When I first heard this, I thought it sounded impossible.
Many investors could be looking at 10% yields from a stock that yielded just 3% five years ago. How, you might ask? By not doing a single thing.
And almost anyone can start collecting giant yields like this every year -- all from a single stock purchase.
To be sure, there are dozens of stocks that could deliver equally high yields for investors. I'd be willing to bet that you've already invested in some of these companies.
But before we talk about companies that can give you giant yields like these, I need to tell you one thing about this investment opportunity.
And many investors won't like it. In fact, some may hate it...
As with any great goal, this one will take time to reach.
Try to think of a great achievement that only took a few weeks or months to accomplish -- they are few and far between. It took decades to put a man on the moon. It took decades to develop a vaccine for polio. It took four years to construct the Golden Gate Bridge... and five years to build the Hoover Dam.
These accomplishments weren't done in a few weeks or a few months. The biggest goals -- the ones that can truly change the path of your life -- take years, if not decades, to accomplish.
It's the same in investing.
Although it won't happen overnight, you can generate significant returns in a few years by following one simple rule:
Invest in companies that consistently raise dividends, then have the patience to let them pay you for years to come.
I'll show you how...
You see, like many investors, I prefer stocks that pay dividends. But I don't chase after risky high-yield stocks. Instead, I'm MUCH more interested in a company's dividend growth than I am in its current yield.
Dividend growth isn't talked about much. You won't find CNBC or Bloomberg teaching investors about its importance. They are too caught up in the market's day-to-day movements to explain something like this. But the returns that dividend growth can help you generate are staggering.
Consider McDonald's (NYSE: MCD). It's a steady dividend grower and the perfect example of what dividend growth can do for you and your wealth.
Back in early 2011, McDonald's traded for about $73 per share and paid a quarterly dividend of $0.61 per share.
So if you invested $10,000 five years ago, you'd own 136 shares ($10,000/$73) of McDonald's. During the first year, you would've generated just over $330 in dividends (over 3% yield-on-cost).
That's an admittedly modest sum. But look at what happens when McDonald's sticks to its tradition of relentlessly raising its dividend.
Since early 2011, McDonald's has increased its dividend an average of 8% a year. Today the quarterly dividend stands at $0.89 a share. Those 136 shares now earn $484 in dividends annually -- a 46% increase from five years ago.
That means anyone who has held McDonald's for five years is now earning nearly a 5% yield on their investment.
That's just the start. Although there are no guarantees, I believe McDonald's will continue raising its dividend. And going forward, that will make some investors an unbelievable amount of money.
If you're not convinced McDonald's will continue to boost its dividend, let its history tell the story. As a Dividend Aristocrat, the company with the golden arches has raised its dividend payment for 39 consecutive years (and counting).
If McDonald's continues to grow its dividend by 8% annually, then those original 136 shares will then earn $711 a year -- equivalent to a yield of 7.11% -- in just five more years.
And just five years after that, the $10,000 investment would earn $1,045 a year in dividends -- a 10.45% yield on the original investment each and every year. And that figure will continue to grow as long as McDonald's keeps increasing its dividends.
These returns are from dividends alone. They assume zero dividend reinvestment.
And none of this even mentions any capital gains that come with companies that raise dividends. For instance, McDonald's shares have grown more than 50% over the past five years.
Also, don't forget that was just for a $10,000 investment made five years ago. Just imagine the size of the yields you could have had in just a few years by investing a few thousand more into McDonald's and letting it grow for even longer periods of time.
The strategy is simple. Buy dominant companies like McDonald's, hold onto them for the long haul, and let dividend growth do all the work for you.
But remember, there's no sense in putting all of your eggs in one basket. Instead, the best way to do it is to buy a basket of these of dividend growers trading at a great value -- and a great place to start is by looking at my new list of the Top 10 Stocks For 2016.
In this special presentation, I've uncovered several more investments that are similar to McDonald's -- ones that dominate their markets, pay increasing dividends, and repurchase billions in stock. I've even found a company that's paid a growing dividend for over 40 straight years (less than 1% of stocks can boast anything close to that kind of safety and growth). To learn more about these ideas, including several names and ticker symbols, visit this link.