It’s a question I get from investors all the time: “Should I take my dividends in cash or reinvest them through a dividend reinvestment plan (DRIP)?”

My answer: unless you want your cash sitting in your account earning zero, your best bet is to reinvest any dividend money you don’t need to pay your bills.

But we don’t want to practice “buy and hope” investing, either, whether we do it through obsolete DRIPs or the old-fashioned way.

When I say “buy and hope,” I mean putting your cash into household names like the so-called Dividend Aristocrats and “hoping” for higher stock prices when you cash out in retirement.

You’ve probably heard of the 53 stocks on the Aristocrats list, which have raised their payouts for at least 25 straight years. Trouble is, despite their lofty name, these companies hand us a pathetic current dividend of 2.2%, on average.

And many pay a lot less:

5 Dividend Paupers

So if you invest mainly in these stocks (as many people do), you won’t have to worry about reinvesting your dividends. You’ll need every penny of dividend income just to keep the lights on!

That’s because even with a $1-million portfolio, you’re only getting $22,000 in dividend income a year here, on average. That’s not far above poverty-level income for a two-person household.

Pretty sad after a lifetime of saving and investing.

Luckily, there’s a way we can rake in way more dividend cash. I’m talking a steady $75,000 a year in income on a million bucks. And if you’re not a millionaire, don’t worry: a $550k nest egg will bring in $41,200 annually, enough for many folks to retire on.

That’s 59% more income than our million-dollar Aristocrat portfolio, from a nest egg that’s a little over half the size!

How to Bank an Extra $41,200 in Cash Every Year

I know what you’re thinking: “Brett, that amounts to a 7.5% yield. There’s no way a payout like that can be safe.”

You can be forgiven for thinking that, because you hear it everywhere (heck, even my financially savvy personal trainer didn’t believe payouts like this were possible).

But the truth is, there are plenty of safe payers throwing off at least that much, like the 19 stocks and funds I recommend in my Contrarian Income Report service (which I’ll show you when you click here).

Right now, these 19 sturdy investments yield 7.5%, on average. And every month I personally run each one through a rigorous dividend-safety check, starting with 3 things that are absolutely critical:

1. Rising free cash flow (FCF)—unlike net income, which is an accounting measure that can be manipulated, FCF is a snapshot of how much cash a company is making once it’s paid the cost of maintaining and growing its business;
2. A payout ratio of 50% or less. The payout ratio is the percentage of FCF that went out the door as dividends in the last 12 months. Real estate investment trusts (REITs) use a different measure called funds from operations (FFO) and can handle higher payout ratios, sometimes up to 90%;
3. A healthy balance sheet, with ample cash on hand and reasonable debt.

Making DRIPs Obsolete

The best part is, these 19 investments are perfect for dividend reinvestment because each one gives us a dead-giveaway signal of when it’s time to buy, sit tight—or sell and look elsewhere for upside to go with our 7.5%+ income stream.

That makes DRIPs obsolete!

Because why would we mindlessly roll our dividend cash into a particular stock every quarter when, at a glance, we can pinpoint exactly where to strike for the biggest upside?

To show you what I mean, consider closed-end funds (CEFs), an overlooked corner of the market where dividends of 7.5% and up are common. We hold 11 CEFs in our Contrarian Income Report portfolio, mainly larger issues with market caps of $1 billion or higher.

(By the way, my colleague Michael Foster focuses 100% on CEFs in his CEF Insider service, where he keys in on funds with sub-$1-billion market caps trading at ridiculous discounts due to their obscurity. That sets you up for fast 20%+ upside and dividends up to 9.4%. You can check out a recent interview I did with Michael here.)

We don’t have to get into the weeds, but CEFs give off a crystal-clear signal that a big price rise is coming. You’ll find it in the discount to NAV, which is the percentage by which the fund’s market price trails the market value of all the assets in its portfolio.

This number is easy to spot and available on pretty well any fund screener.

This makes our plan simple: wait for the discount to sink below its normal level and make your move. Then keep rolling your dividend cash into that fund until its discount reverts to “normal.”

That’s exactly what we did with the Nuveen NASDAQ 100 Dynamic Overwrite Fund (QQQX) back in January 2017—and the results were breathtaking.

How We Bagged a 42% Total Return (With a 7.5% Yield) in 15 Months

QQQX is run by portfolio manager Keith Hembre, who cherry picks the best stocks on the NASDAQ, juices their high yields with a safe options strategy, then dishes distributions out to shareholders.

It’s hard to imagine now, after the huge run tech stocks have put in over the past couple years, but back in January 2017, QQQX was trading at a 6% discount to NAV and paid a 7.5% dividend.

That triggered our initial move into the fund. And over the next 15 months, we bagged two dividend increases and watched as QQQX’s discount swung to a massive premium—so much so that by the end of that period, the herd was ready to ante up $1.13 for every buck of assets in QQQX’s portfolio!

Discount Window Slams Shut…

That huge swing from a discount to a premium catapulted us to a fat 42% gain (including dividends). But the fund’s outrageous premium meant its upside was pretty well maxed out by the time we took our money off the table on April 6, 2018.

… and Delivers a Fast 42% Gain

And what’s happened since?

QQQX has moved up slightly—a 1% gain. But that’s way behind the market, which has cruised to a 7.5% rise.

Premium Gives Us the Perfect Exit

Forget QQQX: Grab These 8% Monthly Dividends Instead

Luckily, the herd has cooled a bit on QQQX, but it still trades at a 5% premium to NAV. And why the heck would we overpay when the ridiculously inefficient CEF market is throwing us bargain after bargain as I write this?

And there’s one more thing I have to tell you: many of these cheap CEFs pay dividends monthly instead of quarterly.

So if you hold them in your retirement portfolio, their massive dividend payouts will roll in on exactly the same schedule as your monthly bills!

Convenience isn’t the only reason to love monthly payers, though. Because they also let you reinvest your payouts faster, amplifying your gains (and income stream) as you do.

I’m talking about an automatic “set-it-and-forget-it” CASH machine here!

  [FREE REPORT] Options Income Blueprint: 3 Proven Strategies to Earn More Cash Today Discover how to grab $577 to $2,175 every 7 days even if you have a small brokerage account or little experience... And it's as simple as using these 3 proven trading strategies for earning extra cash. They’re revealed in my new ebook, Options Income Blueprint: 3 Proven Strategies to Earn Extra Cash Today. You can get it right now absolutely FREE. Click here right now for your free copy and to start pulling in up to $2,175 in extra income every week.

Is it possible to double your money – quickly – buying safe dividend stocks? You bet. Let me explain how…

“Basic” income investors are enamored with higher current yields. These are OK for payouts today, but they’re not going to get us 100%+ gains.

For triple-digit profits we must pay attention to the underrated dividend hike. These raises not only increase the yield on your initial investment, but they trigger stock price increases, too.

For example, if a stock pays a 3% current yield and then hikes its payout by 10%, it’s unlikely that its stock price will stagnate for long. Investors will see the new 3.3% yield and buy more shares. They’ll drive the price up, and the yield back down – eventually towards 3%.

This is why many Dividend Aristocrats don’t pay high current yields: Their prices just rise too fast. Just look at A.O. Smith (AOS), which perpetually yields in the low 1% range. The low yield isn’t from a lack of dividend hikes – in fact, AOS keeps hiking its payout more aggressively over time. But investors just keep chasing the stock too high!

A.O. Smith (AOS): A Boring Company With a Breathtaking Trajectory

What a “problem” to have!

If you’re looking for a “dividend stock double” to bring you secure gains of 100% or better, consider these ten payers. Don’t be fooled by their modest current yields – these dividends will probably always look modest thanks to soaring share prices.

American States Water (AWR)
Dividend Yield: 1.7%

I’ll start off with American States Water (AWR) delivers water up and down California – an absolutely necessary service that its 1 million-plus customers can’t go without. That results in a steady stream of revenues and income – profits that tick higher over time as American States Water slowly raises rates. It’s a well-worn utility story.

What’s a little less common about AWR is its absurd growth.

American States Water (AWR): Is This a Utility … Or a Chip Stock?

Up next for AWR? The company likely will announce its 64th consecutive dividend increase sometime in very early August.

Dover Corporation (DOV)
Dividend Yield: 2.6%

American States Water may have an impressive dividend-growth streak, but it’s not actually a member of the Dividend Aristocrats given its small-cap nature and exclusion from the S&P 500. But Dover (DOV) is full-fledged dividend royalty, touting an equally impressive streak of 62 consecutive years – the longest streak among Aristocrats and the third-longest among all publicly listed companies.

