I love it when someone calls me boring...
I've been fortunate enough to experience many things in my life. I worked at some of the biggest banks on Wall Street, became a board-eligible eye surgeon, made my own wine, and got my pilot's license. I now spend my time traveling the world and sharing advice about investing and living well.
Yet, some folks still call me boring. More specifically, they call my income-focused newsletter boring.
I want to give my readers the advice I'd want to receive if I was planning to retire or currently in my retirement. That's why my goal with my Income Intelligence newsletter is to generate the highest income returns possible... with minimal risk.
There's something special about getting income checks each month or quarter. And as I'll explain today, consistent and safe income is key to any successful retirement...
This is especially true in today's market, where it's nearly impossible to predict what's going to happen to stocks... where bitcoin is taking up space on front-page headlines... and where folks seem to have forgotten that you should be concerned with return of capital when the market hits crazy valuations.
Take a look at how much of the S&P 500 Index's return has come from dividends over the years...
For more than 90 years, dividends were responsible for more than 40% of the total market return. Imagine the poor investor who based his entire portfolio on stocks that can only generate a return if their prices go up.
That's a lot of money to leave on the table.
Plus, dividend-paying stocks are a defensive tool. As you can see in the chart above, in decades where major financial crises occurred like the 1930s and 2000s, dividends could have kept your portfolio afloat.
And dividend-paying stocks aren't the only way to collect income...
You can find many different types of income-producing assets. In Income Intelligence, we track almost all of them. Below is an indicator we publish in our monthly issues. It shows whether an asset class is a buy, hold, or sell based on current market conditions...
The indicator flashes a buy signal when assets have uncommonly high yields and upward momentum, which is an extremely rare combination.
Last month, it told us that master limited partnerships (MLPs) were a buy.
MLPs are a special class of oil and gas pipeline companies that pay high distributions in exchange for favorable tax treatment. These companies have taken it on the chin in the past three years... losing more than half their value.
That sell-off made sense for a while, when oil prices crashed in 2014... but it doesn't any longer. Prices have more than doubled from their 2016 lows, and production is higher now than it was before the 2014 crash.
Today, we can buy MLPs for the cheapest they've been since the financial crisis. And just as important, they pay strong yields today. It's the perfect opportunity to buy.
I'm extremely proud of my Income Intelligence portfolio. We see little volatility in our positions. And our average yield across all positions is more than double what you'd get by buying a S&P 500 index fund. We profit from the dividends we collect and from price appreciation.
To be clear, if you want a "get rich quick" strategy, focusing on income-producing assets isn't for you. (I recommend the lottery instead.)
However, this strategy is perfect for investors who want a market-beating, consistent stream of cash payments... as long as you don't mind being boring, of course.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig
Editor's note: Until Saturday, Doc is offering a lifetime subscription to his Income Intelligence research service for less than the regular price of a single year. You'll gain access to his top income recommendations... including one stock he says could rise 100% over the next year, and yields 6% today. Click here for more details.
Further Reading
One group of classic dividend-growing stocks has been crushed lately. Is this a contrarian opportunity for income investors? In a recent essay, Doc walks through whether it's time to buy... Read more here.
As Doc explained today, "boring" companies can be an especially good bet in certain market environments. And he says the current market has been showing odd signals recently... Get his take on it right here: Even a Crystal Ball Is Worthless in This Strange Market.
In his Extreme Value newsletter, our colleague Dan Ferris recently shared "a stodgy blue-chip chemical company" that's trading at a major discount...
THE 'WORLD DOMINATOR' OF PANTRY STAPLES IS GOING STRONG
Today, we revisit an investing strategy that our colleague Dan Ferris calls "the single best way to get rich in stocks"...
As regular readers know, investing in "World Dominators" is a safe and lucrative technique. These companies maintain strong margins and cash flows, and they consistently raise their dividends (which makes them a great source of income). You'll usually recognize them as the top brands in their fields...
Spice maker McCormick (MKC) is a great example. The $15 billion company is a one-stop shop for all condiment, spice, and seasoning needs... with well-known brands like Old Bay and Schwartz spices. Last year, the company acquired Reckitt Benckiser's food division, scooping up more popular names like French's mustard and Frank's RedHot hot sauce. McCormick uses its dominance to reward shareholders... The company has raised its quarterly dividend for 32 years in a row.
As you can see below, the stock is up about 65% over the past four years and recently hit an all-time high. You can see why it pays to invest in the best businesses in the world...
