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!

Still feeling the taxman’s sting from April? Then you probably need to consider getting some tax-free income.

Having an income stream the IRS can’t touch may sound like pie in the sky, but it’s a reality if you hold municipal bonds. That’s because the tax code provides an exclusion for these bonds, allowing most US investors to collect interest payments from them tax-free. And in many states, income from those bonds is exempt from state taxes, as well.

If you aren’t intrigued yet, then let me show you some numbers—and what they could mean to your portfolio.

If you’re in the highest tax bracket (37%) and you get a 6%-yielding municipal-bond fund, that income is the exact same as a 9.5% dividend from stocks. And municipal bonds are nowhere near as volatile as high-yield stocks. Just compare the volatility of the iShares National Muni Bond ETF (MUB) and the Vanguard High Dividend Yield ETF (VYM):

A Smoother Ride Makes Withdrawals Easier

Not only does this lower volatility give you peace of mind, but it also makes withdrawing from your principal easier in cases of emergency.

There’s just one problem—MUB yields a paltry 2.4%!

But have no fear—I’m going to show you 3 closed-end funds (CEFs) that yield far more than that and are still tax-free. Before I get to them, though, let me tell you why you should choose these funds, and why now is the time to jump in.

Why Muni CEFs—and Why Now

One of the biggest benefits of closed-end funds is how inefficient they are. It sounds crazy, but CEFs cater to retail investors, who often just don’t know how far apart these funds’ market prices are from their their net asset values (NAVs), resulting in big discounts for a lot of CEFs.

In fact, the average CEF now trades at a 6.3% discount to its NAV—which is near the biggest average discount over the last year.

But some CEFs are more heavily discounted than others, while some actually trade at a premium—or for more than what their portfolios are worth. That risk of overpaying is why you can’t just choose any CEF.

The most interesting trend in CEFs over the last few months has been the shrinking discount to NAV among equity funds and the growing discount among bond funds—but nowhere is the discount bigger than among municipal-bond funds. Take a look:

Big Discounts in Muni Funds Create Buying Opportunities

Source: CEF Insider

With the average discount among muni-bond CEFs at 8.6% (which is near double the 5.3% average discount of just a year ago, by the way), these funds offer us an incredible buying opportunity right now.

And while a few discounts in US-stock CEFs are still there, the recovering market that I predicted back in April means that the oversold equity funds I showed you back then aren’t so cheap anymore, so we need to get a bit creative.

Which is why muni-bond funds are the “it” thing to buy right now.

For one, with their unusually large discounts, muni funds are finding it easier to sustain their dividend payments, providing us with a safer income stream. Also, despite popular belief, municipal bonds do not go down during periods of rising interest rates.

In fact, this “rates up, muni bonds down” myth is a big driver of why muni-bond CEFs are so cheap now, again giving contrarians like us an opportunity to get tax-free income at a heavy discount.

Don’t believe me? Take a look at this chart from the mid-2000s, when the Federal Reserve increased interest rates by over 400%:

Interest Rates Rise—and so Do Muni Bonds

That blue line is the Invesco Municipal Opportunity Trust (VMO), the first pick I want to show you today. It’s a 5.7% yielder full of tax-free muni bonds that went up a full 17% during the last sustained rate-hike cycle.

And it’s unusually cheap now: its 10.8% discount to NAV is massive on its own, but it’s even more attractive when you consider that VMO’s discount has averaged just 2.3% in the last decade.

On top of that, VMO is managed by Invesco, one of the world’s biggest fund companies, with over $950 billion in assets under management (AUM). So you can count on this fund being reliable and secure.

Additionally, VMO has a long history. It’s been around since the early ’90s and has delivered consistently strong results since then—surviving the dot-com bubble bursting, the subprime mortgage crisis and all the drama in between:

A Steady Long-Term Performer

Which brings me to my second big yielder worth considering: the PIMCO NY Municipal Income III Fund (PYN), a 5.9% payer managed by one of the most respected names in the bond world: PIMCO, with $1.8 trillion in assets under management—more than the GDP of several small countries!

PIMCO built those assets through outperformance, which is why most of the company’s CEFs tend to trade at premiums to NAV.

PYN, however, is different. With a 2.6% discount to NAV, this fund is trading for less than the value of the assets in its portfolio—something it hasn’t done since 2009! And there’s no reason for it to trade so cheap, since PYN has doubled the return of its benchmark, MUB, since the Federal Reserve started raising interest rates in late 2015:

A Huge Overachiever

With such a track record, expect this one to trade at a premium to NAV soon. But there’s one other thing that makes PYN attractive: its size, or lack thereof.

