Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

Stock Market Bottoming Signals…

Wednesday, August 3, 2022. Here’s a good piece of intelligence I’m sharing, and have also created a watchlist of symbols to track for future use…

“Two Indicators That Will Signal a Stock Market Bottom

Aug 2, 2022

On a cool autumn morning, a man and his dog stroll through their neighborhood park.

The two walk along together for a full hour. They start at the same place, and they end at the same place. But along the way, despite being connected by a dog leash, they take vastly different paths.

The man’s path is steady and consistent. He walks straight, rarely moving side to side. He doesn’t speed up or slow down. His pace and direction are obvious and consistent.

The dog, on the other hand, has a much different experience.

There’s no straight line or regular stride for him. He bounces from one side of the path to the other. He sits down to scratch an itch. He jumps up to meet an approaching dog. He sprints ahead to the end of his leash, pouncing on a fluttering leaf. Then he falls far behind to smell a tree.

The man is steady, predictable, reliable. The dog is erratic.

If you’ve ever wondered about the relationship between the economy and the stock market, this is it…

The man’s the economyThe dog’s the stock market.

The two are inextricably linked, but they behave in completely different ways.

The economy is slow and steady. It almost always grows a few percent a year, and even down years don’t fall by much.

The stock market, by contrast, is dramatically influenced by investor enthusiasm. It can rise 35% in one year, for no good reason, and then crash 40% the next year… with little fundamental change.

Still, both are linked. Growing profits are what allow stocks to boom. So in a terrible economy, stocks can’t soar for years on end. For that same reason, you won’t see a long-term stock market bust when the economy is strong.

Clearly, what affects the economy also affects the stock market. And right now, they’re both in bad shape.

In May, I wrote that a recession was becoming an economic inevitability. In the three months since, that has become the consensus opinion.

The most recent Bank of America Global Fund Manager Survey shows that the majority of professional money managers expect a recession. And a July Bloomberg survey shows that since March, recession odds have more than doubled to around 50%.

Meanwhile, stocks are already in a bear market. Frothy sectors are down 50% or more.

It has been a tough road for investors. And knowing that difficult economic times are ahead too just adds salt to the wound. But don’t give up yet.

You see, we’ve been through all of this before. Recessions and stock market busts are nothing new. And studying history gives us a useful guide to knowing how this painful period could play out.

So this month, we’ll look at the relationship between stocks and the economy. We’ll see what’s typical in times of upheaval like we’re experiencing today. And more importantly, we’ll cover two simple indicators that will signal both an economic downturn and a stock market bottom.

Let’s begin by looking at how stocks behave during recessions…

What We Can Expect From This Stock Market Bust

The big difference between the man and the dog is volatility.

The economy is lumbering. It’s steady. The stock market is manic. It’s always moving around… more than it probably should.

Because of that, we get plenty of bear markets, even when the economy is doing fine. Heck, one of the most brutal stock busts happened without any economic slowdown.

That was Black Monday in 1987. The S&P 500 Index fell 20% in one day. And overall, that bear market led to a 34% decline.

In total, there have been six bear markets that happened outside of recessions since 1928. Take a look…

Bear markets have become less common in the post-World-War period since 1950. But they can and do happen. Again, that dog is always scurrying around. And he’ll often find trouble without disturbing the man one bit.

However, history also shows that it’s more typical for bear markets to go hand in hand with recessions…

There are a few things to note here. First, we’ve had 13 bear markets during a recession. They’re twice as common as the nonrecession type.

Second, these kinds of bear markets tend to be more painful. The average decline is 10 percentage points more than those not accompanied by recessions. Even if you remove the 86% Great Depression bust, the average percent decline in this second table is still 37% (seven percentage points more than in the first table).

Third, these kinds of bear markets, on average, last about 50% longer than bear markets outside of recessions.

This all makes sense. The man and dog are walking the same path. So if the economy slows, we should expect stocks to follow. And we should expect the bust to be worse in that scenario.

That’s the world we’re in today. So let’s put the current bear market into context…

Stocks peaked on January 3, 2022. That means we’re seven months into this bear market. That’s about half the typical length. Similarly, stocks were down 24% at their worst. That’s just a little more than half the typical historical decline.

Much of the damage is likely done. But averages are… just averages. Every situation plays out differently. Things could still get worse from here, and the pain could last longer than any of us would prefer.

Thankfully, there’s a playbook we can follow to successfully ride out whatever waves may come our way next. This playbook is built around two simple prices that indicate when the economic recovery is beginning and when the stock market bust is ending…

Two Indicators That Will Signal a Coming Stock Bottom

Stocks are forward looking. They anticipate bad times ahead and fall before those bad times hit. But that also means they then recover before good times rematerialize.

Because of that, stocks tend to bottom before a recession comes to an end. Since 1970, that has happened five out of six times. The only outlier was the dot-com bust.

So we can expect stocks to turn around before the economic news does. But when that happens, how can we be sure the bull has truly returned and that it’s safe to buy in?

