It’s hard to imagine more troubling times for income investors and retirees…
Last week, Federal Reserve Chairman Ben Bernanke said he plans to keep interest rates at zero percent for at least the next two years. The goal of this policy is to help revive the economy. But it makes it nearly impossible to get a decent yield on conventional savings.
As for keeping your money in stocks, the past few weeks have brought extraordinary volatility and huge one-day declines. Some companies have fallen more than 35% in less than a week.[ad#Google Adsense 336×280-IA]Meanwhile, the credit of the United States has been downgraded… Our political process has reached new lows of immaturity and grandstanding… Forecasters are calling for another Great Recession… Rioters are burning London.
Have you panicked yet? I don’t blame you if you have.
But now, you need to take a deep breath… and get ready to take advantage of one of the best opportunities I’ve seen in my investing career…
A few days ago, my colleague Brett Eversole showed you a list of stocks that barely budged while the rest of the market fell off a cliff in late July and early August. He mentioned how many of those stocks were sellers of “the basics,” like cereal and cigarettes. He also mentioned that many of them were among the best dividend-paying companies in the world.
Take Coca-Cola, for example…
From July 22 to August 8, the beverage behemoth fell only 6.6% while the S&P 500 dropped nearly 17%. Its shareholders were able to sleep much better at night than most investors knowing that no matter what happens, the business keep bringing in cash and paying it out in dividends.
Right now, Coke pays a 2.8% dividend. That might not sound like much, but the company has increased its dividend every year for 49 years. Its 10-year dividend growth rate is 10%.
As DailyWealth readers know, focusing on dividend-growing stocks is one of the great secrets to building wealth. It keeps you in the highest quality, cash-rich companies. You know management is committed to taking care of shareholders. And as I showed you here, investments like these allow you to compound your way to a comfortable retirement.
And now is a better time than ever to buy these “dividend machines.”
Even though they fell less than the rest of the market did, the panic and speculation has created incredible chance for income investors to buy these stocks at bargain prices.[ad#article-bottom]Oil major Chevron, for example, is selling for just 10.8 times cash flow. Semiconductor giant Intel goes for just 9.4 times cash flow. And software maker Microsoft is selling for an absurd 4.1 times cash flow. All three are selling for under 10 times earnings. And all are master dividend growers.
The opportunity to buy major leaders of industry for less than 10 times earnings and at such low multiples to cash flow is unheard of in my investing lifetime. Great businesses usually go for about 15 times earnings in the stock market.
These companies pay safe, secure dividends and have years of experience managing their businesses. The steady, growing cash they deliver will help insulate your savings from whatever happens next in the market.
It might look like a terrible time to be an income investor. But if you avoid the panic and look at the facts, you’ll see what an incredible opportunity we have.
— Doc Eifrig
P.S. I’ve shown my Retirement Millionaire readers a dozen of the world’s greatest dividend payers selling at absurdly cheap prices. You can click here for details on how to access my research. And be sure to read DailyWealthtomorrow for details on how to double or triple the income you receive from the safest stocks in your portfolio.[ad#jack p.s.]
Source: Daily Wealth