Dover is a widely diversified industrial company whose products range from product-tracing technologies to bench tools to chemical dispensing systems to commercial refrigeration units. That kind of product breadth has allowed the company to weather even the worst economic environments with the dividend not only intact, but growing each and every year.

As a note: A look at a Dover chart shows a big dip in May. Don’t worry. This wasn’t the effect of a nasty earnings surprise, but instead a reflection of the spinoff of Apergy (APY), its oil-and-gas equipment-and-technology business.

Consecutive dividend hike No. 63 should be announced sometime during the first full week in August.

First American Financial Corporation (FAF)
Dividend Yield: 3.0%

Trying to get decent yield from a financial stock is like trying to wring blood from a monkey wrench. The Financial Select Sector SPDR Fund (XLF) exchange-traded fund of banks, insurers and other financial companies yields a miserable 1.6%. That’s why it’s refreshing to come across companies such as First American Financial Corporation (FAF).

FAF sounds like a bank, but it’s actually a top title insurance and settlement services provider used by real estate and mortgage companies. And, like similar companies, it offers a wide array of other products, from home warranties to property and casualty insurance to even investment advice.

First American’s dividend increase schedule has been a little variable over the past five years, but it manages to get the job done at some point. The best bet for FAF’s next increase announcement is sometime in mid-August, with the payout itself coming a month later.

Brinker International (EAT)
Dividend Yield: 3.1%

Brinker International (EAT) isn’t nearly as recognizable a name as the brands that it owns – specifically, Chili’s and Maggiano’s Little Italy restaurants, which combine for more than 1,600 locations worldwide.

Brinker had been struggling mightily amid the “restaurant recession” of the past few years that saw giant chain restaurants but together a huge string of monthly same-store sales declines. Brinker itself delivered a couple disappointing earnings reports that sent investors fleeing EAT shares.

That said, the company is back on the rebound in 2018 as various changes, including a heavily scaled-back menu, are bearing fruit. Brinker scored a beat in its most recent quarterly report (in May), and while same-store sales dipped a bit, the company still is tracking a potential growth year in comps.

Brinker also has been upgrading its dividend for several years now, and given a payout ratio of just more than half its profits, chances are EAT investors will enjoy another dividend-hike announcement sometime in the middle of August.

Chili’s Parent Brinker International (EAT) Tries to Reach Recovery Road

Federal Realty Investment Trust (FRT)
Dividend Yield: 3.2%

Federal Realty Investment Trust (FRT) is a virtual unicorn – a real estate investment trust (REIT) in the Dividend Aristocrats. In fact, at the moment, it’s the only real estate play in the whole hallowed group.

Despite what the name would imply, Federal Realty isn’t a government-real-estate play – it’s a mixed-use retail REIT that focuses on high-end properties in Washington, D.C.; Boston; San Francisco and Los Angeles. To give you an example, FRT is responsible for Pike & Rose – a commercial/dining/living mixed-use development in North Bethesda, Maryland, that includes tenants such as Pinstripes (a bowling-and-bocce bistro), L.L. Bean, REI Co-Op and four apartment-and-condominium communities.

FRT has grown its dividend every year since 1972, from 7.3 cents to its current payout of $1 per share. The next hike should come in either very early August or the tail end of July.

Healthcare Trust of America (HTA)
Dividend Yield: 4.5%

Healthcare Trust of America (HTA) is one of many “Boomer” plays – this one dubbing itself the “largest dedicated owner & operator of medical office buildings in the country.” Specifically, it owns 432 medical office buildings across 33 states covering just about every region in the U.S. minus “Big Sky” country.

I love niches, I love specialties, and HTA has a fairly interesting one. This REIT has specifically targeted between 20 and 25 “gateway markets” that have top university and medical institutions, which means they’re more likely to be hotbeds of future facility growth. That’s smart.

The downside is, so far, while it has led to excellent growth in funds from operations (FFO), it hasn’t led to riches for shareholders, who are sitting on essentially flat performance since 2015.

Healthcare Trust of America (HTA): What Is Wall Street Waiting For?

But HTA is among a few stocks that have seen recent insider buying – a promising sign of confidence from people who are in the know and have real skin in the game. Maybe that’ll be the kick in the pants the stock needs.

Investors also could use a more robust dividend bump than they’re accustomed to. Healthcare Trust’s income growth has been glacial – just 6.1% total over the past five years. Look to see if management is any more generous sometime during early August or very early July, when the company is likeliest to announce its next dividend top-off.

Verizon (VZ)
Dividend Yield: 4.6%

Telecom titan Verizon (VZ) has been a sleepy disappointment in 2018, off 5% year-to-date against a higher market. You can thank a few things for that – an uber-competitive pricing environment for telcos, an earnings disappointment at the beginning of the year, and sluggishness in its Fios video offerings.

It could be worse. AT&T (T) is off by about 15% as Wall Street voices its skepticism over the Time Warner acquisition.

Verizon remains a stable dividend play, however, delivering a yield well north of 4% on a payout-growth streak of 11 years. No. 12 likely will be announced late in August or in the first couple days of September.

Altria Group (MO)
Dividend Yield: 4.8%

We’ve been told for years that tobacco stocks would be miserable investments thanks to increasingly strict government bans on cigarette use and dwindling consumers as anti-smoking campaigns continue to take root. Yet Marlboro maker Altria Group (MO) mostly managed to swim upstream for many years.

But the stock has seemingly come up against a ceiling, peaking a couple of times in 2017 before succumbing to an eventual downtrend. Altria’s earnings report from April tells a lot of the tale – the company still is squeezing out ever-higher profits, at $1.9 billion versus $1.4 billion in the year-ago period. But sales ticked up just a half a percent, and domestic cigarette shipping volumes actually declined by more than 4%.

A 17% decline in 2018 has juiced Altria’s dividend to nearly 5%, however – but so has a dividend hike announced on March 1. That was actually outside the company’s routine, which is to announce any increases in late August. It’s very possible that the hike was The company typically

Altria actually hiked the dividend once this year, from 66 cents to 70 cents per share, but it did so away from its normal dividend-hike schedule. So Altria is actually a stock to watch here in late August – namely, to see whether the company resumes its routine with a summertime dividend improvement, or simply delivered early.

Main Street Capital (MAIN)
Dividend Yield: 5.9%

I have a love-hate relationship with Main Street Capital (MAIN): I love this business development company’s ability to execute, but I hate how expensive the stock typically is! Few BDCs are run as well as Main Street Capital, but you really have to pick your spots.

As a reminder: BDCs help finance small- and midsize businesses. In Main Street’s case, they provide capital for lower and middle-market companies. Their target company has revenues between $10 million and $150 million, and EBITDA between $3 million and $20 million, and Main Street typically will invest anywhere between $5 million and $75 million.

Main Street is one of a few good actors in the space, and its long-term performance reflects that. In fact, MAIN has nearly quadrupled the broader VanEck Vectors BDC Income ETF (BIZD) in total returns over the past five years.

Main Street Capital (MAIN) Is Among the Best in This Brutal Biz 

While many BDCs have stagnant dividends, Main Street Capital’s payout keeps ticking higher, even if it’s just by a little bit year after year. The company should announce its next set of monthly payouts at the very beginning of August or the end of July – and there should be a slightly higher number attached to them.

Buckeye Partners LP (BPL)
Distribution Yield: 14.7%

Buckeye Partners LP (BPL) might have the highest yield of any company on this list, but it’s not a product of a hyper-aggressive dividend-growth problem. BPL is earning its yield the wrong way: hemorrhaging shares. The stock is off nearly 60% since mid-2014, in fact, not rebounding with much of the rest of the energy space.

Buckeye Partners is mostly split into two parts – about half of its profits comes from domestic pipelines and terminals, while most of the rest comes from global marine terminals. Despite this diversified business, BPL keeps running into hurdles, such as losing a large storage customer in 2017.

The company has gone so far as to abandon its practice of increasing dividends every quarter, thanks to extremely tight dividend coverage. That having been said, the company still has a 22-year streak of annual dividend increases it probably wants to extend, so it’s entirely possible that Buckeye Partners will offer up a token hike in the first week of August – roughly a year since its last dividend increase.

Lock In 100%+ Dividend Growth Returns

If you want a healthy retirement portfolio, it’s absolutely vital that you stuff it with dividend growth stocks. High-yield stocks with stagnant payouts will actually lose value over time, and your regular income checks won’t stretch as far as they used to thanks to inflation drag. But dividend growth stocks will not only keep you ahead of inflation – they’ll help grow your nest egg, too!

