Dividends or growth? Why choose?

There’s a widespread belief that stocks and funds can deliver red-hot capital gains or substantial income, but not both. Fortunately for us that’s not true.

It is possible to collect big dividends and capital appreciation. I’m going to show you how to safely collect 32% in total returns in less than a year from a big dividend payer. And while this “easy dividend money” has been made, we’ll discuss three more stocks yielding around 8%-9% that can deliver 20%+ in dividends and upside over the next twelve months..

Income investors like you and me should focus on total returns, which are made up of dividends and price appreciation. The latter, price gains, are driven by a combination of:

• Growth in the actual business, which naturally makes a stock worth more.
• Dividend increases, which drives investors to buy up stocks and funds alike.
• A climb toward fair value (say, the closing of the discount window in a closed-end fund, or a higher multiple on a REIT’s funds from operations)

The first two drivers are what sent AllianceBernstein (AB), which I highlighted back on Dec. 16, 2017, to market-clobbering returns ever since. I pointed out some optimistic analyst outlooks for the stock, as well as widening operating margins and an unorthodox but upward-trending distribution. Sure enough, AllianceBernstein proceeded to churn out 35% in adjusted profit growth over the next three quarters, then returned every cent of that back to investors.

The results? Total returns of 32%. That’s 22% in growth, and another 10% in dividends, for a total return that has quintupled the S&P 500 over the same time frame!

AB Delivers 10% in Dividends Plus 22% Upside

Now, let’s look at some more high-yield stocks of about 8%-9% that can deliver similar upside over the next year.

Senior Housing Properties Trust (SNH)
Dividend Yield: 9.5%

Senior Housing Properties Trust (SNH) is a Baby Boomer play that’s pretty much exactly what you would expect from its name, but also more. Of its 443 properties across 42 states and Washington, D.C., 50% are senior living communities. However, SNH also boasts life science centers (23%), medical office buildings (21%), wellness centers (3%) and skilled nursing facilities (3%) – other types of businesses that should flourish with the aging of the Boomers.

But there’s another reason to like Senior Housing Properties’ business right now, and that’s its focus on privately paying customers. In fact, the company boasts “limited government funding exposure,” with 97% of its net operating income coming from private-pay properties. That looks like it could be increasingly important with Congress starting to beat the drums on “entitlement reform” (that’s politician-speak for reducing Medicare, Social Security, etc.)

The basic business case is there. What should give SNH an extra kick in the pants? For one, analysts are expecting an outsize year of profits in 2018 before it “pulls back” in 2019 – though still to levels about 34% higher than they were in 2017. Value should play a role, too. A pullback in real estate this year has swept up Senior Housing and brought it to a valuation of less than 11 times its TTM funds from operations. Tack on a nearly 10% dividend, and you’re looking at likely total returns of 20%-plus over the next year.

Starwood Property Trust (STWD)
Dividend Yield: 8.9%

Mortgage REIT Starwood Property Trust (STWD) has a portfolio of more than $12 billion, primarily invested in first mortgage loans but with exposure to mezzanine loans, subordinated mortgages, commercial mortgage-backed securities (CMBS) and a few other investments.

This is a diversified pie no matter which way you slice it. By property type? Office (32%), hotel (22%), multi-family (13%), mixed use (12%) and several others. By region? West (27%), Northeast (26%), Southwest (16%) and again others, and even including 9% international exposure.

But the thing I love most about Starwood is its one big imbalance.

Mortgage REITs historically have performed poorly when interest rates head higher. However, roughly 95% of Starwood’s portfolio is floating-rate in nature, and in fact the company expects to its cash flow to increase in a rising-rate environment. And what do we have right now?

A Rising-Rate Environment

The Federal Reserve has signaled that more rates are coming at least this year and next, and Starwood Property Trust is well-positioned to ride this wave higher. Its 9% dividend yield, meanwhile, will pad those returns.

Sabra Health Care REIT (SBRA)
Dividend Yield: 8.4%

Next up, I want to double down on one of the other picks I made last December – Sabra Health Care REIT (SBRA), which also has had a nice run since my call, tripling the total return of the S&P 500.

Let’s Double Dip in Sabra!

