Get Rich - Stay Rich - Investing for Monthly Income

Posts Tagged ‘growth and income stocks’

How to Beat the Market in 2017

As we start a new year, every investor should ask themselves this question: Did you beat the market in 2016? According to an article on CNBC “Most investors didn’t come close to beating the S&P 500”. The rationale is discussed as:

Bad market timing and poor stock picking kept most investors from fully reaping the gains of the bull market last year. “The average investor held too much in cash, was too concentrated in stocks that didn’t perform well and avoided financial stocks that rallied last year,” said Hart Lambur, co-founder and CEO of Openfolio, a social network with more than 70,000 members who share their investment portfolios.

The average investor on Openfolio had a gain of roughly 5 percent in 2016. That lagged the nearly 12 percent total return of the S&P 500, which includes dividends, by more than 7 percentage points last year. 

Part of the lag can be attributed to investors having a diversified portfolio. That is a good thing because it smooths volatility and can improve returns over long periods. Yet when you consider that a balanced portfolio of 60 percent U.S. stocks and 40 percent U.S. bonds would have generated roughly 7 percent last year, Openfolio investors still fall short by 2 percentage points.”

How can investors beat the market?

Our newsletter beat the S&P 500 handedly in 2016 with a 27.8% return! In reviewing the results we obtained from the perpetual covered call strategy during the past year. In terms of total return as tracked in the monthly spreadsheets, the average across all positions was 27.8% during 2016. In the past year ending 12/17, the S&P 500 only returned 12.75% and the DJIA returned 16.8%. Therefore, we more than doubled the S&P and beat the Dow Jones significantly while generated significantly more income. The average monthly income across our open positions was $152 for each position with 100 stock shares! AND this includes the cost of having a long put to protect against downside risk on each position.

The average cost of 100 shares across all positions was $5,278 which generated an average of $152 of income each month. A $50K portfolio will generate an average of $1500 per month while a $100K portfolio creates $3,000 every month! This is proof our income strategy works. We target a 2-3% return per month on average.

Join our investing community and beat the market in 2017!

Know the Rules of Investing

In a recent interview, Tony Robbins stated he has coached a successful trader for more than 20 years. The person he is talking about is Paul Tudor Jones, one of the most successful investors of all time and owner of the Boston Red Sox baseball team. Robbins found Jones, and other wealthy, successful people like him, were constantly looking to learn more about money. He stated:

It isn’t about the money! That’s why I call it ‘MONEY: Master the Game, his latest book.’ It is a game. A lot of people get offended by that, like ‘Oh my God! How could he call it a game?’ It is. “The wealthiest people in the world know it’s a game, and the reason they succeed is they know it’s a game. They know there’s certain rules. If you know the rules, you can win and if you don’t you’re gonna lose. Rather than be pissed about it, learn. “

I agree in being successful requires knowing the rules of the game. In my perspective, the rules are the trading plan – designing a strategy and knowing when to enter and exit a trade. At Get Rich Investments, we focus on producing income each month. To be consistent, e follow a set of rules we have learned from over 20 years of investing. The markets are always changing due to events, direction trends and volatility, This is why our income strategy incorporates several options to be successful. These strategies allow our members to be agile and to profit regardless of market sentiment and volatility.

Some investors are comfortable earning a 3-4% dividend yield to meet their income needs. If you seek more return, then join our income plan to earn 10-15% in income each year. We focus on world class stocks with nice dividend payments. But we juice our returns by collecting option income in addition to dividends. This strategy works with all sizes of account amounts- you don’t need a million to started. And, the sooner you get compounded your returns the more income you can create each month.

Start learning the rules of successful investing.  Subscribe to the Monthly Income Plan.

The Case for Income Investing

Today’s stagnant economy isn’t what it used to be. Societies, both individuals and governments, are saddled with enormous amounts of debt and yields have disappeared making it impossible to generate income from traditional fixed income investments.

Many top experts, including Jeff Gundlach who is considered the “Bond God,” believe this is the “new normal” and that rates could go even lower still. Which doesn’t offer a lot of hope to retirees who need income now, or future retirees who need to grow their portfolio at a much faster clip if they hope to retire at all.

