I love it when someone calls me boring…
I’ve been fortunate enough to experience many things in my life. I worked at some of the biggest banks on Wall Street, became a board-eligible eye surgeon, made my own wine, and got my pilot’s license. I now spend my time traveling the world and sharing advice about investing and living well.
I want to give my readers the advice I’d want to receive if I was planning to retire or currently in my retirement.
That’s why my goal with my Income Intelligence newsletter is to generate the highest income returns possible… with minimal risk.
There’s something special about getting income checks each month or quarter. And as I’ll explain today, consistent and safe income is key to any successful retirement…
This is especially true in today’s market, where it’s nearly impossible to predict what’s going to happen to stocks… where bitcoin is taking up space on front-page headlines… and where folks seem to have forgotten that you should be concerned with return of capital when the market hits crazy valuations.
Take a look at how much of the S&P 500 Index’s return has come from dividends over the years…
For more than 90 years, dividends were responsible for more than 40% of the total market return. Imagine the poor investor who based his entire portfolio on stocks that can only generate a return if their prices go up.
That’s a lot of money to leave on the table.
Plus, dividend-paying stocks are a defensive tool. As you can see in the chart above, in decades where major financial crises occurred like the 1930s and 2000s, dividends could have kept your portfolio afloat.
And dividend-paying stocks aren’t the only way to collect income…
You can find many different types of income-producing assets. In Income Intelligence, we track almost all of them. Below is an indicator we publish in our monthly issues. It shows whether an asset class is a buy, hold, or sell based on current market conditions…
The indicator flashes a buy signal when assets have uncommonly high yields and upward momentum, which is an extremely rare combination.
Last month, it told us that master limited partnerships (MLPs) were a buy.
MLPs are a special class of oil and gas pipeline companies that pay high distributions in exchange for favorable tax treatment. These companies have taken it on the chin in the past three years… losing more than half their value.
That sell-off made sense for a while, when oil prices crashed in 2014… but it doesn’t any longer. Prices have more than doubled from their 2016 lows, and production is higher now than it was before the 2014 crash.
Today, we can buy MLPs for the cheapest they’ve been since the financial crisis. And just as important, they pay strong yields today. It’s the perfect opportunity to buy.
I’m extremely proud of my Income Intelligence portfolio. We see little volatility in our positions. And our average yield across all positions is more than double what you’d get by buying a S&P 500 index fund. We profit from the dividends we collect and from price appreciation.
To be clear, if you want a “get rich quick” strategy, focusing on income-producing assets isn’t for you. (I recommend the lottery instead.)
However, this strategy is perfect for investors who want a market-beating, consistent stream of cash payments… as long as you don’t mind being boring, of course.
Here’s to our health, wealth, and a great retirement,
Dr. David Eifrig
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Source: Daily Wealth