Sabra is similar to SNH in that it’s a Boomer play – 72% of the portfolio is skilled nursing/transitional care real estate, as well as 23% senior housing (89 properties leased, 24 managed) and the rest in “specialty hospitals and other.”

Sabra did hit some turbulence after a multibillion-dollar merger in 2017, as well as a prorated dividend, though it made good on that and even hiked the payout after that.

The business clearly is on the right path. Full-year adjusted AFFO came to $2.31 in 2017, up from $2.26 the year prior. And in 2018, AFFO for the first six months of the year has come to $1.14 – that’s up from $1.10 during the same period last year, and makes for a safe 127% dividend coverage.

Earn a 28% Return in 1 Year From America’s Safest Stocks

I like the three stocks I’ve outlined above, but I’m in love with a set of four new high-yield, total-return plays that my research has produced.

In fact, I haven’t been this excited about an income opportunity in years.

What if I told you that you could turn some of Wall Street’s most exciting, growth-oriented blue chips, such as Visa (V)and Google-parent Alphabet (GOOGL), into “double threat” holdings that deliver double-digit upside and 8%-plus dividends? Well, given that Visa pays less than 1% and Alphabet doesn’t deliver a single penny in income, you’d probably call me crazy …

… right until the moment you saw my new discovery: “Dividend Conversion Machines.”

These stocks have extremely specialized businesses that allow them to do the seemingly impossible: They can actually wring high-single-digit dividends from some of the most skinflint companies in America. One of my Dividend Conversion Machines takes Visa’s 0.6% payouts and magnifies it to 9.2%. Another one can take Google’s 0% and produce a 9.4% yield out of thin air.

And no, this isn’t an options strategy, or some dangerous derivative, or the “next Bitcoin.” What I’m going to show you is perfectly SAFE – it’s essentially the same as buying traditional American blue-chip stocks. In fact, I’ll even show you the four steps you’ll need right now:

1. Launch your web browser.
2. Go to your trading account.
3. Instead of entering a buy order for, say, Disney by entering the stock’s “DIS” symbol, enter the 3-letter code for one of my 4 Dividend Conversion Machines instead.
4. Instead of getting Disney’s 1.6% dividend, start collecting an 8%+ income stream!

That’s it!

Editor's Note: The stock market is way up – and that’s terrible news for us dividend investors. Yields haven’t been this low in decades! But there are still plenty of great opportunities to secure meaningful income if you know where to look. Brett Owens' latest report reveals how you can easily (and safely) rake in 8%+ dividends and never worry about drawing down your capital again. Click here for full details!

With the stock market collapsing 6% from its all-time high in just two weeks, a lot of people are freaking out.

Don’t follow them!

Because now is the best time to buy we’ve seen in a long time.

Before I show you my top 3 “buy now” indicators—which are all blaring green—and a bargain 7.5%-yielder to jump on now, let me first say that we’ve been here before.

In mid-February, with the market again on its back, I urged readers not to panic. This has happened since:

A Quick Recovery

While a 1.6% total return in 8 months isn’t much to write home about, it’s not the massive loss a lot of investors are terrified of today. Plus, an 8-month period is so short to be almost meaningless. Check out how investors who bought during the big correction in early 2016 have done:

You Can Choose Contrarian Outperformance …

But if you’d waited until the market started recovering fully in April 2016, you’d have a far smaller return:

… Or Diminished Profits

We are now in a similar position with stocks. But given the wild swings we’ve seen in the last few weeks, I understand if you’re still skeptical. That’s why I’ve written up the 3 rock-solid “buy now” indicators I’ll show you next.

Buy Indicator No. 1: Third Quarter Profits Are Soaring

In both the first and second quarters of this year, S&P 500 firms reported earnings that demolished expectations and delivered record growth.

That trend isn’t stopping.

While it’s early for third-quarter reports, so far the news is good. Net profit margins across the S&P 500 are 11.6%, which is where they were in the first quarter. That’s far ahead of what we’ve seen in the last 5 years:

Q3 Brings “Levitating” Profits

When all is said and done, analysts expect 19.2% earnings growth on a year-over-year basis for the third quarter, which is miles ahead of the 3.5% annualized growth in the last decade. It also means stocks are the cheapest in years—the S&P 500’s forward P/E ratio is at 15.7, way below its historical average:

Stocks Getting Cheap

With higher earnings and lower stock prices, this is a rare buying opportunity.