Well, we can look to two markets with a strong history of bottoming even before stocks do: investment-grade bonds and copper. Let’s cover why that happens and how each played out over the past two decades…

Investment-Grade Bonds

Investment-grade bonds are the safest bonds you can own. They come from steady, reliable companies, like Apple (AAPL), Microsoft (MSFT), and Johnson & Johnson (JNJ).

In trying times, investors sell first and ask questions later. That goes for both stocks and bonds. But the investment-grade bond market tends to recover before the S&P 500.

That’s because the only way we’d ever see major losses from investment-grade bonds is if the world as we knew it essentially ended. And while bond investors get scared right along with stock investors on bad market news or economic concerns, they also wake up much faster. They quickly realize the bad news does not, in fact, portend the end of days… leading investment-grade bonds to bottom well before stocks.

That was the case in 2002, during the final stage of the dot-com bust. Investment-grade bonds – as measured by the iShares iBoxx Investment Grade Corporate Bond Fund (LQD) – bottomed that July… a full three months ahead of stocks.

It was the same story during the financial crisis. Investment-grade bonds bottomed in October 2008… almost five months before stocks.

What’s more impressive is that by the time stocks finally did hit their low in early 2009, these bonds had already rebounded so much that they’d recovered most of their financial-crisis losses. (They did go through another correction during that time. But, importantly, they did not hit a new low alongside stocks.) Take a look…

The pandemic bust in 2020 was a bit different. It ended as quickly as it began. But even then, investment-grade bonds managed to bottom a few days before stocks did.

The trend here is clear… Investment-grade bonds have a history of bottoming before stocks. And that makes them crucial to watch right now.

Now, before we look at what investment-grade bonds are telling us in 2022, let’s look at our second indicator…

Copper

Copper is the most important industrial metal. We use it to build just about everything… from roofing and plumbing to machinery and wiring. If you want to build stuff for the modern world, you need a lot of copper.

Because of that, copper prices are sensitive to the economy. A recession means a slowdown in demand. Copper prices tend to crater when that happens.

But once again, folks realize that a recession doesn’t mean copper demand will go away for good. The copper market wises up, and prices bottom. Importantly, that tends to happen before stocks…

During the dot-com bust, copper bottomed in November 2001. By the time stocks hit their lowest point nearly a year later, copper was already back up double digits.

The story was the same during the financial crisis. Copper bottomed in December 2008, months before the overall market did. And it was reaching multimonth highs by the time stocks hit their ultimate low. Take a look…

Again, this was a powerful sign. It told us that the worst of the economic destruction had already happened and that a stock bottom was on the horizon.

Now, to be fair, copper bottomed right alongside stocks during the 2020 bear market. But that was a unique time. Things moved more quickly than any other bust in history. So we can give the metal a pass for not giving us weeks of notice.

Between investment-grade bonds and copper, we have two key indicators of when the recession and, more importantly, the bear market could be nearing their ends.

What Our Indicators Say Today…
and What It Means for Our Portfolios

Now that we know the two crucial indicators to watch, let’s see what they’re showing us right now…

LQD bottomed two days before stocks did in mid-June. There have been ups and downs since then. But overall, the trend over the past month is up.

If stocks turn down again to hit new lows but LQD continues higher, it’ll be a powerful signal that the bear market is ending soon. But we’ll need to wait and see if that plays out.

For now, it’s safest to assume investment-grade bonds have not given us a green light. And that means lower lows are likely for stocks.

As for copper, the result is clearer…

Copper prices have absolutely crashed. The metal is down more than 20% since early June. It hit its most recent bottom on July 14, a month after the stock market’s June low. Since history tells us stocks bottom after copper, the current discrepancy indicates the market bottom is likely not in yet.

Just like with LQD… if stocks turn down again to hit new lows but copper continues higher, it will be a green light to get greedy. But we’re not there yet.

Of course, like anything in the world of finance, these indicators aren’t perfect. They won’t tell us exactly when the bottom is in, but they will help us build an investment case that we can act on. Again, they’ll tell us when it’s safe to get greedy.

Right now, both LQD and copper say there are tough economic times ahead. Anyone paying attention knows that. And the S&P 500 – that crazy dog tugging on its leash – has acted like it all year.

History says what we’ve seen could get much worse. We’re not rooting for that. But knowing what’s possible makes preparing for it much easier.

In the meantime, we’ll focus on finding select areas of the market that are poised to buck the overall downtrend. And we’ll put safe investments in our portfolios to withstand tougher times on the horizon.

Not every move will work out. But thanks to the two-indicator playbook, we know where we’re headed and how things will likely go from here. That’s crucial as this bear market plays out and we inch closer to an incredible buying opportunity.

Good investing,”

I’ve created a watchlist to track corporate bonds and copper… They just turned back down only the past 2 days… let’s see where they go, and what they might say!

Harold

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Uncategorized, Stock Market Investing, Dividend Growth Investing, Retirement Income, Stock Market Timing

July 2022 Portfolio Dividend Income

Monday, August 1, 2022. Over the weekend our email announcement arrived that our brokerage statements were available. That always excites me! Who paid us? How much? Did we get any raises???