Investors often overlook the value of selling options for income. This is in part because investors misunderstand the risk of these investments and how to manage this type of investment.  But many individual can benefit from these investments. If the income from selling puts and calls is reinvested every month, the investor can compound savings and buy more investments such as stocks, CEFs, etc.

This can be a growth strategy for investors no longer contributing to their portfolios or retirement accounts.  This type of portfolio of investments is likely to produce a higher yield than a growth stock portfolio. And, investors will benefit from the income even if the portfolio doesn’t have any capital appreciation or the market moves sideways. 

Investors can create a diversified portfolio for option selling by writing cash-secured puts, selling covered calls and owning dividend paying stocks and CEFs with monthly distributions.  If income is a goal, these option selling strategies and income investments could be worth a closer look.

I combine the strategies for market diversification of income opportunities.  Also, I combine then to create new investment vehicles.  The one strategy I prefer has 3 income opportunities: (1) selling put options to enter a stock, (2) collect dividends if put to me, and (3) sell covered calls until the stock is called away.

Where else, on even a modest portfolio, can you generate an extra $1,000 to $5,000 per month or more? Owning a basket of strong dividend paying blue chip stocks might earn you 3% to 5% per year. But to generate $5,000 per month in income you’d need a nest egg of $1.2 to $2 million dollars.

Get started collecting multiple streams of income today.

 

Creating Multiple Income Streams with CEFs

An income investor has several investments available to create income streams. Most turn to dividend stocks and bonds to create consistent cash flows for their living expenses. While both of these investments will provide income, there are additional vehicles to produce money flows. One I like to use is closed-end funds or CEFs. These investments trade like stocks with a market price and can be easily purchased during trading hours on all stock exchanges.

Investors have nearly 400 CEFs to choose from that pay monthly distributions (see listing included). Simply, an investor can create a diversified portfolio of CEFs to create monthly income. Most investors should look at selecting five or more CEFs in different investment categories or type of objective. There are cases with investors creating numerous CEFs such as 30 funds to average one paycheck per day. I guess you can call this one check per day or daily paychecks.

The 10-year Treasury note touched its second-lowest yield before regaining some ground to finish at around 1.51%. The 30-year Treasury was offering a yield of 2.234% last week.  Those meager yields mean that despite grousing about elevated stock valuations and poor corporate quarterly results, investors aren’t finding a lot of safe options to put their money and eke out a decent return. Bespoke statisticians say 41% of stocks on the S&P 500 offer a richer yield than the so-called long bond, or 30-year note. And more than 60% pay a better yield than the benchmark 10-year note. A great alternative is investing in CEFs.

CEFs have some differences compared to stocks such as they have a publically known net asset value or NAV. The NAV is the sum value of the funds holding or intrinsic value. The CEF may trade at a market value that us different than the NAV. This makes it easy for investors to determine if the fund is trading at a premium or discount to its true value or NAV. As an investor, you want to purchase CEFs at a discount to NAV as this can be like buying a $1 of assets for $0.90 or whatever the discount to NAV. Who doesn’t want to buy funds at a discounted price or on sale!

To create a successful CEF portfolio, an investor should create a diversified portfolio of monthly paying CEFs trading at a discount to NAV. The investor can reinvest some dividends to increase their payments over time. This investing strategy can be used to replace income from employment or to supplement other types of income.

The Western Asset Emerging Markets Debt Fund (ESD) is a closed-end fund that invests in bonds issued by emerging-market governments and corporations. As income investors, we love the 8.5% yield… And as value investors, we love that the fund is available for an 13% discount to its NAV. On top of that, bonds are traditionally safer investments than stocks, even in emerging markets. ESD has an extremely diverse portfolio of 235 different holdings. Its largest country allocation, Mexico, only accounts for 13% of its portfolio. And 97% of its holdings are denominated in U.S. dollars.

How would you like 10 monthly income checks from your portfolio?

Subscribe today for more monthly income checks… you will make your money back on your first investment.

 

 

How to Get 50% of Your Stock Purchase in Monthly Income Installments

A covered call trade is a very simple instrument to increase your monthly income. The basic idea is to sell a call option for every 100 shares of stock you own.  By selling the call option, the investor receives a premium which is what our investors call monthly income or monthly dividend payments.  We sell new call options each month to create new income – month after month.  This is in addition to the current dividend paid by stocks on a quarterly basis.