Buy Indicator No. 2: Fatter Paychecks, Higher Spending

The good news isn’t just limited to companies—that would be a bad thing! Average Americans are doing better, too.

Since March of this year, average weekly earnings have risen more than 3%, the fastest growth since 2010. The trend has lasted longer this time than back then, when we saw wages rise above 3% for just 2 months in a 5-month period.

Salaries Swell, Retailers Rejoice

Note that the line is both staying above 3% and is in an uptrend. That rise has broken a resistance level wages saw throughout 2014 and most of 2017:

Wage Gains Break Out

The wage news is incredibly good and keeps getting better. When Americans have more money in their pockets, they go shopping. That’s helped corporate revenue: all told, S&P 500 companies’ sales are up nearly 5%, the highest year-over-year growth in nearly a decade.

Buy Indicator No. 3: Hitting “Snooze” on the Recession Alarm

The final good piece of news is something I covered in-depth in my October 15 article.

Earlier in 2018, many financial analysts and journalists fretted that the flattening trend in the yield curve (or the spread between the yields on the 2-year and 10-year Treasury notes) would usher in a recession in the next year or so. This was reasonable: an inverted yield curve has preceded every modern recession on record.

But the trend toward a flatter yield curve suddenly stopped in September:

A Dangerous Sign Fades Away

This remains one of the greatest indicators of financial health in the United States, so we need to keep a close eye on it. But for now, the odds of a 2019 recession are vanishing.

1 Fund (Paying 7.5% in Cash) to Buy Now

If the economy is booming and earnings are still rising, now may be the worst time to sell—especially since everyone else is. So you could buy the S&P 500 ETF (SPY) and get a strong return over the next few months.

But you could get a stronger return with a fund like the John Hancock Tax Advantaged Dividend Income Fund (HTD).

Why? For one, HTD has crushed the S&P 500, despite its focus on large-cap value companies:

Dusting the Benchmark

With a 405% total return in the last decade versus 274% for the S&P 500 index fund, HTD has a proven track record. And it notches gains like that while delivering a 7.5% dividend, giving us a serious income stream we can use however we like.

The market hasn’t rewarded HTD, however; despite its solid track record, the fund trades at a 7.9% discount to net asset value (NAV, or what it’s underlying portfolio is worth), far lower than where it traded in late 2017:

HTD Goes on Sale

When the market recovers, I expect HTD’s NAV to rise, helping it deliver capital gains.

But I also think other investors will realize HTD’s solid performance when its NAV rises, causing more bidding pressure to result in a smaller discount, compounding HTD’s return. Investors who buy now can enjoy the fund’s 7.5% dividend while they wait for that to happen.

Your Best Selloff Buy Now: 8.4% Dividends and Big 2019 Gains

Here’s something else I need to tell you: the selloff knocked one of my top 4 CEF buys to an amazing 14% discount to NAV!

In plain English, that means we’re getting this standout fund’s portfolio—top-notch high yielders like Ventas (VTR) and Enbridge (ENB)—for just 86 cents on the dollar!

This bargain fund then takes these stocks’ massive dividends (plus the upside its veteran managers squeeze from its rock-solid portfolio) and hands them to you in the form of a huge 8.4% dividend paid monthly!

Your Monthly “Paychecks” Await

This is the perfect investment for today’s churned-up markets. Because thanks to this fund’s huge discount, my team and I have it pegged for easy 20% price upside in 2019.

And that’s on top of its incredible 8.4% CASH dividend!

Plus, you get some invaluable downside protection, because even if we get hit with an unexpected market collapse, we’re still covered: thanks to this fund’s big markdown, it will just trade flat—and we’ll still pocket its massive 8.4% payout!

Please don't make this huge dividend mistake... If you are currently investing in dividend stocks – or even if you think you MIGHT invest in any dividend stocks over the next several months – then please take a few minutes to read this urgent new report. Not only could it prevent you from making a huge mistake related to income investing, it could also help you earn 12% a year from here on out! Click here to get the full story right away.