Because, like I showed you with A.O. Smith, the very best dividend stocks will rise in line with their increasing payments.

Most people never realize this. But those of us who DO stand to profit handsomely and almost automatically!

It’s a simple three-step process:

Step 1. You invest a set amount of money into one of these “hidden yield” stocks and immediately start getting regular returns on the order of 3%, 4%, or maybe more.

That alone is better than you can get from just about any other conservative investment right now.

Step 2. Over time, your dividend payments go up so you’re eventually earning 8%, 9%, or 10% a year on your original investment.

That should not only keep pace with inflation or rising interest rates, it should stay ahead of them.

Step 3. As your income is rising, other investors are also bidding up the price of your shares to keep pace with the increasing yields.

This combination of rising dividends and capital appreciation is what gives you the potential to earn 12% or more on average with almost no effort or active investing at all.

I’ve scoured thousands of stocks out there right now, looking for the very best companies that have both rising dividends and strong buyback programs in place … the kind of stocks that could easily spin off annual total returns of 12%, 17%, even 25% or more … doubling your money in very short order.

Right now, at this very moment, there are 7 in particular that I think you should consider buying.

They stand to do well no matter what the broad market does … regardless of what happens in Washington … and irrespective of interest rate trends.

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!

My best advice for you today is this: ignore the breathless trade-war panicking and focus on one thing: cash.

Because the truth is, US companies—like the 3 stout dividend growers we’ll dive into below—are swimming in it. So much so, in fact, that they don’t know what to do with it all … so they’re sending it right back out the door to us!

A Colossal Cash Stash

But don’t take my word for it; ask the folks at UBS, who just said that US companies are sitting on nearly $2.5 trillionin cash. And that’s just what they’re holding inside America’s borders. There’s another $3.5 trillion squirreled away overseas!

On top of that, new cash is literally flowing in the door faster than management can send it out. As my colleague Michael Foster recently pointed out, S&P 500 earnings are expected to spike 19% in the second quarter, after jumping nearly 25% in Q1.

And don’t forget the $1.5-trillion tax cut businesses grabbed thanks to tax reform. They also gained the ability to bring foreign cash home at a lower tax rate.

Like Catching Rain in a Bucket

No wonder UBS says US companies are poised to drop $2.5 trillion on buybacks, dividends and mergers and acquisitions this year.

I’m sure I don’t have to tell you that all three of these moves (when done right, of course) line our pockets. It’s just a question of how you want your profits: in cash (dividends) or gains (M&A and buybacks, as both juice earnings, and share prices along with them).

So today we’re going to zero in on 3 stocks that are doing the best job of using their cash piles to fatten our portfolios, starting with…

Cash Machine No. 1: Rising Rates Catapult This Dividend Higher

SunTrust Banks (STI) just rolled out a 25% dividend hike on June 28, after passing the Federal Reserve’s latest “stress test” for banks. It also announced a $2.0-billion share-repurchase program—52% bigger than the previous one.

Funny thing is, hikes like these are standard fare for STI shareholders. Last summer, they grabbed a nice 53% “pay raise.”

But don’t take that to mean STI’s payout growth is slowing down. The stock still pays out a meager 29% of its $2.7 billion in yearly free cash flow (FCF) as dividends.

The stock has jumped more than 2% since the latest dividend hikes and buybacks were announced, but don’t worry, you haven’t missed your chance: the bank, which focuses on the fast-growing southeast and mid-Atlantic regions, is still cheap at 11.8 times FCF.

(An added plus: its regional focus gives it insulation from any trade-war blowback.)

Higher interest rates are, naturally, boosting the bank’s net interest income (NII): SunTrust earned $1.44 billion in NII in the first quarter of 2018 versus $1.37 billion the same time period in 2017—a gain of 5.5%.

That’s a nice raise for doing nothing, and it helped—along with a lower tax rate from tax reform and fewer shares outstanding due to its buybacks—drive a 42% jump in earnings per share in the first quarter.

Management Knows a Bargain When It Sees One

And with the Federal Reserve poised to raise rates 2 more times this year, the bank’s NII will keep quietly rising, giving it more room to up its dividend (current yield: 2.4%) and buybacks—and its share price right along with them.

Cash Machine No. 2: Buy This Hotel Operator Post-Split

Wyndham Worldwide was a bargain before it renamed itself Wyndham Destinations (WYND) and spun off its hotel arm as Wyndham Hotels & Resorts (WH) in May … and both stocks are even cheaper now.

Shares of both the parent and the spinoff are down since the split occurred, which is normal as investors look at their portfolios, spot the two “new” stocks and decide which to keep and which to toss.

Wyndham Shareholders Rearrange the Furniture

So which is the better bet?

We’re going to go with the “new” company, Wyndham Hotels, which is actually Wyndham’s “old school” hotel business.

Why?

Because it uses a terrific business model to reap the most gains (at the least risk) from its 9,000 or so hotels in 80 countries.

It does it by offloading its risk to franchisees, who run its hotels on steady 10-to-20-year contracts. And Wyndham doesn’t put its whole business on just a few owners, either: it has 5,700 in all, with most owning just one hotel.

More on WH in a moment.

First, if you’re worried about the declines in the share price I just showed you, here’s proof that spinoffs give you a great shot at beating the market in the long run:

Spinoffs Win Out

This is the performance of the Invesco S&P Spin-Off ETF (CSD), the benchmark for spinoffs, which, as you can see, has crushed the S&P 500 since inception back in ’06.

The bottom line? Any price decline after a spinoff is a buying opportunity.

Which brings us back to Wyndham Hotels & Resorts, which has the spinoff and a major acquisition behind it: the combined company closed its $2-billion purchase of La Quinta Holdings in May, then added it to WH.

La Quinta adds 900 hotels and bulks up WH’s presence in the red-hot upper-midscale market, giving it a shiny lure for the exploding global middle class, a group the World Bank sees surging to 4.9 billion people by 2039.

Management also has a long history of buybacks, including in the run-up to the spinoff and the closure of the La Quinta deal, while the combined company was trading at around 6 times cash flow:

Wyndham Buys Up Its Own Stock Pre-Spinoff

Finally, Wyndham Hotels & Resorts and Wyndham Destinations have announced dividends of $0.25 and $0.41, respectively. That gives WH a 1.7% forward yield but plenty of room for higher payouts to come, especially when you consider that the combined company was only paying out 34% of FCF as dividends before the spinoff.

Cash Machine No. 3: A Buyback “Jedi”

Prudential Financial (PRU) is a buyback machine, having announced $1.5 billion in repurchases back in December, just as tax reform got the stamp of approval.

The thing that’s striking about PRU’s management is its Jedi-like mastery of the buyback, knowing exactly when to buy the company’s stock and when to hold off.

Look at its handiwork over the past year—and at how PRU halted its buybacks when the stock rose, then boosted them on the dips:

Smart Buyback Strategy in Action

The stock has been dragged down with other financials as first-level investors’ euphoria over rising rates cooled. But that selloff was way overdone with PRU, which now trades at a totally absurd 2.9 times FCF! Heck, it even trades at 77% of book value, or less than it would be worth if it were sold off in pieces today.

And get this: the company’s $60 billion in yearly revenue is 50% higher than its market cap!

It’s a complete injustice, especially given that PRU’s retirement products set it up to gain as more baby boomers get set to clock out of the workforce.

That, plus PRU’s smart buybacks, will amplify its dividend growth (because buybacks leave it with fewer shares on which to pay out): the stock yields 3.8% now and has already more than doubled its payout in the last 5 years:

A Shareholder-Return Machine

How to Turn Prudential’s 3.8% Dividend Into 8.6%

If you buy stocks based on their current dividend yields (like the 3.7%, 3.8% and 2.4% the 3 stocks above pay), I’ve got bad news for you.

You’re looking at the wrong number!

What you really need to focus on is your “yield on cost”—that is, how much of a yield you’d be pocketing on a buy you make today, say, 5 years out from now.

Let’s look at Prudential, with its 3.8% dividend. That’s nice, but if management were to boost the payout 125% in the next 5 years—as it has in the last 5—you’d be pocketing a tidy 8.6% on your original investment.

That’s more like it!

But of course, you’ll need Prudential to keep its fantastic dividend streak going … and it should be able to. But of course, that’s not guaranteed.

Luckily, there’s my “8% No-Withdrawal” retirement portfolio.” It hands you an average payout of 8% today—there will be no waiting (and hoping) till 2023 to get a life-changing dividend like that.