Because PYN has just $51 million in AUM, it’s simply too small for a lot of large institutional investors—and that small size means that it’s incredibly inefficient, even by CEF standards. That’s why this fund typically has traded for a premium to NAV for most of the last decade, making its recent discount that much more appealing.

The last fund I want to show you is the BlackRock Municipal Income Investment Trust (BBF), which commands attention thanks to its 6.1% yield.

But that’s not the best thing about this fund. Like PYN, BBF is really small, with just $142.2 million in AUM, which is about a quarter of the size of most muni CEFs. And that small size results in mispricings that don’t reflect its stellar track record.

Another Big Winner

As you can see, the BlackRock Municipal Income Investment Trust has beaten the index for a very long time (this chart just covers five years, but since the fund’s inception in 2007, BBF has returned 79.3% versus MUB’s 50% over the same period).

I may be burying the lead here, though; the really nice thing about BBF is its manager: BlackRock, the largest investment firm in the world, with a staggering $6.3 trillion in assets under management. That means it has the connections to get the best municipal bonds as soon as they go IPO, the best minds and technology to analyze those municipal bonds and the best market position to trade those bonds most profitably.

Is this corporate heft priced in to BBF? Hardly. It’s trading at a massive 7.4% discount to NAV, after trading at a premium for most of the last three years:

BBF Suddenly Very Cheap

Should we expect this premium to NAV to come back? The short answer is yes. The discount only showed up—and steepened—in the last few months due to the market panic of the last few months.

But the market is getting more comfortable, which will likely result in BBF returning to its normal high price—giving those of us who buy today some tidy capital gains on top of that massive 6.1% income stream.

This CEF Doubled the Market and Pays 7.8% in Cash!

There’s no doubt that in a few months we’ll look back at the selloff in muni bonds and recognize it for the terrific buying opportunity it was. So don’t miss your chance to lock in the safe, tax-free payouts muni-bond funds offer now—while you can still get them cheap.

Here’s something else you should know: “munis” aren’t the only assets to be hit by the silly (and wrong) investor myth that rising rates are a bad-news story.

Another? High-yield real estate investment trusts (REITs).

And just as I showed you with VMO above, REITs also do great when rates head higher—contrary to what most folks believe.

Check out how the benchmark REIT ETF, the Vanguard REIT ETF (VNQ) did in the last sustained rising-rate period:

Rates Rise, REITs Surge

That makes now a terrific time to buy this unloved asset class, too. But just as we did with muni-bond funds, we’re going to take a pass on the popular REIT ETF and go with my top CEF pick in the sector.

Why?

For one, my No. 1 REIT CEF pick fund hands us an outsized 7.8% CASH dividend today. And talk about stable: it not only survived the financial crisis, it rebounded far more quickly than the market and has gone on to hand investors far bigger gains since.

An All-Star Management Team in Action

And keep in mind that this fund posted these incredible returns while investing in real estate: the very thing that caused the collapse in the first place!

Think about that for a moment.

This fund not only more than DOUBLED the market’s gain—even when you factor in the Great Recession and the subprime mortgage crisis—but its incredible management team did it while paying a rock-solid 7%+ dividend the whole time!

If this isn’t a fund worth paying a premium for, I don’t know what is. But thanks to the wacky mispricings in CEF land, this one’s trading at an absurd discount to NAV today.

Once the herd catches on to what it’s missing, this fund could easily blow into premium territory.

How do I know? Because it’s happened many times in the past—and when it does again, we’ll easily be sitting on an easy 20% gain, on top of this fund’s juicy 7.8% dividend payout.

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Source: Contrarian Outlook 

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!

With over 500 closed-end funds (CEFs) on the market, how do you choose the best one?

It’s not an easy question to answer, because there are literally dozens of metrics any CEF investor should look at before buying.

But you don’t have to worry, because in a moment, you’re going to get the “guts” of the 5-point system I’ve carefully designed to pick winning CEFs for our CEF Insider service.

So why is it important to have a good system?

Because if you don’t, you could find yourself holding an empty bag—like investors who bought the Virtus Total Return Fund (ZF) at the start of the year because they were seduced by its 15.3% dividend yield.

Sadly, that move resulted in a massive loss in no time flat, even with dividend payouts:

The Perils of a High Yield

What’s even sadder is that there are plenty of funds that invest in the same assets as ZF that have done far better over the long term. Take the Liberty All-Star Growth Fund (ASG), which also focuses on high-growth stocks and is up a nice 22.8% since the start of 2018.

