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How to Earn Predictable Returns That Go Up Every YearBy
Thursday, February 24, 2011
Some people like to invest in stocks. Some people like to invest in real estate. Some people like to trade commodities...
But what you really want – what we all want – is an investment that goes up every year.
If you had that, you could invest money regularly, perhaps each month, confident it'd grow enough to outpace inflation and keep your money safe from loss. With that kind of confidence, a person with a regular income can sock a little money away every year, no matter what the economy or the market is doing.
What you want is a chart that looks like this:
 No, that's not a stock price graph. It's a picture of larger and larger amounts of cash placed directly in shareholders' pockets by a World Dominating dividend grower. It's the graph of the dividends paid out by Intel from 2001 to the present.
Now compare that to a chart of the S&P 500 from 2001 to today:
 Be honest with yourself, look at the above chart, and please tell me what makes the stock market so attractive. I hope you answered, "Nothing," because that's how it looks to me, too.
The S&P is down. It's up. It's all over the place. The long-term effect on investors is maddening. Over the last decade, the market has gone nowhere, compounding at a negative 0.48% a year.
If you count on the stock market's action as a source of investment return, you are literally gambling with your life savings.
Now, you might object: A dividend-grower's stock price can fall, too!
What most people don't understand that when the dividend goes up, the value of your investment goes up. If you're buying an income investment, the investment's value is based on the income you receive. When the income rises, the value of the investment rises, too. The stock market might take years to recognize it. But smart income investors know that doesn't matter so much.
No one has the option of stock prices that always go up. That doesn't exist. But everyone has the option of dividends that always go up. That does exist, and that's why investors who want to make consistent returns from stocks need to focus on dividends... and relentless dividend growers.
Good investing,
Further Reading:
"For most folks, the thought of owning U.S. stocks in this sort of environment doesn't make sense," Dan said last week. "For me, it does... But you have to own the right stocks." Find the right stocks here: The Ultimate Portfolio to Protect Yourself from the "End of America" Scenario.
This powerhouse company isn't technically a World Dominator, but Dan still gives it an honorable mention... and calls it "one of the best income bets in the market." Read more here: This 6.5% Dividend Is One Sure Path to a Wealthy Retirement.
Market NotesWE'RE BACK TO THE BOILING POINT WITH NATURAL GAS Natural gas is back to its record "boiling point" of cheapness.
Last week, we checked in with the "oil to gas ratio" for a read on how cheap natural gas is getting... and we noted the clean fuel was near an extreme reading against its energy cousin, crude oil. This extreme reading is almost always followed by sharp rallies in natural gas.
Over the weekend, the revolution in the Middle East/North Africa (MENA) got a little hotter... which caused oil to surge higher... which took the oil-to-gas ratio even higher... to a multiyear extreme reading of 24. This ratio is now like a whistling teapot on a hot burner.
While this extreme reading will likely lead to a pop higher for natural gas, the big message to take from here is that natural gas has a bright "consumption future" coming from Asia and the United States... which is why seasoned investors are taking stakes in this fuel while nobody wants it.
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