And when I say “life-changing,” I mean it. With an average payout that high, you can put the one thing every retiree wants solidly within your grasp: the ability to retire on dividends alone, without having to sell a single stock in your golden years.

And remember, that 8% dividend is just the average. You’ll also find payers of even bigger income streams of 8.7% and higher.

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!

Do you have a reliable way to generate monthly cash flow from the dividend stocks you own today? If not, why not?

Many “first-level” investors hope that their stocks will go higher so that they can sell them for cash flow. But, if you follow rich people, you’ll notice that they never actually sell any assets – they instead use them to generate more and more cash flow.

We can – and should – do the same. We can “tap” dividend stocks for regular cash flow. We can even turn the shares we own today into monthly dividend payments that provide us all the income we ever need for the rest of our lives (and we can hang onto the shares and enjoy price upside, too!)

Some financial advisers (many of whom haven’t even retired successfully themselves!) pitch a “4% withdrawal rate” where you “safely” withdraw roughly 4% each year that you use as spending money. Sometimes they’re right … but when they’re wrong, they risk your entire retirement with “reverse” dollar-cost averaging:

This Is What Reverse Dollar-Cost Averaging Looks Like

If you’re following the 4% withdrawal strategy, you usually take money out at precisely the wrong time. You sell more when shares are low – precisely the opposite of the behavior you used to build your nest egg in the first place when you bought low and sold high!

This is reverse dollar-cost averaging – selling more when prices are low and less when prices are high.

The solution? Never have to sell a share by requiring meaningful dividends of 6%, 7% or 8%. This way, you can collect cash from your portfolio quarterly (or sometimes even monthly!) without selling low – or ever!

I also suggest you take one extra step: That’s buying when prices are low and yields are high.

The stock market offers far more upside than bonds, so going too lean on stocks opens you up to a pair of risks:

1.) Outliving your savings, and

2.) Missing out on the gains only the stock market can offer.

One way to do that? Target what I call “Dividend Stocks with Double-Digit Upside” potential.

These shares yield more than 5% each today. Plus these firms have been raising their dividends every year, which means your “yield on cost” will soon grow to 6%, 7% or even 8% or more.

BUT – investors who buy these shares next year likely won’t see a 6% to 8% yield. They’ll probably see the same 5%, give or take – which means your shares will have increased in value. (Investors pay more for a stock price over time as its underlying dividend increases.)

Looking for meaningful yield today with better payouts and price upside tomorrow? Here are five 5%+ payers with 25%+ upside each – thanks to future dividend hikes and the fact that these shares are cheap with respect to cash flow (as indicated by FFO, or their funds from operations).

National Health Investors (NHI)
Dividend Yield: 5.2%
Dividend Hike Streak: 8 years
P/FFO (Price to Funds From Operations): 13.7

Baby Boomers have been an unquestionable economic force their whole lives – and now they’re impacting new industries as they hit retirement age. Roughly 10,000 Boomers are hitting retirement age every day, which is expected to double Medicare spending between 2017 and 2020. Not to mention, an average couple is expected to shell out some $275,000 in out-of-pocket healthcare costs during retirement.

This is a trend that will play out for more than a decade – a dream for buy-and-holders looking for growth and dividends in the healthcare space.

It’s also a trend that has been lifting the fortunes of National Health Investors (NHI) for a roughly a decade already.

National Health Investors owns and provides financing for senior housing and other medical real estate, via a number of methods, including joint-venture, sale-leaseback, mortgage and mezzanine. The company has 225 portfolio companies across 33 states, including 147 senior housing facilities, 73 skilled nursing facilities, three hospitals and two medical offices. Its leases are long-term in nature – none of its current leases expire until 2026! – and they include annual escalators, which helps smooth out expectations for profits.

NHI has been a growth machine for years; the chart below tells the tale:

National Health Investors (NHI) Is Ticking Like a Champ

The good times kept rolling in National Health Investors’ first quarter, including a roughly 10% jump in revenues that filtered down to an 8% improvement in adjusted funds from operations (AFFO). The company also continued growing by devouring, announcing or completing nearly $100 million in real estate acquisitions and loans for the quarter.

Better still, the REIT (real estate investment trust) just boosted its dividend by 5% to $1 per share, and it’s still well-covered at a healthy 83% of AFFO.

LTC Properties (LTC)
Dividend Yield: 5.4%
Dividend Growth Streak: 8 years
P/FFO: 13.8

Let’s stay on the seniors/health care theme by exploring one of my favorite monthly dividend stocks, LTC Properties (LTC). It’s very similar to NHI in several ways.

For one, the company invests and finances senior-living and health care properties, with similar breadth – more than 200 properties across 29 states. NHI’s split is 99 assisted-living facilities, 97 skilled-nursing facilities and seven that fall under the “other” basket.

The company also has a similar yield, similar valuation and the same eight-year dividend-growth streak as National Health Investors. Leases are long-term, with none expiring until after 2024, so cash flow looks safe. FFO payout ratio sits just a hair above 76%, so that looks good, too.

Top- and bottom-line growth? LTC looks good, just like NHI.

LTC Properties (LTC) Is as Healthy as a Horse

If you’re worried about the 4% year-over-year dip in FFO last quarter, don’t sweat it too much. That was heavily impacted by property sales in 2017, plus a defaulted lease that investors seemingly already baked in.

Tanger Factory Outlet Centers (SKT)
Dividend Yield: 6.1%
Dividend Growth Streak: 25 years
P/FFO: 9.0

The majority of retail plays on the market stink from a long-term perspective. Whether you’re talking about the brick-and-mortar operators themselves, a la Macy’s (M) and Sears (SHLD), or the real estate investment trusts (REITs) that lease to them, there’s very little upside in a space that’s not just getting upended by the likes of Amazon.com (AMZN), but also by more agile operators such as Williams-Sonoma (WSM) that have “figured out” the internet.

In fact, only a few retail REITs are worthy of consideration, and Tanger Factory Outlet Centers (SKT) is one of them.

Tanger Factory Outlet Centers is a bit different from most retail operators, but that difference counts. Rather than operating traditional retail space such as malls or single-tenant buildings, Tanger operates 44 large outlet malls across 22 states, where brands such as Coach (COH), Michael Kors (KORS), Ecco and Tumi for outrageous discounts, attracting its own type of bargain-hunting crowd.

Meanwhile, investment bargain hunters are sure to like the single-digit P/FFO.

It’s hardly immune from the factors weighing on the retail space – the company actually adjusted its occupancy forecasts lower in May, during its Q1 earnings report, as a result of store closings and bankruptcies. But SKT provided reason for optimism, too, in the form of several operational improvements. FFO improved by 3% year-over-year to 60 cents per share, same-center tenant sales performance improved 1.7% year-over-year for the 12-month period ended March 31, and average tenant sales productivity improved during the same period.

One last feather in the cap: Tanger increased its dividend for the 25th straight year, making it eligible to become a Dividend Aristocrat – making it a rarity among REITs.

Enterprise Products Partners L.P. (EPD)
Dividend Yield: 6.1%
Dividend Growth Streak: 19 years
P/DCF: 11.8

Enterprise Products Partners, L.P. (EPD) is one of the largest master limited partnerships (MLPs) on the market, boasting roughly 50,000 miles of pipelines dedicated to moving natural gas, nat-gas liquids (NGLs), crude oil, refined products and petrochemicals – NGLs are king, though, at 57% of revenues. EPD also features storage, fractionation, natural gas processing and import/export terminaling operations.

Pipeline contracts mostly range between 15 to 20 years, helping to ensure stable cash flows. That in turn has allowed EPD to be one of the most prolific income growers of the past decade-plus, with Enterprise Products Partners boasting 55 consecutive quarters of distribution hikes.

Enterprise Products Partners, L.P. (EPD): Distribution Growth That’s Smoother Than a Baby’s Bottom

EPD’s most recent quarter was a blowout affair. Earnings per share grew 11% to 41 cents per share to easily best estimates, and distributable cash flow jumped 23% year-over-year.

Continued dividend growth seems likely, too. At 63.8 cents in the first quarter, EPD sports a coverage ratio of 150%. So despite its frequent payout growth, there’s still plenty of room in the trunk.

W.P. Carey (WPC)
Dividend Yield: 6.1%
Dividend Growth Streak: 20 years
P/FFO: 12.3

W.P. Carey (WPC) is a single-tenant net-lease REIT, which means that the obligation of real estate taxes, maintenance and building insurance all fall to the tenants. The company operates in both North America and Europe, and its properties span industrial, retail, self-storage, hotels and other categories. That kind of diversification helps insulate WPC from violent fits in any one area.