Now, I’ve a piece of BAD news. My hard drive in my PC failed about 2 or 3 weeks ago, necessitating I buy a new machine. I did, and I love it. It’s a great PC. But, the weirdest thing happened. ALL my files were recoverable between my local shop and my backup service… except for a few of my very most frequently used Excel files… which could only come back to me as having been saved from back in 2016!!! It was really weird, not to mention… USELESS!

So, anyway, I could go back thru past statements and recreate data content, but I don’t want to take that kind of time for that. I’ll report what I’ve got and go with that. First off, we were paid by 15 of our holdings, and they were: AFG, BST, BSTZ, IIPR, IMOS, KEN, LRCX, MAIN, Money Fund, MO, O, SRE, UTG, VICI and XEL. The amount was tremendous, and we are very happy!!!

So, again, only able to go with what information I’ve got… were there any raises? As I was going through the charts, I was thinking I wouldn’t find any… then I got to NEP, NextEra Energy. There was a dividend increase in July by NEP from $2.51 a share 12 months ago, to $2.89 a share for a 15.14% dividend increase “Pay Raise”… that should at least meet real inflation… maybe! And, yup, that was the only new raise reported this month.

One other matter I can report is the average divided of all our holdings 12 months ago, and their payout, and that which we receive, on average today. 12 months ago, the average dividend per share for all we own was at $3.17 Today, our average dividend for all shares is now $3.66. That’s a $.49 increase for an annual “pay raise” of… 15.46%!!! That’s what I’m talking about!

If you were to buy “our portfolio” today, your yield upon purchase would be 2.68%. That’s decent. But, we created this thing less than 2 years ago, and even added shares at higher prices and lower yield along the way… and yet our present portfolio dividend yield now stands at 4.33%, or some 61.57% greater in some 23 months! Is that incredible, or what???

What’s in your portfolio?

Harold

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Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

#2 Pfizer, a “Forever” Stock?

July 30, 2022. I recently wrote up United Healthcare below. I think it is an absolutely tremendous idea. I’ve had some for quite some time, and consider it among very best ideas ever… only wished I had bought more to begin with. Next ‘buyable dip,’ I’m going to add some more. Next up, according to the new letter I referred to earlier… please read below, is Pfizer, Symbol PFE. Here’s the write up on it. I don’t have any… yet. After I read and study it on my own, I’ll make a decision and tell of it right here…

Forever Health Stock No. 6: Pfizer (PFE)

Pharmaceutical giant Pfizer (NYSE: PFE) is one of the world’s best health care businesses.

You probably have a Pfizer product in your medicine cabinet. The company makes the pain reliever Advil, Robitussin cough syrup, and multivitamin Centrum. It’s also the maker of ChapStick lip balm.

Over the past few decades, Pfizer produced some of the world’s biggest blockbuster drugs, including antibiotic Zithromax, antidepressant Zoloft, and the bestselling drug of all time, cholesterol reducer Lipitor.

Now, some of its bestselling drugs include Ibrance for breast cancer, Eliquis for blood clot prevention, and Xeljanz for arthritis. These drugs all have market-leading positions and, importantly, a lot of remaining years of patent protection.

During the COVID-19 pandemic, Pfizer was one of the companies to step in with a vaccine. And not just any vaccine…

Pfizer used innovative mRNA techniques to create its vaccine. It was developed in record time, deemed safe by the FDA, and is one of the most effective vaccines ever created in history exceeding 90% effectiveness.

The scientific community is embracing this new method of vaccine development. Pfizer will continue to leverage this experience to immunology with new products.

Pfizer finished 2020 with $42 billion in revenue. This jumped to $81 billion in 2021 and is expected to approach $103 billion in 2022. This jump in sales is directly related to Pfizer’s rapid response to COVID-19 and the pandemic.

Importantly, FCF more than doubled from $10 billion in 2020 to $28 billion in 2021. This year, FCF is expected at $35 billion. This equates to a monster 34% FCF margin. This means that a third of every revenue dollar can be used for whatever the company wants.

And right now is a great time to be holding a bunch of cash. A surge in deal-making by biotechnology companies could boost the stocks of pharmaceutical companies looking to buy up new technology.

For example, Bristol-Myers Squibb (BMY) announced its acquisition of precision-oncology company Turning Point Therapeutics (TPTX) for $76 per share. The $4.1 billion cash deal is a 122% premium to Turning Point’s final closing price when the deal was announced.

This deal follows Pfizer’s agreement recently to buy migraine-drug developer Biohaven Pharmaceutical (BHVN) for $11.6 billion.

Biotech stocks are coming off their worst spring since 2002. And the lower valuations are making smaller biotech firms prime targets for acquisition. Take a look at the following chart of the round trip in the Nasdaq Biotechnology Index from the time the WHO declared the outbreak of a global pandemic to today.

Over the past 30 years, Pfizer’s stock has been an outperformer – beating the S&P 500 by over 400 percentage points of total return. The stock has shown remarkable resilience over the past year as global markets tumbled amid rising interest rates, inflation, and geopolitical risks. Pfizer is up 33% versus a 9% drop in the S&P 500.

Now reloaded with billions in cash, we expect this medicine maker to continue to thrive and create total returns that exceed 1,000% over the longer term.”

