace with the market and beating it. Here’s the proof: from 1982 to 2011, the Total Yield strategy returned 15.04% annualized, handily outperforming the S&P 500, which returned 10.96% annualized over the same period. Extensive back-tested research has shown that by using the Total Yield strategy — choosing stocks that pay dividends, buy back shares of… Read More

Dividend investing is changing. Over the past decade, many dividend-paying companies have slowly trended away from paying traditional dividends. Don’t get me wrong, many long-time dividend payers will keep paying and growing their dividends into the future. But certain ones are starting to reward shareholders in two other, more tax-friendly ways. Fortunately for investors, these two hidden, “extra payments” could be much more valuable than traditional dividends alone. (I recently talked about each of these extra payment types here and here.) #-ad_banner-#That’s why over the past few weeks, I’ve been telling you about a new way to invest in dividend-paying… Read More

Dividend investing is changing. Over the past decade, many dividend-paying companies have slowly trended away from paying traditional dividends. Don’t get me wrong, many long-time dividend payers will keep paying and growing their dividends into the future. But certain ones are starting to reward shareholders in two other, more tax-friendly ways. Fortunately for investors, these two hidden, “extra payments” could be much more valuable than traditional dividends alone. (I recently talked about each of these extra payment types here and here.) #-ad_banner-#That’s why over the past few weeks, I’ve been telling you about a new way to invest in dividend-paying stocks. It’s the single best way I know to get market-beating returns from your dividend stocks, as I’ll show you in today’s example. It’s called Total Yield investing. I call it that because it looks at all the ways a company rewards shareholders. This not only includes dividends, but also accounts for two other “extra payment” metrics: stock buybacks and debt paydown. You’re familiar with how dividends work. If you invest $100 into a stock with a 10% dividend yield, you can expect to receive $10 in dividends (or 10%) a year from that investment. The other two “yields” are… Read More