Like the previous picks, W.P. Carey has a fairly dependable cash stream in that the vast majority of its leases include rent increases.

Unlike the previous picks, W.P. Carey is entering a brand new chapter of existence, announcing in mid-June that it was going to merge with CPA:17 – a non-traded REIT that W.P. Carey’s management team helped advise. The deal gives WPC a hefty dose of exposure to warehouse space, office space and retail; the new assets are geographically diverse, too, with 44% of CPA:17’s net leases coming from international clients.

This merger should only improve WPC’s cash-flow situation, which in turn should fuel continued growth in the dividend. W.P. Carey already is no slouch on that front, having expanded its payout every year since hitting public markets in 1998.

W.P. Carey: Robust Dividend Growth (And The Occasional Special Payout)

How to Retire on 8% Dividends Paid EVERY MONTH

The 5% to 6% yields on this five-pack are nice, but 8% current dividends are of course even better. And how about a monthly payout instead of a quarterly one?

I have a handpicked portfolio of 8%+ monthly payers that not only will pay you four times more than the market average … but will pay you three times more often!

In retirement, it’s important to line up your dividend income with your regular expenses (which are billed monthly). But most publicly traded companies pay dividends quarterly, leaving us high and dry for an extra 60 days in between payments.

Possible to align quarterly dividend payments to show up roughly in equal amounts every 30 days? Sure – but the effort isn’t necessary.

There are cheap monthly dividend stocks (and funds) available today that pay 8%+ per year and pay the same reliable distribution every 30 days, like clockwork. My readers regularly collect $3,000-plus in dividends every single month – and do it with a nest egg as modest as $500,000. (And less money is fine, too – a $250,000 portfolio would yield $1,500+ in monthly income. With price upside to boot.)

My “8% Monthly Payer Portfolio” checks off every box that investors need from retirement:

[X] Monthly dividend income to pay your monthly bills.

[X] Dividends checks large enough to allow you to live off investment income entirely. That means no selling your stocks and shrinking your nest egg, which ultimately shrinks your regular dividend paycheck.

[X] Better returns on any dividends you choose to reinvest. If you don’t need the income from your portfolio right away, you don’t have to wait every three months to put dividends to work – you can sink them back into new investments just about every 30 days!

These monthly dividend payers include a few picks that have remained mostly under the radar despite their high payouts and general quality. For instance, this portfolio includes an 8.7% payer trading at a bizarre 5.3% discount to NAV, and an 8.5% payer that not 1 in 1,000 people even know about.

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!

Source: Contrarian Outlook 

If you want to clobber the stock market – and double your money every two or three years – then buying companies with accelerating dividends is an absolute must.

And I’ve got good news for you: there’s never been a better time to buy them.

That’s because dividend growth is on a sugar high: research firm IHS Markit recently predicted that global dividends would jump 10% this year—a new record.

What’s more, if you’re looking to grow your nest egg fast, you’re in luck, because accelerating dividends are the beating heart of my personal 3-step system for banking 12% annual returns for life.

I’ll tell you all about this safe, simple approach, and why that 12% number is vital, in just a moment. First, let’s talk about why I’m so focused on an accelerating payout.

Getting a fatter income stream is an obvious reason, but it’s just the start. Because as I wrote in December, a rising payout acts like a lever on a company’s share price, prying it higher and higher with every single dividend hike.

The pattern is plain as day in this chart of NextEra Energy (NEE), a supposedly “boring” utility that’s been quietly sending its shareholders bigger and bigger dividend checks over the past five years.

Look at how NEE’s stock has jumped with each and every dividend hike NextEra has delivered—and how its latest monster payout hikes have magnified those gains:

Bigger Dividend Hike, Fatter Share Price Pop

NextEra just delivered a 13% dividend hike earlier this year. But you and I can do even better.

We’ll start by looking at each part of my 3-step “accelerating dividend strategy,” designed to uncover the stocks that will deliver that 12% annual return we’re craving.

Why 12%? That’s because, as I show you in my in-depth investment report, “The Simple (and Safe) Way to Earn 12% Every Year From Stocks,” it’s enough to double your portfolio every 6 years and throw off a dividend stream that’s 3 times larger than the experts say you need in retirement.

That’s more than good enough for a risk-averse dividend fan like me. So let’s get going, starting with…

Step 1: Build Your Own High Yields

Plenty of dividend hounds simply run out and find the stock paying a high current dividend yield (6%, 7%, 8% and more) and call it a day.

But that can be a recipe for disaster.

Take telecom provider CenturyLink (CTL), which is getting a lot of headlines these days because of its ridiculous 12.3% yield. But that’s entirely because, as I told you back in November, the shares have been walloped (as you calculate dividend yield by dividing the annual payout into the current share price). Check out how the dividend yield has risen as the share price has dropped through the floor.

CTL: The “Dividend Trap” Is Set

This is a textbook example of why you’re often safer with a lower-yielding stock that grows the yield on your initial buy over time.

Let’s again consider NextEra for a moment, if you’d bought that stock five years ago, you’d be pocketing a nice 5.5% on your original buy today, thanks to the company’s accelerating payouts. That’s more than double NEE’s current yield of 2.8%.

Or better yet, you could go with a stock like Lam Research (LRCX), which dropped a fat 120% dividend hike on shareholders in March and has plenty of room for even bigger raises, thanks to another misunderstood measure (2, actually) I’ll show you now.

Step 2: Know Your Ratios

If you’ve been buying dividend stocks for a while, you probably know about the payout ratio. You calculate it by dividing the total amount of dividends paid out by the company’s last 12 months of net income.

If the result comes out to, say, 50% or less, you’ve got a safe dividend that’s likely to grow. As you get climb closer to 100%, the noose around the payout gets tighter.

Simple, right?

Problem is, earnings are an accounting creation and can be easily manipulated to overstate cash flow generation. But they can, at times, understate it, too.

Right now, for example, Lam has a net income–based payout ratio of 15.9%. That sounds great, but it doesn’t tell the whole story, because the company’s free cash flow payout ratio clocks in at a minuscule 12.3%!

Why the difference?

Because free cash flow (FCF) tells you how much cash a company is generating once it’s paid the cost of maintaining and growing its business. You calculate it by subtracting capital expenditures from cash flow from operating activities.

The bottom line is that FCF is a much better snapshot of how much cash a company is truly making. And while Lam gets a fantastic grade on both ratios, its higher net income–based payout ratio masks its even-higher dividend-growing power. And that’s why I expect more massive payout hikes out of this stock for years to come.

By the way, this is precisely the opposite of the almost certain payout cut our long-suffering CenturyLink investors can expect. That company’s FCF payout ratio is 128%—so it’s paying out way more in dividends than it generates in FCF.

Step 3: Buy Growth Instead of “Bond Proxies”

Lazy financial writers like to say that higher bond yields will hurt dividend stocks. This blanket statement may sound reasonable, but it’ll cost you money if you take it at face value.

Pundits have called sleepy dividend stocks like General Mills (GIS) “bond proxies” in recent times. GIS has paid 3% (more or less) over the last three years. That compared favorably with the 10-year Treasury note, which paid 2% (more or less) over that time period.

So, the story goes, investors had been buying stocks like GIS instead of safe bonds like Treasuries to scrape an extra 1% or so. But with Treasuries rallying to 3%, these same investors have “demanded” a higher yield from GIS. It now pays 4.6%, which means its stock price has dropped as the Treasury’s price has risen:

Bonds and Their Proxies: Like Oil and Water

This is a waste of time. It begs the question:

Who the heck was buying GIS for an extra stinking percent per year? Not contrarian income seekers.

Green Giant peas? Cheerios? Seriously? This company dominates food staples of yesterday. GIS is behind the curve on every current food trend. The numbers don’t lie – it’s been evident in the firm’s slowing dividend growth and falling revenue:

Beware the Slowing Dividend

What does GIS have to do with dividend growth tomorrow? Not much.

Remember, share prices tend to move higher with their payouts. So there’s a simple way to maximize our returns and hedge against higher interest rates: Buy the dividends that are growing the fastest.

Let’s take internet landlord CoreSite (COR). Its dividend has “lapped” GIS over the last three years. No matter how much trash the bond market talks, it will never catch this runaway yield:

Proxy? Please.

When Hidden Yields subscribers bought CoreSite on my recommendation in March 2016, it paid a $0.53 quarterly dividend. That was a 3.1% starting yield for us based on our purchase price.