First off, I didn’t read anything there that really made me want to be a buyer, so because I really look at long-term charts, I need some 15 past years of data to get a feel for it… and especially the past few years, which as I read above, would be largely ‘skewed’ by Covid ‘vaccine’ development and response, which I see as temporary.

Let me begin with… Back in the ’08/’09 debacle, PFE took a tremendous tumble and slashed its dividend… by HALF! That doesn’t excite me! From there, at $.64, it is now $1.60… so, not even a triple since 2010. The rate of dividend growth over the years has been getting successively smaller, not greater… The most recent increases being the smallest! The long-term EPS line is absolutely freakish to look at. Future projected earnings increases look to be every bit as good as the write-up above says… But, honestly, the EPS estimate all this year has been trending downward, and the price is reflecting PFE as something of a non-starter at this point.

I ranked PFE #2 of the 7 suggestions, according to the ranking of my program. The editors made it number 6 of their 7, but I see NO indication there was an order or ranking to their effort, so it’s immaterial. What is material is this: I own another issue in the same industry group, and have for some time. I find the Price, EPS and Dividend Payout charts to be far more compelling to me… and that is for my holding in Bristol-MyerSqibb, BMY. Now, I would NOT tell anyone not to buy Pfizer. I respect the work of the editor and his analysts too much to say such a thing as that… But I’ve already put my money on BMY, and at least, for right now, it looks to me to be the better idea.

What I AM going to do is to create a second watchlist… I have one already, with the editor’s 7 picks. I’ll create a second, and have only those 7 that I prefer… it’ll open with UNH and BMY for starters, and then either include more of his, if I own or really like ’em, or with another idea of my own that I own from that industry, or would (and will) buy instead!

Look for another idea soon… They liked it, and I own it already!

Harold

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Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

#1 United Healthcare, a “Forever” Stock?

July 27, 2022. Nobody’s foolin’ anyone… There’s probably no such thing as a real forever stock, but the whole idea behind those that I call “safe-dividend growers” is to find those that just seem to fit a profile where you could buy, and hopefully, hold forever. And that’s the point behind the new investment newsletter that has just started, called Prosperity Investing. See my previous recent posts.

The first of the 7 recommended forever stocks on their list was UNH, United Healthcare. So, let me begin by saying I would rank them according to my own efforts. They listed this first, and I need to read they’re full write-up to learn if they were trying to rank them in an order… I put it first. I’ve owned UNH for some time now. Our position has appreciated 67% and our yield on our purchases is 2.07%… the current yield is 1.24%. This is for sure a safe-dividend grower! I should have overweighted it in our portfolio. We only have a standard weighting of some 2%. Shame on me!

Charting some 15 1/2 years back, as I now like to look, I see they commenced dividend growth in ’10 for $.50 a share. The picture from there, for the past 12 years is one of an ever-growing stair-step pattern of consistent dividend increase “pay raises” to our present $6.60 a share payout. I don’t need to tell you… That’s fantastic! So, let me post their analysis:

Forever Health Stock No. 1: UnitedHealth (UNH)

UnitedHealth (NYSE: UNH) – or “United” – is the largest managed care organization (“MCO”) in the U.S. by revenue. Its primary product is health insurance, which it offers to tens of millions of people through employers, the state and federal government, people on Medicare and Medicaid, and more.

At the end of 2021, the company had a prominent role in the health care of 100 million people. That’s almost one out of every three people in the U.S. These customers brought in $290 billion in revenue and $20 billion in free cash flow (“FCF”) – the amount after all expenses and capital expenditures have been accounted for.

United operates through two operating segments: UnitedHealthcare and Optum.

UnitedHealthcare is mostly the health insurance part of the business.

It works directly with more than 45 million people in the U.S. – or one out of every seven people – and 5 million more abroad.

Optum, however, is what really sets United apart from other health insurers. It’s a laboratory helping provide care aided by technology and data. It’s this part of the business that makes United a Forever Health Stock.

Optum is comprised of three units:

  • Optum Health – These are businesses that deal directly with patient care. For example, the company employs or aligns with more than 60,000 doctors working for patients across more than 2,000 primary care, urgent care, and outpatient surgical facilities. In 2021, this business touched 100 million people… or one in every three Americans.
  • Optum Insight – Over the course of business, the company gathers massive amounts of health care data from the transactions it processes for customers. It then takes that data and transforms it into technical and predictive tools. United sells these tools to customers across the health care supply chain. This information is all de-identified and used for analysis only.For example, Optum Insight can isolate millions of people taking statins (cholesterol-lowering drugs) and see how they work. Some drugs may work better than others. Some might be better for younger patients but not work as well in older people. This information means United has early indicators on all kinds of health care-related trends. It can suggest interaction earlier on a certain type of drug or therapy that might be more appropriate given the data.
  • Optum Rx – This is the company’s pharmacy benefit manager business, or “PBM.” PBMs are essentially middlemen between drugmakers and insurance companies – negotiating lower prices and handling reimbursements. This business serves United’s health insurance customers as well as other standalone entities needing access to medication.

