Last weekend, I read a piece from Bloomberg telling me that the so-called “experts” were caught off guard by the bull rally in the first half of 2023. Moreover, not only were they caught off guard, but many if not all were calling for stocks to suck this year.
Dear reader, if you need any more evidence of our role as unconventional and visionary stock market profit prophets, just read the first paragraph of this Bloomberg article published on Saturday, July 8. It's titled "Wall Street Soothsayers Are Bewildered About What’s Next" and reads as follows:
Up and down Wall Street, forecasters were caught flat-footed by how the first half of 2023 unfolded in financial markets. That seems to have rattled their faith in what the winning playbook for the rest of it should be. Heading into the year, a handful of predictions dominated strategists’ annual outlooks. A global recession was imminent. Bonds would trounce stocks as equities retested bear-market lows. Central banks would soon be able to stop the aggressive rate hikes that made 2022 such a year of market misery. As growth stumbled, there’d be more pain for risky assets. But that bearish outlook was shattered as stocks rallied even as the Federal Reserve continued to ratchet up interest rates in the face of stubbornly elevated inflation.
Again, on our November 14, 2022, podcast, we called the bottom and made the case that 2023 was going to be the start of a major bull run.
On that podcast, I predicted that the S&P 500 would finish 2023 up around 24%–25%. As of this writing, the broad-based index is up 18%. I maintain my original call.
But I want to tell you that during this broad rally, I’ve been building positions in a select few REITs that, when I purchased them, were kicking off sweet dividends of at least 9%. They were also coming off lows. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
One such REIT is Innovative Industrial Properties (NYSE: IIPR), a cannabis REIT that leases real estate to cannabis growers. It owns 108 properties in 19 states. Revenue for IIPR has risen from $116 million in 2020 to over $276 million today. It’s growing, pardon the pun, like a weed.
In an attempt to be fully transparent, here are the IIPR trades I made over a month ago:
When I made my first IIPR purchase on June 5, the stock was trading for $67.74. Its dividend yield at that level was nearly 11%. Moreover, the stock was trading at a P/E ratio nearly equivalent to its dividend yield, 11:11.
I’ve been developing a fundamental equation that pinpoints the best time to buy high-yielding dividend payers based on P/E ratios, growth rates, and a bottoming pattern. Here’s a chart of IIPR for this year:
You’ll notice that as IIPR’s stock has declined, the P/E ratio contracted and the dividend yield expanded.
I call this the “P/E Dividend Percentage Swing Lever Trigger.”
Visualize a seesaw on a playground. On one end of the seesaw, one kid pushes up. He goes higher while the kid on the other end goes lower. And they go back and forth, up and down, up and down, off the strength of the lever in the middle (the fulcrum). The dynamic at work here is that it doesn’t take a lot of force to move up because of the leverage at the fulcrum.
It’s the same physical law with REITs and dividend-paying stocks. If the “E” in the P/E ratio remains solid for future earnings and the stock is going lower, the P/E ratio goes lower too. By law (mathematically speaking), the stock’s dividend yield heads higher.
What happens next is not only almost always guaranteed — it’s a thing of stock market beauty. Value investors, seeing a bargain in both the low P/E ratio and the high dividend yield, start flooding into the stock.
In the case of stocks, the “force” (like a child pushing his end of the seesaw up) comes in the form of volume.
I analyze volume with moving averages, unusual buying (perhaps volume spikes), and the number of buyers versus sellers, and the stock closes up on higher buying volume.
The P/E ratio goes higher, and the dividend yield goes lower.
However, with my new “P/E Dividend Percentage Swing Lever Trigger” system, we will own the stock before the surge of buying begins. Again, I use volume studies to pinpoint the exact moment to buy. Therefore, we continue to enjoy the high dividend yield, but now we are also enjoying capital appreciation in the underlying stock. It’s a win-win.
If you look at the chart again, you’ll notice at the time of my first tranche at $67.74, volume was starting to slowly increase… and so was the stock. It was mild, but it was a trigger of a much bigger move to come — and it came.