In less than two years, the firm has nearly doubled its dividend. It now pays $0.98 per quarter, which means we’re earning more than 5.8% on our initial capital.

Plus as our income stream was rising, other investors were bidding up the price of our shares to keep pace with the increasing yields.

This combination of rising dividends and capital appreciation is what earned us 73% total returns in just 26 months – with no active trading beyond our initial purchase.

CoreSite Cooks the Bond Proxies

The 10-year’s yield is up about 1% since we bought CoreSite. Our stock gains haven’t been slowed by the bond bully because our dividend simply outran it.

And there are plenty of dividend growth stocks like CoreSite ready to run 70%, 80% and even 100%+ higher in the year or two ahead. Seven are particularly compelling buys today, to be specific!

7 More Buys to Double Your Nest Egg Fast

Of course, you can use the 3 steps I just showed you yourself, by using an online stock screener and poring over corporate earnings reports on your own.

But it can take hours to run an analysis like that on just a handful of stocks (and of course, you’ll also want to take a peek at dividend, earnings and FCF history, as well as valuation measures like price to book value and price to free cash flow).

Plenty of folks (myself included) love the challenge! But if you’d rather just cut to the chase and start pocketing your 12% annual return for life now, I’ve got you covered there, too.

Because my team and I have discovered 7 stocks set to deliver that steady 12% yearly return. All 7 boast an explosive mix of accelerating dividends, timely buybacks, strong current dividends and absurdly low valuations that just can’t last.

Here’s a glance at 3 of the 7 dividend-growth plays I’ll reveal when you click here:

• The US company that’s cashing in on surging Chinese water demand. This is one of the most boring businesses you’ll find—making water heaters—but its dividend hikes are anything but: the payout has soared 167% in just 4 years! And there are far bigger payout hikes to come!
• The 800% Dividend Grower. This unsung company has boosted its dividend eightfold since a new management team took over just 5 years ago! This stock is a complete no-brainer for anyone looking to get bigger and bigger dividend checks from here out.
  
• And a “double threat” income-and-growth stock that rose more than 250% the last time it was anywhere near as cheap as it is now!

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. 

Source: Contrarian Outlook 

Most people are chasing big dividend payers right now in this “3% world” we live in. Meanwhile, a small group of “hidden yield” stocks are quietly handing smart investors growing income streams PLUS annual returns of 12%, 17.3%, or more.

Let’s talk about how to find these stocks, and bank 12% returns or better every single year, by following a simple two-step formula.

See, everyone wants dividend stocks with good current yields. It’s easy to scan a newspaper or financial website and pick out the stocks that are paying 3%, 4%, 8% or whatever number you might consider “good.”

Yet that’s NOT the right way to pick dividend stocks.

You have to do more work to figure out if those yields are actually supported by the company’s cash flows, earnings power, long-term business prospects, etc. You have to sift through the same company’s history to determine how long it’s been paying those dividends. How consistently it’s been paying those dividends. And especially if it’s been regularly increasing its dividend payments.

The best time to buy a dividend grower is anytime. But we can tip the odds in our favor even further when we buy at moments like these – when the share price is due to “catch up” to the dividend.

Which brings me to step 1 of our 12% return formula…

Step 1: Buy Before Dividend Hikes

The “efficient market” is always slow to adjust to higher dividend levels. Folks who scan the papers are looking at trailing yields. They’re not considering next month’s payout increase, which is likely not yet priced into the stock quote.

Which means we should start our search for 12% by considering companies set to hike in the next month or two.

Here are nine firm’s poised to give their investors a payout raise in June.

Step 2: Review Next Month’s Dividend Hikes

Every dividend that eventually “accelerates” begins with a simple payout hike. We’ll talk about purchase timing in a moment. First, let’s review the seven stocks most likely to raise their dividends next month.

Discover Financial Services (DFS)
Dividend Yield: 1.8%

Financial stocks aren’t necessarily the most generous of dividend payers, with many of them shelling out in the 1%-2% area. Such is the case with credit card purveyor Discover Financial Services (DFS), which doesn’t even clear the 2% bar.

To its credit, DFS has pumped up its dividend significantly over the past few years, turning a 20-cent payout in 2014 into today’s 35-cent offering – a 75% increase.

To its detriment, the company has done so amid a roughly 15% contraction in earnings over roughly the same time.

Discover’s (DFS) Earnings Arsenal Is Waning

Still, the company did report a nice third quarter in April that included a 27% bump to the bottom line.

Expect Discover’s next dividend increase to come sometime in mid-July.

JM Smucker (SJM)
Dividend Yield: 2.9%

Jam master JM Smucker (SJM) is having itself a trying 2018, off double digits less than halfway through the year. That comes despite a beat on both the top and bottom lines back in February – the company’s $2.50 in earnings topped expectations by 37 cents, while revenues of $1.9 billion just slid above the $1.89 bill mark. Of particular interest was a gain in cash from operating activities, from $419.5 million to $469.0 million.

Perhaps investors aren’t pleased with guidance, which has net sales coming in between flat and down slightly for the year.

Investors will be hoping for a pick-me-up in the form of a dividend increase announced sometime in mid-July. SJM has lifted its dividend by almost 35% over the past five years, and still has ammunition enough to keep perking up the payout.

Kellogg (K)
Dividend Yield: 3.4%

Kellogg (K) might command a horde of popular brands including Frosted Flakes, Froot Loops, Rice Krispies, Pringles, Pop-Tarts, Eggo, Kashi, Morningstar Farms and more. But it doesn’t command much respect among Wall Streeters – nor has it for some time. The stock has essentially been dead money for the past five years, and it has posted a 5% loss this year versus a roughly flat market.

That’s despite a significant bump since its first-quarter report in early May. At the time, the company reported a 69% jump in earnings as well as top- and bottom-line beats, thanks in part to strength in its frozen-foods unit.

Kellogg leaves much to be desired, not just on a share-appreciation basis, but also in the dividend-growth arena. The company’s payout expansion has slowed to a crawl, ranging between about 2% and 4% annually for the past several years.

Kellogg’s (K) Dividend Growth Is Flattening Out

Education Realty Trust (EDR)
Dividend Yield: 4.1%

Education Realty Trust (EDR) is a niche real estate investment trust (REIT)  that specializes in collegiate housing, serving 79 communities across 25 states. Some of its most recent projects have been focused on Pennsylvania’s Lehigh University, as well as Mississippi State University.

This has been a roller-coaster stock for several years, including an up-and-down 2018 that has EDR sitting on fractional losses for the year-to-date. That hasn’t been helped much by a somewhat lackluster quarter for the period ended in March – the company’s funds from operation (FFO) declined 5% year-over-year on a 1.5% drop in same-community net operating income.

Also disappointing has been the dividend growth in this real estate name. The payout has improved by a modest 18% since 2014, with only penny-per-share hikes since 2015. Investors certainly will want to see better in mid-July, when the company typically announces its annual improvement.

National Retail Properties (NNN)
Dividend Yield: 4.6%

National Retail Properties (NNN) is a so-called “triple-net lease” REIT that boasts 2,800 properties across 48 states and 37 industries. It’s called a “triple-net” lease because when it leases properties, it puts the triple onus of taxes, insurance and maintenance on the tenant, too. So while the REIT charges less overall (because it’s not covering those expenses), it’s a far more predictable revenue model because there’s no guesswork as to what taxes will be in a given year, or what building issues will need to be addressed.

Like many retail REITs, National Retail Properties has been on the slide for a couple of years as the industry suffers the wrath of an ever-encroaching Amazon.com (AMZN) as well as other e-commerce headwinds. That said, the damage hasn’t been too bad simply because so many of NNN’s tenants aren’t direct competitors with Amazon. Consider that top tenants at the moment include companies such as 7-Eleven, Mister Car Wash and LA Fitness. As a result, funds from operation have actually been improving for years.

Dividend growth hasn’t exactly been explosive, however. The company’s payout has advanced by just 17% since 2014. And there’s no reason to expect anything different in mid-July, when the company is expected to deliver its 29th consecutive annual increase.

National Retail Properties (NNN) Is Making Money. Now It Needs to Give More Back.

Duke Energy (DUK)
Dividend Yield: 4.9%

What list of dividend growth stocks would be complete without a utility stock?

Duke Energy (DUK) is a Charlotte, North Carolina-based electric utility that serves roughly 7.6 million customers across 95,000 square miles of service area, and owns 49,500 megawatts of generating capacity.