United offers just prescription drug coverage to more than 3.7 million people on Medicare. It also sells its PBM services to smaller MCOs that aren’t big enough to manage their own PBM arm. There’s something else to note here, too… Trends in prescription drug patterns often are a leading indicator of more serious conditions to come. For example, if an otherwise healthy patient begins taking a cholesterol-lowering statin, this could suggest the first signs of heart disease. AI analysis of prescription-drug trends leads to early intervention, better outcomes, and more savings.

The Optum segment shows how United transformed itself from a health care company to a company fueled by monetizing the data and transactions through the health care system.

In 2021, Optum accounted for 41% of United’s gross revenues. However, its 50% of earnings as profit margins exceed those of the insurance business – showing how United has become a comprehensive health care services business.

Over the past five, 10, and 20 years, United’s stock has handily outperformed the S&P 500. As you can see in the chart below, United’s total return from June 2002 to June 2022 was 2,484% versus the S&P 500 at 495%. A $10,000 investment has turned into almost $260,000 including dividends.

The way that it does this is something specific to health care stocks… something a lot of people don’t realize. Health insurers have a built-in “price increaser.” Let me explain…

Over the 50 years from 1966 to 2016, average health care costs in the U.S. rose 10.7% per year. United and other health insurers are in the health care finance business. Ultimately, it’s their job to manage and pay for those rising costs.

Health insurers don’t create these health care costs. They reflect them. This is what so many investors miss when they pass these stocks by.

Day in and day out, people seek care from doctors and hospitals. Those providers then charge prices for those products and services. United and other MCOs then have to pay for those medical costs on behalf of the people who bought insurance.

For United and others to be successful, they have to increase their prices each year to cover the almost guaranteed rise in health care costs. Like any business, as costs go up, so does the price of the product. In the case of MCOs, they must raise their prices by at least the increase in average medical costs… the 10.7% average we just mentioned. Some years it’s higher and some years it’s lower. But it’s always higher than overall inflation.

Therefore, United enjoys a built-in “price increaser” equal to this rate. As long as United matches its price increase with expected medical inflation, its revenue, earnings, and cash flow will rise consistently.

In other words, investing in United is like investing in the ever-rising costs of health care in the U.S. It’s pretty much guaranteed to keep raking in cash and increasing prices. And that’s led to big investment gains.

Over the past 10 years, United stock has had a total return of 1,021%. If future returns are half that number, United would still outperform the broader market… and we’d still consider it a Forever Health Stock.

As of right now, there’s no indication of any changes on the horizon in how the U.S. health insurance system operates. That means we expect United to keep growing revenues, earnings, and cash flow for the foreseeable future.”

That’s a great write-up, isn’t it? It makes me want to do this: Sell-off a couple of our other holdings, and put the proceeds into this one. It would result in a present reduction of our portfolio yield, but I could match our present portfolio dividend, and ensure a likely better, safer future yield and growth.

Now, we also hold a smaller 1/2 position in Elevance, symbol ELV, (formerly Anthem until just recently), another fine healthcare company, so 3% has been put into this very area, but nonetheless, I want to add some more UNH, and keep our ELV.

What’s in your portfolio,

Harold

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Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

If There Were Ever “Forever” Stocks

Tuesday, July 26, 2022. If you have not yet, read my previous post below… There were 7 ideas put forth by the editor and his two colleagues, the symbols of which I will share here and now. I will then conduct my own manner of research and follow up with what I see on each one from out of that resource I have employed for many years. Those 7 “Forever” ideas are, in the order listed by the publisher: UNH, CVS, OHI, PKI, MDT, PFE, and GILD.

I don’t know if the order listed by the publisher was meaningful, but I will order them according to my understanding, and write each up from best the least best among the 7. I very first early impression would put UNH at the very top, with PFE behind it. If you have read me for any time at all, you already know that I have owned and recommended UNH and CVS for quite some time already.

So, more to come, as I should get back to the subject…. I’m excited for the prospect of it!

Harold

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Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

How to Find ‘Forever Stocks’ in Today’s Wild Market

“Lots of folks are feeling pain right now…”

Sunday, July 24, 2022. I have hit a jackpot! Please read all below, from one of the very best in the investment newsletter industry. The man’s record is among the very finest, and we can piggyback on it, and do even better, as I will explain how! From Dr. David Eifrig and the launch of his brand new service:

“With stocks having a bumpy year and falling into bear market territory, people’s portfolios are suffering.

But today, there’s still a place to find “forever stocks” – the kind you can and should stash away for as long as you can with barely a second thought, no matter what the market or economy is doing.

This sector also famously outpaces inflation year after year – something you can use to your tremendous advantage if you know how.

Right now, health care stocks with many great businesses are trading for ultra-low valuations. I’m going on record as saying that this is one of the best moneymaking opportunities I have seen in my decadeslong career.

To help me navigate the complex world of health care, I’ve put together a team of experts…

First, Thomas Carroll is a health care investing legend. Fortune magazine once named him the No. 1 health care analyst in the U.S. He holds a master’s degree in health care finance from the Johns Hopkins Bloomberg School of Public Health.