Here is an example of what subscribers to the Get Rich Monthly Income Plan achieved in 2013:

Subscribers purchased Holly Frontier in January 2013 for $46.35 per share. So purchasing 100 share of stock will cost a total of $4,635 plus commission costs.  At this time, HFC was paying a $0.30 per quarter dividend for a dividend yield of 2.59%.  This is a nice yield on a fairly stable stock but it gets even better.  In addition to the $1.20 in quarterly dividends, HFC paid $2.00 more per share in special dividends.  This increases the total dividends to $3.20 per share in 2013.  The addition of special dividends increases the stocks annual dividend yield to 6.9%.  Wow, a 6.9% dividend yield is great in this low yielding stock market!

But it gets even better for Get Rich Monthly Income Plan subscribers.  They sold a call option on each 100 shares of HFC stock they owned each month of 2013.  Based on our results, this created a total of $1,985 for the entire year.  This created an average monthly income of $165.42 by selling the call option which created the covered call trade.  The total premium income of $1,985 is about 40% of the total cost of entering the trade – $4635 at the beginning of the year.  Therefore, investors received nearly half of their initial investment in HFC back during the year through a simple monthly covered call trade.

Now, subscribers can add the three sources of income – quarterly dividend, special dividends and covered call income together to create a Monthly Income Plan.  In total, subscribers received $2,305 in additional income from owning 100 shares of HFC stock in 2013.  This is an average of $192 in additional income each month of 2013. And, the $2305 in income is 50% of the total amount of the initial investment in 100 share of HFC!

Pfizer offers a Total Yield Stock Play with an Increasing Dividend Payout

While income investors constantly seek out stocks with growing dividend yields, they can also benefit from share buybacks.  The share buybacks present an opportunity for investors to get capital gains in addition to current income.  Currently, 80% of S&P 500 companies are buying back shares. Combine this with dividend yield and you can get a total yield of greater than 10% in 2014.  We are presenting a series of stocks worth a look.

Pfizer (PFE) has a projected share buyback yield of 14% and a current dividend yield of 3.49%.  This provides investor a potential for a total yield of 18.2%.  The stock has a 12 month price target of $33.

Investors were pleased to hear that the company intends to increase its dividend payout ratio to 40% (from 33%) by the end of 2013. The company returned about $15 billion to shareholders in the form of dividends and share buybacks in 2012. Pfizer intends to use the proceeds from the sale of the Nutrition business on additional share repurchases and other value creating opportunities.

On 7/30/2013, the Board of Directors authorized a new$10 billion share repurchase program to be utilized over time. This new program is in addition to the$3.1 billion of authorization currently remaining under the previous share repurchase program.

Pfizer posted second quarter 2013 earnings of $0.56 per share, 5% below the year-ago earnings. Revenues, which fell 7% to $12.9 billion, missed the Consensus Estimate of $13.1 billion. Revenue growth was impacted by the loss of exclusivity of certain products and purchasing patterns for Prevnar/Prevenar in some markets.  Pfizer maintained its outlook for 2013. Revenues will be hit by genericization and the expiration of a few co-promotion agreements. The company s pipeline needs to deliver given the Lipitor loss of exclusivity and the upcoming loss of exclusivity on additional products in the next few years.

We expect revenues in 2013 to decline about 12%, primarily reflecting the classification of the animal health business (divested in June 2013) as a discontinued operation. We also project lower sales of established drugs, largely due to ongoing generic erosion in off-patent Lipitor, Detrol and Xalatan, as well as the expiration of certain co-promotion agreements.  However, we project continued gains in Lyrica muscle pain therapy and Celebrex arthritis treatment. We also forecast good growth from emerging markets, new oncology agents such as Xalkori and Inlyta, and from the recent launches of Xeljanz and Eliquis.

In July 2013, PFE announced plans to internally separate into three distinct business segments, two innovative units and one value business.  The first innovative unit will comprise drugs with patent exclusivities beyond 2015. The second innovative segment will include vaccines, oncology agents, and consumer healthcare.  The third value unit will consist of mature drugs, and joint venture products. We believe the new structure should provide investors greater transparency of PFE’s different businesses, and represents a prelude for a potential eventual split-up of Pfizer into three separate firms.

