Make Wall Street Pay You
“Ski the mountain; don’t let the mountain ski you.” — Cheddar (Old ski buddy)
It was a bright, sunny day with blue skies and thin wisps of white cloud that blew quickly across the mountain peak. We were sitting, my wife’s cousin and I, in green Adirondack chairs near a gas fire in front of the lodge.
Every once and a while, some idiot would come shooting off a 10-foot jump at the bottom of the slope. Few would land it. Most would ease off the lip with halfhearted bravado and fail with the alacrity of the non-committed, face-plant the landing, and tumble down the hill in a hurricane of snow, gloves, and edged paraphernalia.
“When are you going to do that?” she asked as the gear settled.
“I did that when I was 25 so I don’t have to do it now,” I replied with a backward wave. “Besides, I achieved my goal for my first time skiing in 12 years: I didn’t break anything.”
This, of course, has everything to do with age. And, in fact, another cousin, a 12-year-old boy with a season pass, broke his humerus the very same day. Like many things, broken bones are better on the young — where I would be disabled for months, he will be back at it in weeks.
Yes, my friend, taking big risks is better for the unseasoned. The same idea is true in investing.
Sure, it’s awesome to get a 3,000% gain like readers of Bull and Bust Report did by buying and selling Bitcoin at the right time. But for your core portfolio, you need to make solid buys on secure, cash-generating, dividend-paying stocks with predictable results.
After all, you’re not going to put 20% of your portfolio in a fly-by-night cryptocurrency. But you will buy an undervalued dividend payer with a clear future.
Historically, dividends have delivered a significant portion of the return to the U.S. market. Specifically, dividends contributed 43% of the total return between 1930 and 2016 for the S&P 500, though the exact contribution dividends make can change a lot by decade.
This may seem surprising, especially because day-to-day so much of the focus is on changes in price in the market. However, over time, the market’s little secret is that despite all the punditry and commentary, those major price movements tend to come out in the wash more than you may expect. Whereas a price move up can be canceled out by a subsequent price move down, companies have no way of taking back dividends they have paid out.
Dividends are also a reminder to the company itself that there is a fundamental basis to all this stock market stuff. The market was originally a way to get enough money to start an endeavor with a goal of making more money.
Like buying a ship to trade goods. The classic example is of the English privateer Golden Hind. It was captained in 1578 by Sir Francis Drake, who set about plundering the Spanish gold fleet. Investors received 47 pounds for every one invested, or 4,700% gains.
Today, of course, with computers, quants, and AI, there is very little that resembles the basic idea of investing. So it is nice to get a company that pays you for holding its stock.
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In regard to sectors, you should look at companies with the wind at their backs. One of these is pipelines. Obviously, the U.S. is producing oil at a record volume. This has caused massive bottlenecks in certain fields like the Permian Basin. There are not enough pipelines to move the oil.
Producers have to sell at a $10 to $13 a barrel discount just to get the oil to market. The U.S. ranks #1 in pipelines planned and under construction. Average daily transportation volumes rose 13.5% in 2018 to 5.889 bbls/d.
Next year, volumes are expected to grow by 19% to 7 million bbls/d.
My friend and associate Keith Kohl, the original Pipeline Bull, has been all over this sector for months.
One pipeline company he was telling me about saw its volume jump 12% last year; meanwhile, its earnings climbed 21%. And because everyone hates oil at the moment, it has a P/E under 10 and pays close to a 5% dividend. That’s ridiculously undervalued.
It’s time to make Wall Street pay you for a change. Click here now and find out how.
All the best,
Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.
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