Tom spent 17 years as an analyst and managing director for Legg Mason and Stifel Financial, with $752 billion in assets under management. And he has won the industry’s top awards, including Fortune‘s All-Star Analyst Award and the Wall Street Journal‘s “Best on the Street” Award, twice.

I’ve also teamed up with John Engel. John is a former research scientist and world-class tech and biotech analyst. He holds a Master of Science from Johns Hopkins University and went on to work in biotechnology startups and world-renowned pharmaceutical companies.

In other words: John actually did the types of laboratory research that we’re most excited about today.

I’ve never been more excited about investing in health care. In a few years, I’m sure some of my biggest winners will be from this sector.

I’m so bullish that I recently sat down to discuss this incredible opportunity in health care.

Here’s to our health, wealth, and a great retirement,

Dr. David Eifrig
July 23, 2022″

You see, I get everything the man publishes, but until now, have not paid a great deal of attention to it because I had discovered my own niche… You know what that is; Safe-Dividend Growers! But, I also have experienced this first-hand… He is absolutely correct… my best selections have typically come from out of the healthcare sector of the economy and market, so I am excited to examine all that he and his colleagues should recommend. Further, by employing my own means of examining his picks, I can possibly either bring the best of his best here… or with just a few more clicks of my mouse, conduct an examination of what what is termed “shadow stocks,” those ideas that are in the same industry group, but may appear to be an even better opportunity than what the Doc puts forward. We’ll see. In any case, I’m very much looking forward to working on a “refinement” of my own strategy and research, and to bring the very best possible ideas to your attention right here… May God help me!

Harold

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Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

This Is What I’m talking about!!!

Friday, July 22, 2022. “Want To Systematically Build Wealth Over Time? Look For This Instead Of Yield…

Suppose I offered you a million dollars cash today. Or, I could give you one penny today, two pennies tomorrow, four pennies the following day, and so on, for an entire month.

Many would choose the cool million. After all, option B would only yield a grand total of $1.27 after the first week and $163.84 after the second. But that amount will continue to grow exponentially. A steady doubling would produce a little over $5 million after thirty days.

You’re probably familiar with stories like this. They’ve been around for ages.

For example, there’s an old folk tale involving a king and a peasant that illustrates the same concept. After doing a favor for the king, the peasant asks for a seemingly humble request: To receive one grain of rice for the first square on a chessboard, two for the second, and so on until reaching the 64th square.

We already know that by the 30th square, the peasant would be looking at a half billion grains of rice — probably enough to make him the wealthiest person in the kingdom.

So where am I going with all this? Well, it’s simple. As investors, we can’t underestimate the importance of dividend growth over time. A stock might only dish out a few pennies per quarter today. But over time, that distribution could multiply several times over, greatly enriching shareholders.

Systematically Build Wealth Over Time

So let’s try this another way. Would you invest in a stock with a dividend yield of 1%? Probably not if you’re an income investor. But by definition, dividend investing is a long-term approach to systematically build wealth over time. So it’s not about what a stock paid last quarter, but what it might distribute over the next 10 to 20 quarters or more.

That being the case, dividend growth prospects should always factor heavily into your decision.

Consider Lowe’s (NYSE: LOW). Just 10 years ago, the home improvement retailer offered a meager 16-cent quarterly dividend, barely enough for a payout of 2%. But the distribution rose relentlessly each and every year thereafter. Before long, the dividend doubled, and then nearly doubled again. The latest hike brought the quarterly payment up to $1.05.

And this is what gets lost on most investors… Sure, the stock has gone on an amazing run. But investors who bought just a decade ago are also earning a yield-on-cost of nearly 20%. And they would have collected substantially more income along the way than with stocks that had a higher starting yield, but fewer and smaller dividend increases.

Meanwhile, the strengthening bottom line that fueled those dividend hikes has also propelled the stock from around $22 to nearly $200. So the dividend yield hasn’t really changed much over the years and still stands around 2%. But investors would be sitting on a total return more than 800%.

Closing Thoughts

One last hypothetical scenario: Would you rather take a job that pays a flat $50,000 annual salary with no growth, or one that pays $40,000 to start, with 10% yearly pay hikes?

The first job would generate $500,000 in cumulative salary over the ten-year period. The second, while less lucrative in the early years, would reach $50,000 in salary by the fourth year and continue to grow ever higher. By the tenth year, you would be pulling in $94,000 annually and would have earned a total of $637,000.

Now, if we drop the extra zeroes and add a percent sign, you see what I’m really getting at.

While a 2% or 3% yield won’t put as much money in your pocket today as a 5% yield, it might well generate significantly more cash over the next five to 10 years if the payouts are growing at a faster pace.

And if the math is compelling for stocks with modest 2% yields (like Lowe’s), then you can imagine the potential for stocks that yield more and continue to raise their dividends well into the future.

Take my advice: income investing isn’t just about the yield. Dividend growth is the name of the game. And it’s about to become even more popular for a couple reasons. First, stocks with rapidly rising dividends will help investors be better equipped to keep pace with inflation. Second, strong double-digit dividend growth is becoming increasingly hard to find.

