Dividend-stock investing is a proven strategy to collect immediate income and build long-term wealth.
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“Remarkable” is the only word to describe it.
Here we are, nine years into a bull market, and no letup is in sight. Corporate earnings flow at a rate unseen in seven years.
Bloomberg tells us that S&P 500 companies are on pace to grow earnings by 10.7% in the second quarter. If all goes according to plan, S&P 500 earnings will grow 11.2% this year. The S&P will have recorded its best annual performance since 2010.
And what do earnings convert to? Cash.
Corporate cash accounts, fueled by the relentless earnings, grow as well.
Moody’s reports U.S. corporations produced a record $720 billion in discretionary cash flow in 2016, up 11% from 2015. Moody’s forecasts another record in 2017.
The top five cash generators ̶ Apple, Microsoft Google, Cisco, and Oracle ̶ hold $594 billion of cash. Moody’s expects their cash accounts to grind higher still.
A torrential flow of cash is a problem most of us would welcome with open arms. But it’s still a problem.
Swamped With Cash
We recently learned that Berkshire Hathaway (NYSE: BRK.b) is swamped with cash — the flow rising to $100 billion at last count. How to drain the cash account flummoxes Berkshire Chairman and CEO Warren Buffett.
Excess cash is a drag on investment returns. Perhaps it’s only coincidence, but as Berkshire’s cash account has swelled, returns on equity (ROE) and assets (ROA) have shrunk.
Dividends ̶ special and regular ̶ are the solution.
With so much cash on the books that needs to be drained, dividends provide the relief valve. With some many companies in need of a relief valve, the final months of 2017 could see a surge in dividend declarations.
Political expediency could accelerate the declarations. Cash could flow at a river-raging rate if President Trump has his way.
Tax reform still tops Trump’s political agenda for 2017. Tax reform includes lower corporate income-tax rates and a one-time repatriation tax holiday.
The benefits of lower corporate income-tax rates are obvious: Companies pay less cash to the Treasury, so more cash remains in the till. More cash in the till means more cash that can be paid as dividends.
But a one-time repatriation tax holiday is the key reform that could lead to a tidal surge.
S&P 500 companies hold $2.6 trillion of cash in foreign countries. They want to repatriate this cash. With U.S. corporate income taxes among the highest in the developed world, they’ll do so only at a discounted rate.
The Best One-Time Dividends
The last time a repatriation tax holiday was offered, in 2004, companies repatriated their foreign cash in droves. Investors enjoyed a dividend bonanza. For every dollar of repatriated cash, $0.60 to $0.92 was paid as dividends.
Swim in the bonanza, but don’t drown.
Focus on the gems hidden in the flotsam. These gems pay one-time dividends that yield five to 10 times that of dividends paid by S&P 500 companies. The most brilliant gems offer even more: huge profit potential.
Life is short, and money is limited. When the bonanza hits, you’ll want to allocate your money only to the gems.
Here’s your opportunity.
Ian Wyatt and I will host a free live webinar next week. You’ll learn how to invest in the best one-time dividends for income and profit. You have nothing to lose except the opportunity to invest in dividend stocks as you never have before.
Reserve your spot now.