My average cost on IIPR is around $69.75. This week, the stock hit $78! That's a gain of 12% in a month… and a gain of 15% from my very first purchase. I’m also still collecting a 10% dividend. I believe IIPR is headed back over $100 a share, if not more.
That’s what I want to talk to you about today.
REITs are starting to move higher, and, in some cases, they are outperforming the broader market.
I was surprised to see just how well real estate in general is performing this year, but I was equally surprised to see how well the homebuilder stocks are doing. Here’s a chart of the SPDR S&P Homebuilders ETF (NYSEARCA: XHB):
It’s up big (not as big as the Nasdaq, but still big).
As the rising real estate tide lifts all ships, REITs are back in favor again.
And that’s why I’m writing to you today. Jason Williams, senior investment director at The Wealth Advisory, focuses on REITs and other income-generating stocks. He’s been doing quite well this year in REITs and recently turned me onto a group of specialized REITs that he thinks are going to outperform the markets for years to come.
In fact, I personally bought one of these REITs that was featured in his exclusive report. It trades for $9 a share and yields a 9% dividend. Better yet, the REIT has an indirect partnership with BP for 180 of its locations. The stock has started to move up. I’m in at an average price of a little less than $8.70. Again, in the spirit of full transparency, here’s my transaction record of the REIT:
You can get all the details in Jason's exclusive report on this special situation right here.
Continue to get to the good grass first,
Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy and Capital. For more on Brian, take a look at his editor’s page.
P.S. I have a very special invitation for you. Check out the details below:
This fall, I am attending a gala in Miami that's hosted by The Atlas Society, and I wanted to invite you to join me. I consider The Atlas Society to be the tip of the spear leading the fight over the current economic and cultural war in the United States.
But The Atlas Society is taking a different approach than most… a virtuous approach that I not only admire but fully support. You see, it is engaging with America’s young people and teaching them the moral defense of capitalism and individualism.
For me, this is the fight of the century.
As the father of five children, I can tell you there’s nothing more important than teaching America's youth the core principles of freedom of thought, free speech, self-determination, and the pursuit of economic and personal liberty. Our future is literally at stake. How will America look in 10, 20, or even 100 years from now? This is the battle of our lifetime.
If we lose, we lose it all — and I refuse to go down without a fight.
That’s why I’ve decided to join forces with The Atlas Society. In fact, I’ve staked my entire reputation on it — and I want you there with us on the front lines.
The Atlas Society’s core philosophy is rooted in the concept of “man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute.”
These are goals that are eternal.
The Atlas Society uses a diverse array of methods including creativity, social media, graphic novels, and animated videos in addition to more conventional methods like events, webinars, and publications, so it was natural that the organization reached out to us to participate in its efforts to spread its message.
- Dress Code: Black tie optional, with a captivating James Bond theme
- Date: October 5, 2023, marking The Atlas Society's seventh annual gala
- Venue: The Frost Science Museum, 1101 Biscayne Boulevard, Miami, Florida 33132
- The evening cocktail hour commences at 6:30 p.m.
Ricardo B. Salinas
Ricardo Salinas is one of Latin America's most outstanding entrepreneurs and a man convinced of the enormous potential of his country, Mexico. Salinas is the founder and chairman of Grupo Salinas, a vast business empire that includes some of Mexico's most prominent companies in the banking, specialized retail, electronic media, telecommunications, content production, insurance, and retirement fund management sectors, among others.
Mr. Saylor received The Atlas Society's Lifetime Achievement Award in 2022. Watch his remarks here. Mr. Saylor is a technologist, entrepreneur, business executive, philanthropist, and bestselling author. He is the co-founder of MicroStrategy Inc. (NASDAQ: MSTR) and served as CEO from 1989 to 2022. He is currently the executive chairman as well as chairman of the board of directors at MicroStrategy.
Learn more about the event and purchase tickets and sponsorships HERE.
For more information, please contact Development Director Ana Freund at (563) 579-4500 or firstname.lastname@example.org.
Together, let us celebrate the inspiring principles championed by The Atlas Society. By supporting this annual gala, you will help intellectually arm young people to defend their freedom and their future.