My High-Yield Investing subscribers and I are laser-focused on finding the absolute best dividend growth stocks out there. That’s because, as the examples above prove, it can be more than worth it over the long-haul.

It’s also why I just released a brand new report on 5 bulletproof income stocks you can buy today and own for the long haul. If you’re interested in learning more about these picks, simply follow this link.

Good Investing”

My friends, THIS is what I do!!! I just passed this article on to a friend and explained that we recreated our Safe-Dividend Growers portfolio for my wife’s sake, in the event that anything were to happen to me. IF one were to buy our holdings today, their yield would start out at 2.8% for them… BUT, because we recommenced this strategy 22 months ago, OUR current yield, due to those lower prices we paid, and the dividend increases we have experienced… has resulted in our yield on purchase price to be 4.3%, or an increase of 53% in just 22 months! This is REAL investing, and our income continues to increase qtr. over qtr., year after year! Do I concern myself with the bear market… Nope, I’m counting our dividends each month, and enjoying their continual increase at a rate that exceeds inflation… our dividend increases the past 12 months have increased 15.4% on our present holdings.

What’s in your portfolio?

Harold

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Uncategorized, Stock Market Investing, Dividend Growth Investing, Retirement Income, Stock Market Timing

We’re Still Getting Paid!

Saturday, July 2, 2022. So, the email notification arrived… Your monthly statements are now available. It’s just like a Christmas in July! Who paid us? How much did they pay us? Did we get any increases this month? Who raised our income to us?!?!?

We were paid by 26 of our holdings! Can that be right? Let me list them: ARES, AVGO, BIP, BIPC, BLK, BST, BSTZ, BTG, CCI, CCOI, DLR, ELV (formerly ANTM), ES, FLO, FXO, HD, MAIN, Money Fund, MSFT, NSA, O, SCHD, SCHV, UNH, UTG, and WEC.

I see increased income from 7 of them: CCOI, FLO, FXO, NSA, SCHD, SCHV, and UNH.

CCOI was paying $2.97 a share 12 months ago, but we now receive $3.37, for a $.40 a share increase of 13.47%. That’s nice. Our FLO increase was only .04 a share, and was for a 4.76% growth. Gotta speak up for how well share price has held up this year though, being a consumer staple issue… While so much else has been seriously hurt, FLO has declined 3% here in ’22. I do like that… a lot! FXO‘s dividend tends to bounce around a lot, unlike nearly all my other holdings, but over time, both price and dividend has risen well. Each quarter is higher or lower than previous one’s with the long-term trend upward with lots of gyrations. All the others even it out. I see in the charts that IMOS has granted a HUGE increase. I suppose we will see it in the next statement for July… 12 months ago, IMOS paid $.95 a share, but the next payment to come our way will be of $3.52 a share for what will be a whoppin’ 270.5% dividend increase!!! I’ll be looking for that next month! NSA was paying a $1.52 a share dividend 12 months ago… It has raised to us and is now at $2.20 a share. That’s a $.68 a share increase for a 44.74% annual dividend growth! Oh, man! Our SCHD raise was from a dividend of $2.19 one year ago, to the present and new $2.43 a share. This is a $.24 raise good for a 10.96% raise. SCHV is on a path of raising. There is an attempt to increase every quarter that it can. It had cut from one year ago, when it was $1.67 a share, but the previous 3 qtrs since were for $1.38, $1.41, $1.44, and now a present $1.48. My reason for SCHV is that its price and dividend, though they move around some (like FXO but not as much), still shows a long term path of growth that meets my criteria of market-beating growth over that time frame. That, and as with anything, I do not have much in any one holding. That value is thought the be going on a multi-year performance tear that is going to outperform growth, I’m holding this for that potential. There’s something to be said for that, I suppose, as this value holding ETF is only down 14% in this bear market so far, which is considerably less than the major market indexes. Finally, UNH. United raised us from $5.80 a share to a new dividend high of $6.60 a share. This is an $.80 a share increase for an annual dividend growth of 13.79%… a very fine raise.

Now, working with a chart that shows an average of the entire safe-dividend growth portfolio holdings, one year ago the average dividend payout per share was $3.11. As of this time, that average dividend per share payout has risen to $3.60 a share for an increase of an average of $.49 for every share of anything we own. That $.49 a share average increase translates into a safe-dividend portfolio dividend growth of… 15.76% over the past 12 months… Whoohoo!!!

Lemme close on this particularly glorious note. Our safe-dividend growing portfolio is now presently yielding to us at a rate of 4.3%… and growing all the time! We’re on our way! According to The Rule of 72… If the portfolio dividend increases would continue to grow at this double-digit rate, it would result in our portfolio dividend income to exceed 8.5% in less than 5 years… 4.57 years to be more precise. But, to be getting anything like 8% in 5 or 6 years from now… from STOCKS will be totally awesome, as the yield would still be growing even from there! Now, we increase the growth of our income by adding more shares, which by their very purchase knocks back the yield a bit, but still serves to grow the income, which is the more important consideration.

