Today I’m going to reveal my personal strategy for outperforming the market over the long haul.
It’s simple. All you have to do is buy dividend stocks—but not in the way most people think.
I’ll also name 4 terrific dividend growers you can buy now and safely tuck away in your retirement portfolio forever. More on those in a moment. First, we need to talk about…
The Wrong Way to Buy Dividend Stocks
When picking stocks for the long haul, many folks put too much emphasis on the current dividend yield.
Trouble is, the high yielders that could really make a difference to your retirement—I’m talking payouts of 6%, 8% and up—are getting scarce as the S&P 500 grinds upward:
Few Trophies for Dividend Hunters
Worse, a high yield can easily lead you onto the rocks, something many people learned the hard way with telecom operator Frontier Communications.
A year ago (and many times since), I warned that its 12.9% yield was a house of cards. One number explained why: the payout ratio, or the percentage of earnings paid out as dividends.
Back then, this ratio was negative, so management was paying the dividend while losing money!
When the inevitable cut came, the reaction was swift and brutal: