Corporate earnings and balance sheet cash are all at record highs.
Hellooooo?!?!
Dividends are at record highs, too — and yet they could still have 40% upside in the next 12 months.
Testing… 1, 2… testing…
Is this thing on? I swear, it feels like I’m playing to an empty room sometimes…
There’s plenty of money to be made — however, it seems the American investor is just sitting this rally out.
Yeah, I know, two massive stock market crashes in less than 10 years will make individual investors a little jumpy.
But swear off the stock market altogether? Seems a little extreme to me.
Still, that’s what the numbers suggest…
Every April for the last 14 years, Gallup has conducted the following poll:
Right now — today — stock ownership by individual investors is at a 15-year low. It would seem the financial crisis pushed a record number of Americans out of the stock market, even more than the one-two punch of the Internet bubble and 9/11.
Of course, unemployment is a lot higher today. And wages haven’t kept pace, which has affected the ability of new entrants into the workforce to put their money to work.
Ratings reveal fewer people are watching CNBC to get stock market information. And data shows Americans are cashing out their 401(k) plans to buy houses.
Some say this is the most hated rally in history. But the stock market — and the current rally — aren’t hated. Remember, the opposite of love isn’t hate. It’s apathy.
32% Richer in 2013
Now, I realize you, as a Wealth Daily reader, haven’t gone completely catatonic toward making money from the stock market… at least you’re getting our daily letter.
We have a great data tracking system here at Angel Publishing. I can easily check to see what kind of investment commentary Wealth Daily readers respond to. On any given day, between 8% and 12% of our 350,000 readers will open a Wealth Daily email (what we cleverly refer to as an “open rate”).
Now, if I want to get a high open rate, all I have to do is put “gold” or “silver” in the subject line of the email… and voilà! I’m at 12%.
But if I offer up the details on how you can get +15% in tax-free income with an oil well profit-share, the open rate will stink.
Maybe thousands of dollars in tax-free income isn’t interesting. I never claimed I had my finger on the pulse of the average investor…
Still, I won’t pander. Open rates be damned, I’m preaching the gospel here, even if the choir isn’t listening.
The simple fact is investment income and dividends are the lifeblood of the stock market. After all, if owning a company’s stock doesn’t mean you also own a portion of the company’s profits, then what good is it?
Read: Dividend payments have accounted for better than 70% of stock market gains over the last century.
I manage The Wealth Advisory income and dividend portfolio, along with Angel President Brian Hicks.
Our portfolio is up 32% since the start of the 2013. And yes, that includes the cash payments our portfolio companies send to shareholders.
Gold is down around 19% so far this year. I don’t know what gold will do next. Sure, it could rally. Or it could stay flat like it did from 1990 to 2002.
On the other hand, I do know what dividends for S&P 500 companies will do…
Dividends are EASY Money
Here’s a chart I recently shared with Wealth Advisory readers:
The current payout ratio for the S&P 500 is 34%. That’s the percentage of net profits these companies are currently paying out as dividends.
The long-term average for the payout ratio is 54%. I conclude dividend payments are headed higher.
This is easy money, people.
This is why we say this is a Golden Age for dividends.
We just advised Wealth Advisory readers to buy shares of an iconic American company that has a forward P/E of 9, a PEG ratio of .43, five-year growth of 10% a year, and the payout ratio is just 17%…
This dividend is half what the average S&P 500 company is paying out. In other words, the payment needs to double just to be average!
And the thing is this isn’t an isolated case… There are more high-upside dividend stocks out there than we have room for in The Wealth Advisory portfolio, so we just pick the very best ones. That’s why our portfolio is doing so well.
If you think it’s too late — that the stock market has come too far to start investing now — the upside for cash dividend payments is a pretty good counterpoint. And don’t forget there’s upside for Europe, for U.S. unemployment, for GDP growth, for real estate, for manufacturing…
The fact is the stock market today looks a lot more like it did in 2003 — when it was at the the start of an eight-year run — than it did in 2007, when valuations were stretched.
Do what you want, but I still say there’s money to be made.
Until next time,
Until next time,
Briton Ryle
@BritonRyle on Twitter
The Wealth Advisory on Youtube
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A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He is also the managing editor of the Wealth Daily e-letter. To learn more about Briton, click here.
