Weekly CEO Sells Highlight: Activision Blizzard, Nielsen Holdings NV, Gilead Sciences, Autodesk
Most people are going to miss the biggest opportunity to money in the next decade.
I recently told you about the upcoming “dividend decade.” I predict there will be no gain in the broader market during the next 10 years (adjusted for inflation). Instead, I believe dividends will account for all of the market’s total return.
The reason is simple…
During the past 30 years, the United States has grown faster than any time in history. But that growth was fueled by debt. Household debt has soared from 60% of income to 120%.
Now we’ve reached a point where the average American can’t easily take on any more debt. In fact, since the recession, the trend among U.S. households has been toward reducing debt. The bill is coming due on the largest segment of the American economy.
You see, while I believe the market as a whole will remain flat, a carefully-selected group of individual stocks could still see capital gains — in addition to steadily-rising dividend payments.
This distinction could make you a lot of money…
As you can see, since its spinoff, Philip Morris (NYSE: PM) — a boring cigarette company — has returned 113%. Meanwhile, the S&P 500 has gone nowhere. In that same period, Kimberly-Clark (NYSE: KMB) — which makes toilet paper, diapers and Kleenex — is up 65%, and Coke (NYSE: KO) is up 49%.
What do all of these companies have in common? First, they all operate boring, predictable businesses that see steady demand in any sort of environment. This means even in a slow-growing economy, these companies can prosper.
Second, they all have large international operations. These companies aren’t focused solely on the U.S. market. Instead, they’ve built their businesses abroad, where growth is much faster.
Most important, they all have extraordinary track records of growing dividends.
I can’t stress enough the importance of rising dividends on your returns — especially in a flat market.
In just a little more than four years, that quarterly payment has increased 85%. Anyone who bought just four years ago is earning nearly 7% a year on their original investment — a figure that will only rise with future dividend increases.
Perhaps equally important, companies that boost their dividends also tend to deliver large capital gains over time.
Brookfield Infrastructure Partners (NYSE: BIP) — which owns electric transmission grids, ports and railroads — has raised its dividend five times, or 41%, since going public in May 2008. It has returned 171%.
Colgate-Palmolive (NYSE: CL) — which sells personal-care products and has raised its dividend 55% in the past five years — is up 55%.
Action to Take –> The trend is unmistakable. “Boring” companies that raise dividends beat the market. And staring at the potential for years of slower growth, that outperformance will be even greater in the years ahead.
Remember, the S&P 500 has lost 1% in capital gains during the past five years. But it’s gained 10% when you include dividends.
The “dividend decade” is real… and we’re already in the middle of it.
[Note: In my newest report — The Top 10 Stocks For 2013 — I’ve identified 10 stocks that are already benefiting from the “dividend decade.” During the past five years, these 10 stocks have returned 87%… despite a flat market.
This includes one stock that’s gained 137% in three years… another that’s raised its dividend 463% since 2004… and another that has more than $9.21 per share in cash (nearly half of its share price). To learn more about my Top 10 Stocks for 2013, visit this link.]