Look at Pentair as a Total Yield Stock Play

While income investors constantly seek out stocks with growing dividend yields, they can also benefit from share buybacks.  The share buybacks present an opportunity for investors to get capital gains in addition to current income.  Currently, 80% of S&P 500 companies are buying back shares. Combine this with dividend yield and you can get a total yield of greater than 10% in 2014.  We are presenting a series of stocks worth a look.

Pentair (PNR) has a projected share buyback yield of 22% and a current dividend yield of 1.47%.  This provides investor a potential for a total yield of 23.47%.  The stock has a 12 month price target of $70.

Pentair Ltd. recently announced that it will pay a regular quarterly cash dividend of $0.25 per share on November 8, 2013 to shareholders of record at the close of business on October 25, 2013. Pentair had previously announced on April 29, 2013 the approval by its shareholders of an ordinary cash dividend of $1.00 per share to be paid out of Pentair’s capital contribution reserve in four equal quarterly installments of $0.25 in each of the third and fourth quarters of 2013 and the first and second quarters of 2014. Pentair has increased its dividend for 37 consecutive years.

Pentair paid dividends totaling $0.88 per share in 2012. Pentair paid dividends of $0.23 per share in each of the first and second quarters of 2013 and $0.25 per share in the third quarter of 2013.

Pentair (PNR) is a global diversified industrial company, which makes and markets water and flow control devices and electrical and electronic enclosures, recently doubled in size after merging with Tyco’s flow control unit.

We project close to 3% organic sales growth in 2013, driven by the water & fluid solutions segment and, to a lesser extent, valves & controls, while technical solutions remains soft. We see favorable trends continuing in global energy (oil & gas and mining), food & beverage and North American residential, with more modest growth in emerging regions. PNR should benefit globally from its expanded distribution via its merger with the Tyco Flow Control unit. We still see headwinds in Western Europe.

We expect gross margins to expand by at least 0.5% in 2013 to above 33%, on supply chain and repositioning cost savings, and a more favorable mix, while commodity input costs remain generally stable. We see adjusted EBITDA margins widening by more than 160 basis points to near 16.5% in 2013, reflecting volume leverage and improved productivity, and $105 million in cost synergies.

Look for a Tasty Profit from this High Quality Dividend Grower

Investors looking for an A-rated quality company with a growing 3% dividend yield should look at the soup favorite – Campbell Soup Company.  The company just increased its dividend 7.6% but still has room for growth.  Campbell’s is rated a 5-star stock by S&P indicating a strong buy recommendation.  The stock has a 12-month price target of $48, an increase of 15% from its current price.

Campbell Soup Company (CPB) recently announced that the company’s Board of Directors has approved an increase in its quarterly dividend from $0.29 per share to $0.312 per share, an increase of approximately 7.6%.  The quarterly dividend is payable Oct. 28, 2013 to shareholders of record at the close of business Oct. 8, 2013.

“This dividend increase is another step forward as we execute our plans to drive shareholder value by delivering sustainable, profitable net sales growth,” said Denise Morrison, Campbell’s President and Chief Executive Officer. “We are encouraged by the progress we’ve made and are confident in our long-term growth prospects as we strengthen our core business and expand into higher-growth spaces.”

The company has paid dividends since it became public in 1954. The last quarterly dividend increase was to $0.29 per share from $0.275 per share on Nov. 1, 2010.

We look for Campbell’s to focus on new products, expanding its presence in packaged fresh foods, and growing sales in some international markets.  We expect at least near-term challenges in U.S. beverage, North American foodservice, and the Australian businesses.

The company has long term targets for annual sales growth of 3% to 4% and 5% to 7% annual growth in earnings per share. Over time, we expect that growth to be helped by new or enhanced products. Areas of new product focus, in our view, will include expansion of the Goldfish snack brand, development of the dinner sauce category, and introduction of a Homestyle soup line. We see the Bolthouse business aiming to have more of a presence in the snack food area with a ShakeDowns carrot product that includes seasonings.

