During the next 12 months, a select group of shareholders will receive windfall profits.
Sure, everyone’s talking about stock buybacks and increased dividends.
Yet the real opportunity lies in little-known “special dividends.” What makes them special?
It’s the fact that these one-day payouts can amount to a staggering 15% . . . 24% . . . 28% and even 41%.
Today, I’m going to show you how to uncover these hidden income plays . . . allowing you to collect huge one-day dividend checks.
Last night, I sat down with Steve to talk about his #1 income strategy for 2018. Here’s a transcript of our conversation.
IAN: Tell me about your big prediction for dividends in 2018.
STEVE: 2018 will be a record year for dividends. In my 25-plus years of professional investing experience, I’ve yet to see the stars this aligned for a record year for dividend payments.
IAN: What’s going to fuel these record dividends?
STEVE: There are two primary things.
First, we have record earnings. Companies continue to operate efficiently and produce earnings growth. We’re nearly nine years into a bull market and S&P 500 companies are registering double-digit earnings growth. FactSet reports that S&P earnings should rise 10.8% year over year in the fourth quarter of 2017 – and that’s expected to continue this year.
Tax reform, more than anything, has changed the game and upped expectations. The top corporate income tax rate was dropped to 21% from 35%. That’s 40% less cash that corporations will send to Uncle Sam each year. That’s more cash to invest, grow earnings, and pay dividends.
The second factor is the repatriation tax that was included in the latest legislation.
Recent tax reform includes a provision for U.S. companies to pay tax on liquid foreign earnings at a 15.5% rate. Many U.S. companies were reluctant to return these earnings to the United States because of high corporate income tax rates. This go-around, they can pay at a 15.5% tax rate. The earnings will be taxed regardless of repatriation. So why not repatriate?
IAN: We just heard that Apple has plans to pay $38 billion in taxes, and build a big new headquarters in the U.S. That’s fine and well. But what’s in store for Apple shareholders?
STEVE: More dividends.
Apple CEO Tim Cook expects Apple (NASDAQ: AAPL) to inject $55 billion into the U.S. economy. Cook says that 20,000 new Apple jobs are part of the mix. A lot of happy talk from a happy CEO. But let’s remove the kaleidoscopic spectacles for a minute.
New impacting investments are few and far in between for a company of Apple’s immense girth. Apple suffered from a lack of investment opportunities under the old tax regime. Revenue growth dropped to single-digit levels. The new tax regime compounds the growth problem: Even more cash will need to be allocated. But where?
Supplementing a regular-dividend increase with a special dividend is the most sensible use of Apple’s excess cash. A special dividend wouldn’t commit Apple to large, continual dividend increases. A special dividend would immediately clear away excess cash, thus ensuring high returns on invested capital.
As for the amount, a special dividend of $10-to-$15 per share is within the realm of possibilities.
IAN: What other big, well-known companies could reward shareholders in 2018?
STEVE: Large dividends could be forthcoming from Microsoft (NASDAQ: MSFT) and Cisco Systems (NASDAQ: CSCO).
Microsoft holds $127.9 billion in foreign cash and cash equivalents. Apply the same assumptions to the Microsoft foreign cash accounts as with Apple and Microsoft could pay a special dividend up to $6 per share. The dividend would be 3.5 times Microsoft’s regular annual dividend.
Cisco Systems posts as the third-largest foreign-cash hoarder. Its foreign cash account stands at $67.5 billion. Cisco could pay a special dividend of up to $5 per share. The dividend would exceed the regular annual dividend by a factor of four.
But let’s not focus only on the big boys. The dividend potential extends beyond the known behemoths. Thousands of U.S. companies hold similarly large foreign cash accounts relative to their respective balance sheets. Many suffer from lack of new investment opportunities like Apple, Microsoft, and Cisco Systems.
IAN: How big are these special dividends?
STEVE: They can be big, really big. It’s possible to collect one-day dividends that deliver yields of 24%, 28%, and even 41%.
IAN: Your favorite trading strategy doesn’t involve “buying and holding” stocks. It’s a more active strategy. What are the benefits of trading this way?
STEVE: I’ve developed a passive trading strategy for non-traders. It’s easy to implement and follow. This isn’t penny-stock speculative stuff. It’s not day-trading. And it doesn’t involve options or anything complicated.
I simply trade in established, dividend stocks. My trading strategy is easy to understand and easy to implement. It’s a trading strategy for conservative investors. It’s a trading strategy anyone can follow. Today, I’ll be happy to share everything with you.
IAN: Thanks Steve!
Today’s LIVE training kicks off at 12 p.m. ET / 9am PT.
Apple, Pfizer and Citibank big payouts could start in February.
Plus, dozens of little-known stocks will be sending out record dividend checks – potentially as much as 24%, 28% and even 41%!