A Better Long-Term Pick

This is one of many instances where blindly buying a CEF would have cost real money. So how do you avoid the trap?

My 5-Point System

When choosing CEFs, I look at 5 crucial points that drive each buy call I make. And they can help guide you, too. They are:

1. Management: How good is the team at the top, and has the fund changed horses lately (frequent management changes are an obvious red flag)?
2. Discount: What’s the fund’s discount to its net asset value (NAV, or the value of its underlying assets), and what has that markdown been historically? We want a current discount well below the long-term average to drive our upside.
3. Portfolio: What does the fund hold now, are there any big changes to the portfolio, what’s the rationale behind those changes, and how are those assets going to perform in the future?
4. Dividend: How sustainable is the payout, what are the chances of a dividend cut, and how low can the payouts go? (Key here is to look at yield on price, yield on NAV, changes in NAV and total net investment income, or NII)
5. Current Climate: How does the fund’s investment strategy fit within your broader portfolio and view of changes in the broader economy?

In other words, the system combines a variety of bottom-up questions about the fund’s portfolio, strategy and management with top-down questions about the asset class and economy as a whole.

The System in Action

To show how this works, let’s look at a recent example: the BlackRock Science and Technology Trust (BST). Although this fund had soared a massive 58.6% in 2017, my system still urged readers to jump head-first into this high-quality fund just as 2018 arrived, because it ticked all the right boxes. You can read my original recommendation here.

Judging by who was managing this fund, the market price and NAV performance, and the sustainability of its payouts, it was clear that this fund was not done rising. That turned out to be accurate: BST has given investors a 33.9% total return since my system flagged it less than six months ago:

A Quick Ride Up

What makes this performance all the more impressive is that it is more than double the fund’s index, the Nasdaq 100. If you tried to get into that index with the “dumb” passive index fund, the Invesco QQQ Trust (QQQ), you’d be missing out on $1,971 for every $10,000 invested.

In less than six months.

3 CEFs to Put on Your Watch List Now

Nowadays, there are a couple dozen CEFs that are getting to that perfect place where the fundamentals and the broader economic climate are combining to create a perfect storm for massive upside and sustainable high yields.

The first is the BlackRock Resources & Commodity Fund (BCX), a commodity specialist that has done well in a tough environment for commodities. It’s an example of a well-managed portfolio with a great management team—but while the bottom-up is good for BCX, we’re not quite there from a macro standpoint yet. But we’re getting closer.

In the utilities world, there’s the Gabelli Global Utility Fund (GLU), which is diversified and has the added bonus of going beyond the US to take advantage of currency fluctuations. I haven’t added it to the CEF Insider portfolio yet, for a couple of reasons. For one, its 3.9% dividend is too small, and its discount to NAV isn’t low enough, given how rising interest rates tend to lower demand for utilities stocks.

Instead, I’ve chosen a diversified equity fund with a bigger discount than GLU’s and a REIT fund that is less sensitive to higher interest rates.

And both of those picks are up nicely, up 13.6%, on average, since my recommendation, while GLU has gained just 9.1%. And instead of paying a 3.8% dividend, these two picks are paying 8.1% each. (Click here to get access to my complete CEF Insider portfolio, including these two fund picks.)

Finally, another interesting fund for your watch list is the BlackRock MuniHoldings Fund (MUH), a municipal-bond fund with a massive 5.8% dividend payout (which is tax-free for many Americans). MUH is also one of the best-performing muni-bond funds in the CEF universe (its 7.5% annualized return over the last decade is far above the 5.2% average across muni-bond CEFs).

Not only is BlackRock the biggest municipal-bond investor in the world, giving it a big edge in this complex market, but MUH’s 8.8% discount to NAV is far bigger than its average 3.4% discount over the last decade.

The only problem? Interest rates. The market still hasn’t priced in the Federal Reserve’s aggressive rate hikes for this year and the next, but when it does, this fund will be ideally positioned to buy and hold for years.

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. 