This is one of the steadier dividends in the game, with Duke doling out a regular paycheck to investors for 92 consecutive years. And while it doesn’t sport a particularly long dividend growth history compared to the likes of Southern Company (SO), it still has more than a decade under its belt and has improved its payout by about 14% since 2014. The next payout hike should come sometime in the first couple weeks of July.

The yield also is getting help from a 10% year-to-date decline – more than twice as worse as the utility sector as a whole.

Enterprise Products Partners LP (EPD)
Distribution Yield: 5.9%

Energy master limited partnership (MLP) Enterprise Products Partners LP (EPD) has built an impressive income resume that includes 55 consecutive quarterly distribution increases. And that streak should extend to 56 consecutive quarters sometime in the first full week of July.

It’s likely to be a token increase, mind you, since it makes four such improvements in any given year. It also doesn’t add up a ton – the company’s distribution has inflated by just 22% since the start of 2014.

EPD is one of the largest energy partnerships in the world, boasting roughly 50,000 miles of natural gas, NGL, crude oil, refined products and petrochemical pipelines, not to mention storage facilities, processing plants and other assets.

It’s also no slouch, producing record net income, gross operating margin and adjusted EBITDA during its most recently reported quarter.

Step 3: Earn 12% Annual Returns For Life!

Robust dividend growth separates the winners from the losers.

And I’m not just talking about the stocks.

Low dividend growth goes hand-in-hand with slow and no growth – and even eventual decay. Hitch your wagon to the supposedly “safe” blue chips that most financial pundits shill for, and you’ll quickly be looking for part-time work a few years into your retirement.

Today I’m going to take you inside the most disrespected, criticized, lambasted and just plain ignored investments on the market today.

Why would I do that?

Simple. Because if you’re not as rich as you’d like to be, these unloved income plays are the perfect way to get you there.

I’m talking about closed-end funds (CEFs), a group of investments that, with a bit of effort (which I’m happy to put in for you) can hand you big, fast upside, safe cash dividends of 8% and higher—or both.

So why do so many investors see CEFs as perennial money losers?

Let’s take a look, using a pick every dividend fan should know about (but doesn’t) as an example: the Delaware Investments Dividend and Income Fund (DDF), a CEF with a massive 11.2% dividend yield and boasting a history of outperformance nearly everyone has missed.

Never heard of DDF? I’m not surprised. It has only $92.9 million in assets under management and a 2.1% expense ratio. Both of these set off alarm bells in most investors’ minds. Massive fees! A tiny fund!

Worse, if you compare DDF’s return to that of the S&P 500, you’ll see this:

A Complete Dud … Right?

Again, not looking good! But remember, this doesn’t include DDF’s huge dividend, which is about 9 times as much as the typical S&P 500 stock pays. Add that in and we get this:

Dividends Make DDF a Market-Crusher

That’s right: as I said above, this tiny fund is beating the market and has been doing so most of the time over the last decade.

Also, it currently trades 3.5% below its net asset value (NAV, or the real market price of its holdings), so you’re getting DDF’s portfolio, its 11.2% dividend yield and its outperformance at a discount.

And since this performance is post-fees—a point I can’t stress enough—we can say with confidence that DDF’s fund managers are earning their keep, despite how high those fees appear to be at first glance.

Now DDF isn’t looking so easy to dismiss, is it?

The Biggest CEF Investing Fear Debunked

When it comes to CEFs, fear of market underperformance is just one issue I hear from investors. The bigger one is that these funds actually lose money over time.

Again, these folks are looking at the wrong chart. It’s true that many CEFs have had their market price decline slightly over time, although in most cases those CEFs have also paid a big income stream at the same time. If the market price goes down 1%, but investors have had a 9% dividend at the same time, investors still have a strong positive total return of 8%. And that return is given out as cash, investors can use that money however they wish—whether it’s using the money today or reinvesting it in the CEF. The control is yours.

Good luck doing that with your typical S&P 500 stock! And even better, unlike stocks, some CEFs are specifically designed to give you tax-free dividend payouts, like the two funds I reveal here.

But do they still, on average, earn a profit?

The answer is simple: yes.

Of the near-500 closed-end funds tracked by my CEF Insider service, only 37 have suffered a loss over a long period of time. And 29 of those are relatively new funds whose losses have happened over the last couple years. When looking at funds with a 10-year track record or longer, only eight have had a negative return over the last decade.

That’s a miss rate of 1.6%!

And when we look at the eight money losers, the cause of their problems becomes obvious.

Three of these CEFs—the Central Europe, Russia & Turkey Fund (CEE), Latin American Discovery Fund (LDF)and Korea Fund (KF)—are emerging-market funds whose assets have been under attack from a strong dollar, declining energy prices and growing geopolitical instability.

Another three—the Cushing MLP Total Return Fund (SRV), GAMCO Global Gold Natural Resources & Income Fund (GGN) and Adams Natural Resources Fund (PEO)— focus on commodities and energy stocks and have been hit by the crash of 2008–09 and the 2014 oil-price collapse.

That just leaves two funds—the Alpine Global Dynamic Dividend Fund (AGD) and the Alpine Total Dynamic Dividend Fund (AOD). Notice something in common? That’s right: the same firm has managed both and, to put it bluntly, both were poorly run.

There has been pressure on these two funds for years because of this poor management, which is perhaps why Alpine Funds agreed to hand over control to Aberdeen Asset Management in early May 2018. And since Aberdeen has a better track record and high-quality managers, there’s good reason to expect AGD and AOD to stop losing money and finally become profitable.

So what’s the key takeaway here?

Simple: if you avoid CEFs whose underlying assets are being hit by political turmoil, economic headwinds or poor management, you’ll give yourself a great shot at earning a nice gain and a hefty income stream over time.

If you feel trapped “grinding out” dividend income with popular 2% and 3% stocks and funds, here’s the three-letter acronym that will fund your retirement:

C-E-F

For whatever reason, closed-end funds don’t have nearly the following – or analyst paperazzi – that dividend-paying stocks boast. This “secret” is one of the last great efficiencies in an otherwise tough-to-beat market.

And we contrarian income hounds will gladly take this edge…

After all, it doesn’t make much sense that we can trade in our “dumb” stocks, ETFs and mutual funds for superior tickers that:

• Yield 6%, 7%, 8% or more,
• Pay their investors every month,
• Often trade at a discount to the assets they each own, and
• Are managed for free (I’ll explain more later) by a top-notch investment manager.

Let’s start with an example featuring stock-based CEFs. For those of you shaking your head at your portfolio’s low yield, you can actually 2X or 3X your portfolio’s yield and improve your upside potential to boot using this strategy. And it’s actually simpler than traditional stock picking.

How to Bank 6% Yields From Blue Chip Stocks

Many income investors have mistakenly parked their capital in “safe” consumer staples like General Mills (GIS), Kimberly-Clark (KMB) and Procter & Gamble (PG) in search of yield and security. Their money was safe, alright – their cash has grinded straight sideways for the last five years!

They’d have been better off “outsourcing” their dividend decisions to the great Mario Gabelli. His namesake Gabelli Dividend & Income Trust Fund’s (GDV) tends to pay around 6% or so (it yields 5.8% today). Mario’s dividends show up around the 14th of the month, every month, to the tune of $0.11 per share.

Sounds like a sweet deal, right? His investors get the benefit of a legendary money mind along with his access to ideas and cheap money. And get paid monthly to boot.

It really is quite the opportunity. The monthly dividends plus the boss’ smarts have rewarded investors who made the “one-click” investing decision to buy shares in GDV and let Mario take care of the rest:

In Mario We Trust (for 62% Returns in 5 Years)

His secret sauce is his stock selection. Meanwhile our opportunity lies with the discount – the fact that Mario’s fund tends to trade at a discount to the value of the shares it holds. Over the past three years, GDV has traded at an average discount of 10% to its NAV (net asset value) – which means investors have bought his stocks for just $0.90 on the dollar.

(Since GDV is a CEF, it has a fixed pool of shares – versus a mutual fund, which can simply issue more shares anytime it wants. The restricted supply means the fund’s price trades like a stock – which means it can stray from its NAV.)

Mario’s brilliance at a bargain is one example of our “CEF edge.” With $1.9 billion in assets, this particular fund is too small for big players to put money to work. Which works out perfectly for us.

And in CEF-land, stocks aren’t the only assets with price upside. Let’s now talk about way to further accelerate these returns. As nice as Mario’s 60% in five years is, I’m going to show you how to bank that much in just two!

How to Boost Your Bond Yields to 8%+

There are serious deals available in secure bonds. No safe bond pays 8% itself, of course. But it is possible to generate 8% and even 9% or more from a portfolio of reliable bonds.

