Categorized | Passive Income

The Secret to 24% Yearly Gains — With Safe Blue Chip Dividends

The best time to buy a dividend grower is usually any time – if you’re holding period is long enough, that is. But, what if you don’t have years to wait to get rich?

Today, I’m going to show you a simple dividend growth “timing formula” that will help you accumulate great wealth with shareholder-friendly stocks. I’m talking about gains up to 40% per year, which means your money will double every two years.

Worse case, you might have to settle for 24% annually – which means your money will take three years to double!

Of course not every buy will bank you 40%. But the “laggards” aren’t too shabby, either. My Hidden Yields subscribers have used this timing technique many times over the past two years. Their portfolios have returned an amazing 24% per year over this time period (versus 15% for the S&P 500).

How’d we do it? How are their portfolios already on pace to double in value by this time next year, just two years into their investments?

Simple – we bought stocks with prices that were due to “catch up” with their soaring payouts. The first of the two timing signals we’ll discuss today.

Buy Relative Yield That’s “Out of Whack”
Dividend raises, sooner or later, are reflected in a price increase for the stock.

We’re looking to buy stocks trending towards “later” because their share prices are due to catch up quickly. Let me explain.

If a stock pays a 3% current yield and then hikes its payout by 10%, it’s unlikely that its stock price will stagnate for long. Investors will see the new 3.3% yield, and buy more shares. They’ll drive the price up, and the yield back down – eventually towards 3%. This is why your favorite dividend “aristocrat” – a company everyone knows and has paid dividends forever – never pays a high current yield. Its stock price rises too fast!

For example let’s look at United Parcel Service, Inc. (NYSE:UPS), which always seems to pay between 2.5% and 3%, give or take. This yield already gets you ahead of the game in today’s low rate world. Next, let’s consider the stock’s price appreciation which moves remarkably in tandem with its dividend:

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