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 

Ticker		Ex-Div Date		Pay Date		Div Amt		Yield
TEI		6/27/2018		7/10/2018		$0.21		24.28%
NDRO		6/28/2018		7/16/2018		$0.06		20.24%
ORC		6/28/2018		7/10/2018		$0.09		13.90%
AI		6/28/2018		7/31/2018		$0.38		13.71%
CBL		6/29/2018		7/16/2018		$0.20		12.92%
NYMT		6/27/2018		7/26/2018		$0.20		12.86%
EARN		6/28/2018		7/25/2018		$0.37		12.79%
DRW		6/25/2018		6/28/2018		$0.92		11.65%
TWO		6/28/2018		7/27/2018		$0.47		11.62%
WMC		6/29/2018		7/26/2018		$0.31		11.51%

Source: Investors Alley 

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 

Last week the Federal Reserve Board increased its Fed Funds Target rate for the second time this year, to 1.75%. The Fed Funds rate controls yields on the short end of the yield curve. Rate increases typically push fear-driven investors to sell the income stock categories like REITs and Utilities. Informed investors use these sell-offs as opportunities to buy dividend paying stocks for what will likely be market beating total returns.

I grabbed this important piece of data from a recent article from investment management company Neuberger Berman:

“Our research indicates that while, in the short term, REIT share prices have been influenced by the direction of interest rates, when measured over longer time periods, REIT total returns historically have not tended to be correlated to interest rates. In the current period, REITs’ underlying fundamentals and access to capital have not declined. Furthermore, many REITs have used low borrowing costs and the capital markets to strengthen their balance sheets… during periods when 10-year Treasury yields rose sharply, REIT total returns generally underperformed broader equity market returns in the short term, but generally outperformed after the initial period of weakness.”

I have seen other research that confirms in periods of rising interest rates REITs have, on average, outperformed the broader stock market. The reason is that rising rates indicate a strong economy and it is likely that commercial property values and rental rates are also increasing. If you are looking for individual REITs that specifically will do well in a rising rate environment, think about those commercial property sectors that have the shortest contract periods. With short term leases, these REITs will be able to more quickly increase the prices they charge to renters.

Hotels have the shortest lease periods – one night. Hotels operators change their rates daily based on demand and occupancy levels. Historically, hotel results mirror economic growth. A strong economy will lead to growing profits and share prices for the hotel REITs.

Chatham Lodging Trust (NYSE: CLDT) is a lodging/hotel REIT which owns 40 hotels in 15 states. The portfolio consists of premium branded upscale extended stay and select service hotels. The hotel REIT sector peaked in January 2015 and then went into a steep bear market which bottomed one year later. Over the last two and a half years, share prices have been volatile without a definite up or down trend.

Since its 2010 IPO, Chatham Lodging has steadily increased its dividend rate, with the last increase in March 2016. Chatham pays monthly dividends and is currently paying out just 62% of funds from operations (FFO) per share. This is a conservatively managed, attractive income yield stock that gives exposure to the lodging sector.

CLDT currently yields 6.4%.

Self-storage companies have rental rates that renew each year. There is a lot of turnover in a self-storage facility, which allows the operator to quickly adjust rates to changing economic conditions. Over the last 15 years, self-storage has been one of the best performing commercial property sectors.

Extra Space Storage (NYSE: EXR) is a large-cap, self-storage REIT with a best in class track record. The company owns 851 storage facilities. It has interests in another 216 through joint ventures and provides the management services for an additional 456 properties. The self-storage business provides strong same store revenue growth with low expenses and capital spending requirements.

Of the four major self-storage REITs, Extra Space is the historic leader for revenue, net operating income, and FFO growth. The company’s dividend has increased by 244% since 2012, including a 10.3% boost this year. This company is the class of the self-storage sector.

EXR currently yields 3.5%.

Rental rates paid for living quarters are usually reset annually. There are several economic factors that continue to push apartment and single family home rental rates higher. The REITs in this sector will be able to increase rental rates faster than the rate of increase in the Fed Funds rate.

Invitation Homes (NYSE: INVH) is one of the small number of REITs focused on owning single-family rental homes as opposed to apartment complexes. These REITs are the result of the institutional buying of distressed homes during the housing make crash of 2009-2011.Thousands of homes were bought at low prices, rehabilitated and turned into rental properties.

In the current economy the number of families that prefer renting to owning remains high. At the same time, millennials are forming families and want to get away from the apartment life into single family homes.

Invitation Homes owns 82,500 homes, with an average of 4,800 in each of the metropolitan areas where it has ownership. This large scale operation provides economy of ownership similar to apartments. The company forecasts to generate 5% to 6% same store net operating income growth. This is the highest growth rate among the different REIT sectors.

INVH is generating FFO of $1.15 per share against a current annual dividend of $0.44. When the company starts to grow the dividend the share price will take off.

Current yield is 2.0%.

Source: Investors Alley 

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.