If we get an absolute market smash and puke… I’ll be stepping up with a lot of cash, and adding a lot of shares. I’ll tell you when and what I bought when that should happen, and I am quite confident that it will.

Harold

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Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

The Big Bad Bear!

Saturday June 11, 2022. Updating the OEXpert 7 Stock Market Timer. It’s trading bands have all rolled over… right at the very middle of January, and turned downward, and price of the OEX has continued to draw the trading bands lower. It’s the picture of a Bear Market. That the F1 indicator got low and signaled back in the early to mid part of April, but continued to get HELD low until the late May bottom was also a Bear indication… and now, we are right back to challenging those same lows with this week’s sell-off. It’s a Bear.

Will the recent support hold, or be violated and further selling and lows ensue. Traders I follow say to expect a bit of a bounce to commence, but further new lows to follow, as valuations are still said to be high… which would be especially true IF we are also slipping into recession, which I am convinced that we are.

Beyond that, if you read my gold post found here: https://goldstocktraderblog.wordpress.com/ The indication would seem to appear that sentiment toward the metal may be turning bullish in light of the latest inflation number, and as a flight to a safe haven.

It’s a bear for now, and will likely get worse, before it can ever get truly better. Fed monetary and gov’t spending and borrowing policies would appear to be on course to create a Train Wreck of the economy. Seemingly NOTHING is working, but energy stocks. Even cash is being savaged by inflation. And have you seen the cryptos??? I sold out a couple of weeks back for a triple, but they have been so highly correlated to high risk tech growth stocks, that I decided those stocks were not done getting hammered, and therefore, cryptos likely weren’t either. For now, I’m glad I sold, as all their technical support props appear to be getting kicked out. If they should commence to free-fall, I’m going to get back into some for a trade.

Hold on tight, it’s looking to be a wild ride… and going to get wilder?!?!?

Harold

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Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

Is That Right?!?!?

Friday, June 3, 2022. We got the email notices that our May statements were ready. So, I opened them and gathered all the portfolio dividend income data from our safe-dividend growers. The total amount of income… has me befuddled. Why is it so HIGH??? I’ll need to go through and examine the data and learn why.

First, we were paid by 18 of our holdings, plus the 6 ETFs I purchased to create a laddered bond holding within our account to experience how that will work. I did that by purchasing shares of BSCM, N, O, P, Q and R.

Those 18 that paid us were: ABBV, ABC, AFG, BMY, BST, BSTZ, CCOI, CVS, EVA, INVH, LNT, MAIN, Money Fund, NEP, NXST, O, SII and UTG.

Now, the shocker came because of the amount we received being 155% higher than May one year ago, but the reason has become clear… AFG has paid out another whopping special dividend. They do that a good deal, and they are always very pleasant surprises!!!

So who has raised to us? CCOI was paying out $2.97 a share 12 months ago… Lately the dividend has been raised and stands at $3.37 a share for a $.40 a share increase of 13.47%. I like that! EVA also raised for us from $3.11 a year ago to a present $3.44 a share for a $.33 a share increase or 10.61%. Again, just fine! FLO raised to us from $.84 a share to $.88. That’s only $.04 and 4.76%. Hmmmm. It has raised 33% the past 5 years. We’ll hold for now, and reconsider some other time. We bought some IMOS only a little while ago, and it has just raised from $.95 a share one year ago to a now $1.57 a share for a $.62 a share increase, or for a lovely 65.26%. THAT’S what I’m talkin’ about!!! MAA has raised from $4.10 a share 12 months ago to now $5.00 a share. That $.90 pay raise to us is a 21.95% dividend increase. YES!!! NSA has given us a dividend increase, from $1.52 a share to now $2.20 a share. That’s good for a $.68 a share raise and 44.74% WOW!!! Even WPM got in on the act… It now pays $.60 a share over the $.56 it paid a year ago. Sure, it’s only a $.04 a share increase, but WPM is our ‘silver insurance’ holding, and we don’t mind that one bit.

So, putting it all together… It was one year ago that our average dividend per share for all our shares held stood at $3.11 a share. But after 12 months of dividend increase “pay raises,” our average dividend for every share of anything we hold in our safe-dividend growers, plus the few ‘insurance’ holdings precious metals related that sits there to protect it all, our current average dividend per share is $3.60 a share, for growth of $.49 a share and a truly lovely 15.76% portfolio dividend growth. Shouldn’t we be excited?!?!? This doesn’t even take into account the special one-time dividend payouts that a company like AFG engages in.

To close, the dividend yield of our safe-dividend growth portfolio is now at 4.24%. It is a safe 4.24%, and steadily climbing with each new dividend increase “pay raise.” The market is tough right now… and may get worse, before it stops declining and commences to reverse to the upside. We are almost certainly in a bear market at this time, For a bit of perspective, IF you were to buy the very same portfolio that we began to reconstruct in September of ’20, not 2 years ago, your portfolio dividend yield would be 2.60%. In less than 2 years, we have experienced something on the order of a 63% dividend yield growth in some 21 months!

I’m going to say it again… there’s no true INVESTING in the stock market, like investing in the very safest of dividend growers! What’s in your portfolio?

Harold

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