The Key To Retiring On Dividends Regardless Of A Pandemic Or Social Unrest
Contrarian Outlook | Jun 03, 2020 08:33AM ET
“How fast should I deploy my cash into your dividend stocks?”
It’s a common question from the new income investors that are always finding their way to us (welcome!) We publish a plethora of dividend analysis on our website ContrarianOutlook.com . And, for premium subscribers, we also issue specific buy, hold and sell recommendations for select stocks and funds.
So, where should a new reader (or, better yet, premium subscriber!) start? Let’s walk through some steps you can take to make the best use of our information as you build your dividend-powered retirement portfolio.
First, Pick Your Stocks
Stock picking is step one, and as discussed, we have no shortage of dividend coverage around here. If something has a ticker and a yield, we’ve likely spilled some ink about it.
I do want to differentiate among our free coverage, wish list items and official premium recommendations. Some readers blur these lines, and it’s important to know (and remember) our dividend hierarchy.
If a stock or fund gets ink on our flagship ContrarianOutlook.com website, that’s coverage. We write editorial that ranges from bullish to bearish, and everything in between. Our opinions are not swayed by secondary business motives because we don’t have them. The vast majority of our revenues is yearly subscriptions to our premium products (like my Contrarian Income Report, Hidden Yields and Dividend Swing Trader services).
Our dividend wish list is the next step up our high-yield food chain. These are names I’m researching, and writing about, and we’re prepared to pounce on them when the timing is right.
Finally, when we do buy, these stocks (or funds) will become official recommendations. Our premium subscribers receive a heads up that we are buying in the publication. These notifications are published directly in the CIR, HY or DST newsletter. If the action is urgent, we’ll send out an email flash alert in between issues. (And we do now have text message alerts available for each publication, too. Just for you fortunate ones who are not as glued to your email as I am!)
When we make a purchase for a portfolio, we do monitor the position. If and when it’s time to sell, I’ll let you know as well.
Now, for the new people. Let’s say you join CIR or HY and you see 12 or 15 or a full 20 stocks already in the portfolio. Is our best practice to buy them all right away? No, we recommend taking some time, especially when markets are as rocky as they are right now. Here are some ways to deploy new money into dividends for maximum yields and profits.
Get The News You Want
Next, Deploy Cash Every Month (for 12 Months)
Most years fly by. However, 2020 is not most years. Few people are sitting around saying: “Gee, it’s June already. Where did the time go?!”
The majority of us are wondering how it is not 2021 yet.
As we’ve discussed in recent weeks, bear markets tend to last 12 to 18 months and we’re kicking off month four. Unless this is going down as the shortest bear market of all time, we have plenty of time to put our cash to work.
(And even if it is a new bull market, let’s look back to June 2009. The markets had been rallying for three months, and most investors were in cash. Anyone who felt like they “missed it” didn’t really miss anything. The investors who sat in cash for the next decade did!)
Legit Bulls Take Their Time Unfolding
So, let’s give ourselves twelve months from today to get fully invested. If it’s a legit bear, we’ll thank ourselves that we took our time. If it’s a legit bull, we’re not going to miss much. Plus, we can buy the pullbacks and help dollar-cost average our way to more and more dividends.
Finally, Buy the Bargains
My two long-term dividend strategies (Contrarian Income Report and Hidden Yields) deliver five to seven “best buys” per month. These are the dividend stocks and funds that are particularly good buys at that given moment in time.
If you buy only the best buys every month for a year, you will end up with 15 to 20 stocks in your dividend portfolio—a full deck that is dollar-cost averaged so that you buy the bargains and acquire more shares when prices were low. Easy.
Alternatively, you could spread a set amount of money across every pick in the portfolio on the same day each month for a year. Or only put new money into recommendations with “buy” statuses. It’s up to you and to be perfectly honest, the exact mechanics aren’t that important.
The “same dollar amount every month” is the important part. Let’s use new Contrarian Income Report recommendation ONEOK (NYSE:OKE) as an example. We bought shares in mid-April knowing that oil’s crash would eventually (and inevitably) lead to a rally in oil stocks that had the wherewithal to make it to the other side of the pandemic-driven transportation pause. The cure for low prices is always low prices, after all, as producers slash output.
Oil’s Last “Crash ‘n Rally” Started in 2008
This makes energy toll bridge ONEOK, with prized assets and transportation pipelines, a nice contrarian pick. And thus far, our CIR purchase has worked out well, as we’re sitting on 24% gains in just 7 weeks.
The last time oil “crashed and rallied” was, of course, 2008 and 2009. Back then, ONEOK was a better play than the goo itself! In fact, buying shares on the first day of 2008 ended up being “better than OK” as time played out, with investors enjoying a 133% gain over the next four years (which included their own crash of the decade).
Investors who bought in 2009, of course, were rewarded even more. And cautious buyers who bought OKE in monthly installments through 2009 and even into 2010 did just fine, too (see $ signs in the chart below for potential purchase points for these installments):
Better Than OK Returns for OKE
To paraphrase a quote bandied about by fitness trainers and attributed to Bill Gates: Most investors overestimate what they can earn in a month and underestimate what they can earn in ten years.
These rocky markets are going to set us up for big gains over the next decade. But we need to make sure we act right now and buy these dream retirement stocks before they run away from us.
Build Your Dream Dividend Retirement with Yields Up to 15%
Many people say they are contrarians, but few actually meet the definition. Even fewer have a publishing company named Contrarian Outlook, dedicated to original dividend coverage!
To be a true contrarian, you often have to run against the herd. Income contrarians, to be specific, buy the handful of investments that are being completely misunderstood and shunned by almost everyone. I’m talking about investments that have big yields and safe dividend streams.
Based on what I’m seeing right now in the markets, I see two major areas of opportunity.
Disclosure: Brett Owens and Michael Foster are contrarian income investors who look for undervalued stocks/funds across the U.S. markets. Click here to learn how to profit from their strategies in the latest report, "7 Great Dividend Growth Stocks for a Secure Retirement ."
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