Investors should look to add Campbell’s to their Monthly Income Plan for both current income and future growth.

This Stocks offers a 4% Yield and 13% Upside

AbbVie (ABBV) is a global research-based pharmaceuticals business that emerged as a separate entity following its spin-off from Abbott Laboratories at the start of 2013.  AbbVie is worth a look for the growth and income investors as it has a 4.2% dividend yield and a price target with 13% upside potential.

AbbVie’s most important product is Humira, an injectable biologic TNF (tumor necrosis factor) blocker treatment for rheumatoid arthritis (RA) and similar conditions, with sales of $9.3 billion in 2012, up from $7.9 billion in 2011.We estimate that Humira accounts for more than half of the global prescription pharmaceuticals market for rheumatoid arthritis. Besides moderate to severe RA in adults, Humira is also approved for eight other uses, including juvenile idiopathic arthritis, plaque psoriasis, psoriatic arthritis, ankylosing spondylitis, ulcerative colitis, Crohn’s disease in adults, juvenile Crohn’s disease and axial spondyloarthritis.

AbbVie’s strategic objectives include expanding Humira’s sales through greater penetration of emerging markets, increased emphasis on earlier diagnosis of autoimmune patients, and new indications. ABBV also plans to advance its R&D pipeline through internal development or through collaborations and licensing agreements. From 2013 through 2016, the company plans to launch five significant new products. The company also plans to maximize efficiency by streamlining the supply chain and optimizing residual value when products near the end of exclusivity.

In January 2013, ABT said that global sales of branded drugs that now belong to ABBV rose 7.4% to$5.14 billionin Q4, topping the$4.8 billionestimate of Wells Fargo analysts. Sales of Humira, ABBV’s leading product, increased 23% to$2.68 billion, about$200 millionabove Wells Fargo’s estimate.

The company estimated 2013 adjusted earnings at $3.03 to $3.13 a share, while analysts polled by Thomson Reuters expect $3.08 a share. Abbott had previously said fourth-quarter sales of Humira jumped 23% to $2.68 billion.  AbbVie said it expects the drug’s sales to increase by a low double-digit percentage in 2013.  The company also said it plans to initiate several Phase III programs this year, including atrasentan for diabetic kidney disease and ABT-199 in chronic lymphocytic leukemia.

The stock is reasonably priced with a current PE of 11.6 compared to an industry PE of 19.7.  AbbVie has a 12-month target price of $43 applies a modest premium to peers P/E of 13.4X to our $3.20 EPS estimate for 2014. The $1.60 annual dividend presently yields 4.2%.We think ABBV’s $7.2 billion cash position enables it to do accretive acquisitions and stock repurchases.  ABBV has an equity summary score of 9.9 out of 10 for a Very Bullish outlook.

The board of directors of AbbVie declared a quarterly cash dividend and also authorized a share repurchase program of up to $1.5 billion of the Company’s outstanding common stock.  The cash dividend of $0.40 per share is payable May 15, 2013 to stockholders of record at the close of business on April 15, 2013.  AbbVie was named to the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least 25 consecutive years.  AbbVie was included as a result of the Index’s change in its treatment of spin-off companies.

This High Yield Stock Just Increased Distributions by 5%

Calumet Specialty Products Partners, L.P. (CLMT) announced an increase in its quarterly cash distribution to $0.62 per unit ($2.48 per unit on an annualized basis) for the quarter ended September 30, 2012 on all of its outstanding limited partner units.  The distribution will be paid on November 14, 2012 to holders of record of such units at the close of business on November 2, 2012.

This distribution represents an increase of 5.1% over the quarterly distribution of $0.59 per unit ($2.36 per unit on an annualized basis) paid in August 2012 for the second quarter of 2012 and a 24.0% increase over the third quarter of 2011.

Calumet has a current dividend yield of 7.88% based on today’s stock price.  Calumet has an equity summary score of 8.8 out of 10 for a BULLISH outlook.

Calumet Specialty Products Partners, L.P. produces and sells specialty hydrocarbon products in North America. It operates in two segments, Specialty Products and Fuel Products.

Subscribe for FREE Trades

Subscribe for FREE Trades

* indicates required
/ ( mm / dd )
Archives