In 1790, Benjamin Franklin left the cities of Boston and Philadelphia $4,400 each. stipulating that after 200 years, the cities would get access to the funds.
So, with 200 years to compound, how much did each city withdraw in 1990?
Not $10,000… $100,000… or even $1,000,000…
A whopping $6,500,000!
That’s an amazing sum to receive from, essentially, doing nothing.
There’s one issue with this strategy, however… It takes time.
Most success stories using compounding interest have time periods of decades and longer.
And as we both know, nobody has 200 years to sit around and wait for their wealth to compound.
That’s why I created the 36-Month Accelerated Income investing strategy.
It takes all my decades of investing experience and boils it down into a simple, repeatable, strategy that doesn’t take 200 years to reap the rewards of compound interest.
And a strategy that you can use over and over again until you have multiple income streams that you can rely on for the rest of your life.
In this post I want to get down into the details of what makes this possible…
Namely, the only type of stock you need…You Only Need This One Stock To Retire Sooner Than You Think…
Look, dividends have changed my life and I believe they will change yours too! But I’d be lying if I won’t acknowledge the BIG elephant in the room…
Dividend checks that look like this:
Instead of this:
I’m asked by folks how it’s even possible…
How can you call a few dollars here and there ‘extra income’?
Lots of folks are put off by the low-yielding dividend checks they may have received in the past…
What’s my answer?
Simple — you’re investing in the WRONG companies.
No one is getting rich off a 1% dividend yield, like what’s common in some of the more common sectors I showed you yesterday like Consumer Non-Cyclical Goods.
But a high, 8-15% yield on the other hand…
And suddenly you can plan for the future with that kind of money!
That’s why I focus solely on…High-Yield Dividend Stocks
And here are five reasons why I recommend YOU do the same:
- Dividends are real returns. They won’t disappear when share prices go down.
- Where else do you get 8%…12%…20% yields? Not a bank CD or a Treasury bond!
- Dividends are more predictable than share prices.
- A higher yield makes the power of compounding exponential.
- For you and I, we have a long-term plan on generating cash forever.
These high-yields are at the heart of the accelerated 36-month plan I advocate for.
Because starting with as little as $25,000, you’ll have the opportunity to build up a $4,804 monthly income stream like one of my readers, Keith G.
He wrote in to tell me in June 2017:
«I am now a dividend income investor. My dividend income is well in excess of $50,000 per year.«
$50,000 per year calculates to around $4,166 per month.
You too could be on a similar income path for life. It’s the great equalizer when it comes to dividend investing, you don’t have to be rich to enjoy the benefits of high-yields.
Traditional dividend stocks are low-yield investments. And compounding on low yield investments is just not that powerful.
If you try to grow your wealth by compounding at 2% or 3% per year, you might have to wait 200 years like the cities of Philadelphia and Boston to reap any meaningful returns!
However, with high-yield stocks like I recommend, the power of compounding offers a unique opportunity to build wealth and income.
BUT — all high-yield is not created equal — that’s why I recommend you first gauge your risk tolerance before making a portfolio allocation.
Here are the steps to take:Do This Before Buying Your First High-Yield Stock
Step #1 — What’s Your Risk Tolerance?
A guiding principle for income stocks is the higher the yield the higher the risk.
While I’ve personally invested hundreds of hours vetting each and every stock in the portfolio I’ve prepared for subscribers, I cannot predict every outcome.
There have been dividend cuts in the past and there will be in the future.
To help you build an income portfolio that produces an attractive cash flow yield –i.e. great income! — and is not too risky for your personal comfort, here’s what you can do next:
Step #2 — Find Your Favorite Subcategory
I have categorized the high-yield investments I recommend into four categories:
- Stable Dividends Investments: These have higher levels of safety for the dividend payments and good potential for dividend growth. All of the stocks on this list paid sustained dividends through the crash and up until the current date.
- Dividend Recovery and Variable Dividend Investments: These are the stocks that chose or were forced to cut dividends due to effects of the pandemic. The ones I continue to recommend are likely to increase the dividends back to pre-crash levels. I also recommend a few investments with variable dividend policies. These also land in this category.
- Preferred Stock Investments: The stock market crash in February and March of 2020 allowed us to jump into preferred stocks «on sale». I am now convinced that these very safe dividend paying investments deserve a significant weighting in any portfolio. The recommended preferred stocks yield on average over 7%, with a high level of safety and principal stability.
- BulletShares Bond ETFs: This unique bond fund offering from Invesco lets you set up an old-school type of bond ladder with funds that own hundreds of individual, investment- grade bonds. Each ETF has a maturity date, that ensures you will earn the stated yield- to-maturity. A three to five-year bond ladder pays a significantly higher average yield compared to money market funds, with very little volatility.
Find the subcategory that fits your risk tolerance the move onto the last step:
Step #3 — Set Your Personal Portfolio Allocation
Using the three income investment subcategories listed above, your first step is to set your own portfolio allocation by category.
Read the descriptions and set the percentages based on your own views on risk and how comfortable you are with falling share prices.
We are all fine with rising share prices. If you don’t have any idea where to start, I suggest a 50% weighting into the Conservative Dividend Stocks and 15% each into the other two categories.
If you want to be more aggressive and plan to reinvest all your dividend income, you may want to go with a higher weight in the Aggressive High-Yield Stocks.
If you are very worried about the next stock bear market or economic recession, a larger percentage in Fixed Income Investments will leave you more comfortable with your income focused investments.
Once you have set your category weights, calculate your individual stock allocations by dividing your category weightings by the number of stocks currently in each category.
For example, there currently are 11 stocks in the Conservative Dividend Stocks.
If you have selected a 50% allocation to this category, you divide 50 by 11, to get a target
4.5% allocation into each stock in the category.
The 4.5% would be out of the total 100% you have committed to following the Dividend Hunter recommendations.
But of course, finding the right high-yield stock takes time and knowledge…
What if you’re new or simply can’t dedicate the time to the hunt?
That’s why in my next email I’ll reveal my #1 high-yield stock to buy right now.
Normally I reserve that kind of information for my paying subscribers, but I think this company is such a screaming buy right now I don’t want you to miss out.