You can even diversify your portfolio, bank these safe 8%+ and hire one of the best bond managers on the planet. For free, to boot!

It just requires a bit of contrarian thinking – and knowing which publicly traded funds these guys are managing behind the scenes (via their often-underrated CEFs).

Here’s a real-life fixed income bargain. You probably know the “Bond King” Bill Gross. How about his successor, Dan Ivascyn?

When Gross left PIMCO, a tide of cash followed him out the door. But the flow of money quickly subsided when Ivascyn stepped to the plate and outperformed Gross himself. No wonder PIMCO let the King walk out the door – they had their next superstar in waiting!

A money manager of Ivascyn’s caliber will usually cost 2% annually (plus 20% of profits). And it’d take a million bucks or two to get his attention.

But from time to time you can hire him for free. In fact there are times you’ll be paid up front to give him your money!

And like buying a regular stock or mutual fund, you can buy this super CEF with one-click from your computer (or tap from your phone) by purchasing PIMCO’s Dynamic Credit and Mortgage Total Return Fund (PCI).

PCI charges a 2% management fee. But it’s easy to get the fee comped – if you simply buy the fund when it trades for a discount.

For top-notch managers like Ivascyn, the fund’s price usually wanders above its NAV. Investors are willing to pay more than $1 for a dollar in assets just to get in:

Big PIMCO Premiums Today

But I always demand a discount. A 2% discount means our management fee is comped. A bigger bargain means we have some upside (as the discount window closes) and our yield is higher than it would be if the fund traded for fair value (because income is earned per NAV unit – so the less we pay for it, the better).

The three funds above are trading at big premiums however. Is it possible to ever get Ivascyn’s expertise at a discount? You bet.

First-Level Worries to the Rescue

PCI had been neglected by investors because of its strategy focused on mortgage-backed securities (MBSs), which had the lead role in the last financial crisis. They have recently been immortalized in the book and movie The Big Short. MBSs blew up the financial system in 2008 and have been outcasts ever since.

But a “second-level” look at mortgage payments showed these assets have successfully completed financial rehab. They quietly began to enjoy the benefits of clean living – with mortgage defaults and delinquencies trending down. Ivascyn and his team capitalized on this misplaced despair.

Two years ago, we added PCI to our Contrarian Income Report portfolio. The fund traded at a 10% discount to its NAV and yielded an incredible 10.7%. This “free lunch” was gradually gobbled up as these safe bonds crushed the stock market at large:

Ivascyn Worth Every Penny: +58% Net of Fees!

Our secret here was our “no brainer” purchase of a 10%+ yield at a 10% discount. Ivascyn did the rest – not only did he keep his monthly distribution funded, but he bought bonds that went up in value as rates rose.

Even after we pocketed these generous monthly payouts, the fund’s NAV sits 18% higher today than it was two years ago. Proving that it is possible to bank plenty of upside from secure bonds. You just need to know where to look – and CEFs are the ideal place to start.

Source: Contrarian Outlook 

Year-to-date my Hidden Yields subscribers have booked total returns (including dividends) of 155%, 30% and 27%. These profits inspired a common question:

“How’d Brett know when to sell?”

Most investors focus on buying. But selling is an ignored art. And leave it to savvy readers like you to recognize this.

I believe in letting winners run, of course, especially with respect to dividend growers. Sometimes there’s never any reason to actually sell a stock if the dividend’s sponsor is consistently growing its profits and dishing them with shareholders.

Other times, however, we’re better off booking gains and re-deploying our money to more promising pastures. Which brings us back to my readers’ prescient question – how’d I know, because they want to be able to identify sell signals, too.

Remember, there are three ways a stock can pay us:

1. With a dividend today,
2. By repurchasing its own shares (to make each remaining one intrinsically more valuable), and/or
3. By boosting its payout tomorrow so that its stock price follows its dividend higher.

Our Hidden Yields formula focuses on the third – and most lucrative – strategy. It’s led us to 24.3% annualized returns to date. But it takes a few months worth of patience to achieve these gains, because we give up the most obvious strategy – dividends today – in exchange for this price upside tomorrow.

Sell Signal #1: Slowing Dividend Growth

Which means if a dividend grower isn’t growing that payout fast enough, we should move on.

Earlier this year, warehouse landlord and Hidden Yields alumni First Industrial (FR) raised it quarterly payout by 3.6%. That may be enough to excite more “basic” dividend investors, but it doesn’t cut it for us.

FR had been fine for us. In nearly two years, my readers and I saw its payout climb by 14%. We enjoyed 21% price gains too. Add up our dividends and our share appreciation, and we banked 27% total returns.

FR Gains: 21% Price + 6%+ Dividends = 27% Total Returns

“Fine” dividend growth isn’t enough for us, however. So we parted ways as friends and put FR back on our watch list.

Sell Signal #2: Low “Relative” Yield

If you want to make real money with stocks, you should always put your money with the faster dividend grower. Boeing was a great example – we added it to the Hidden Yields portfolio in December 2015. Two massive dividend raises since have sent the stock soaring to the tune of 157% total returns for us:

Boeing Soars With Its Payout

Our catalyst was the 57% cumulative “raise” from Boeing, which in turn rocketed its stock price higher. It certainly helped that we bought shares when they were a coiled spring, due to “catch up” with the firm’s ever-growing payout.

Blue Line (Price) Was Due to Catch Up – and It Did

But the curse of high prices is low yields. And Boeing’s price moonshot cratered its current yield:

The Curse of a High Price: A Low Yield

Could shares keep moving higher? Sure. But we’re not in the “buy and hope” business. We banked our 157% gains and put our cash into the next 100%+ mover.

Such as? I’ll share seven stocks with similar setups in a minute. First, let’s wrap up this lesson with our third potential warning flag.

Sell Signal #3: Business is Fine Today, But Looks Dicey Tomorrow

“First-level” dividend growth investors look in the rearview mirror, fawn over past payout increases, and declare a stock an “aristocrat” simply because its past performance is good.

Warren Buffett, the guy who made a fortune on Coca Cola (KO) and inspired countless copycats who saw their late money grind sideways, said it well:

“If past history is all there was to the game, the richest people would be librarians.”

When you and I buy next year’s payout today, we need to picture the future. Are we looking at a retail REIT that is having its rent checks intercepted by Amazon (AMZN)? Or are we looking at an Amazon-proof retailer that is actually a bargain due to overblown worries?

Let’s consider the case of Best Buy (BBY), which boldly decided to take Amazon head-on in 2012 when turnaround CEO Hubert Joly took the helm. And not only did the electronics giant live to tell about it, but it’s now leveraging Jeff Bezos’ website as a shopping channel of its own!

In recent years, Joly has been smartly “doubling down” on the quality of its retail stores (which Amazon doesn’t have). This has powered impressive free cash flow (FCF) growth, which has in turn driven serious stock returns:

Expert Service. Unbeatable Stock Price.

What else doesn’t Amazon have? A dividend, of course. Meanwhile Best Buy pays one, and its growth has been spectacular. Joly & Co. just raised their dividend by 32%. This “high velocity payout” is now up 165% in the last five years! It’s a big reason investors have enjoyed 232% returns in the face of regular Amazon fears.

We dividend hounds don’t get the benefit of hindsight. We must determine up front whether the light at the end of a tunnel represents brightening prospects – or a train rolling in to smash our firm’s entire business model.

This Friday: 7 Fast Dividend Growers with Bright Futures and 100%+ Upside

Life is too short to waste our time with middling dividends! Since share prices move higher with their payouts, there’s a simple way to maximize our stock market returns: Buy the dividends that are growing the fastest.

Don’t be fooled by modest current yields. They often don’t capture the growth potential (and it’s the dividend’s velocitythat really makes us big money – not its starting point).

How to we buy high velocity dividends, the aristocrats of tomorrow? It’s a simple three-step process:

Step 1. You invest a set amount of money into one of these “hidden yield” stocks and immediately start getting regular returns on the order of 3%, 4%, or maybe more.

That alone is better than you can get from just about any other conservative investment right now.

Step 2. Over time, your dividend payments go up so you’re eventually earning 8%, 9%, or 10% a year on your original investment.

That should not only keep pace with inflation or rising interest rates, it should stay ahead of them.

Step 3. As your income is rising, other investors are also bidding up the price of your shares to keep pace with the increasing yields.

This combination of rising dividends and capital appreciation is what gives you the potential to earn 12% or more on average with almost no effort or active investing at all.

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.