The investment universe today is littered with CDs, bonds, and Treasury notes that produce yields slightly above 0% and don’t even come close to exceeding the rate of inflation. Income-oriented investors seeking a reasonable return on their capital can still achieve a solid, safe and growing stream of dividend income if they select their picks carefully. However, selecting investments based on nothing more than a high current yield can result in a disastrous fall in the share price of a stock if the dividend proves to be unsustainable.
Criteria important to assure growth and safety
When investing to produce an income stream, it is critical to select businesses that have a history of paying regular dividends with a consistent track record of increasing the dividend amount, have a payout ratio that shows management’s commitment to rewarding shareholders and are engaged in delivery of a product or service that is a necessity for its customers. We also must be able to buy the shares at the right price.
It is very easy to find businesses that meet one or two of these requirements; finding businesses that meet them all is a completely different matter. To add even more difficulty to the task, we need to spread our investments across several unrelated industries to reduce volatility and risk.
Commercial real estate
For the real-estate portion of the portfolio, it is hard to find a better opportunity than Realty Income Corp (NYSE:O). When a business likes to refer to itself as “The Monthly Dividend Company,” has trademarked the phrase, and paid a monthly dividend for the last 515 consecutive months, you can bet it’s serious about providing its shareholders with a steady stream of income. All an investor has to do is take a quick glance at the homepage and you will see the intense focus this business has on consistently paying and increasing the dividend rate for shareholders.
Realty Income Corp (NYSE:O) owns over 3,500 properties that it leases under long-term agreements to national retail chains and other commercial interests. The cash flow from these agreements produces the dividends.
The monthly dividend announced on May 8 of 18 cents per share produces an annual yield of 4.15%; extraordinarily strong in our current environment but below the long-term average for Realty Income Corp (NYSE:O). The current dividend yield, although attractive, is the one cautionary note regarding this business as the average yield since 1995 has been 7.4%. However, given the focus of this business on paying and increasing dividends, it deserves serious consideration as a cornerstone investment within any income-based portfolio.
Technology
Communications technology and the Internet are such integral aspects of our lives today that it is inconceivable to construct a balanced portfolio without including at least one technology business. Additionally, the large technology businesses have balance sheets overflowing with cash and, in many cases, very low valuations.
When I think of the Internet, I can’t help but think of the term “backbone of the Internet,” which has oft been applied to Cisco Systems, Inc. (NASDAQ:CSCO), my pick for the technology-related portion of the income portfolio.
Based on its most recent quarterly report, Cisco Systems, Inc. (NASDAQ:CSCO) is holding over 41.6%, or $46.38 billion, of its market capitalization in cash and short-term investments; an enormous amount of cash. Even without considering this cash hoard, Cisco Systems, Inc. (NASDAQ:CSCO) is currently trading at only 9.37 times the consensus earnings estimates for 2014.
If calculated after discounting the cash on hand, the 2014 price-to-earnings ratio falls to only 6.32. The current dividend yield of 3.28% requires a payout ratio of only 33%. Not only is it easily maintained, there is a lot of room for increases. Since Cisco Systems, Inc. (NASDAQ:CSCO) started paying dividends on March 29, 2013, it has increased the payment three times for a total increase of 183%, displaying management’s understanding of the need to return profits to the owners of the business.
When considering a long-term investment in Cisco Systems, Inc. (NASDAQ:CSCO), investors should also consider the fact that many of the large tech companies have recently become much more aggressive in their efforts to distribute some of their large cash holdings to investors through increased dividends, special dividends, and share buybacks. The management team at Cisco Systems, Inc. (NASDAQ:CSCO) is proving its willingness to participate in this practice and will continue to do so going forward.
Private equity and wealth management
I am well aware that a great deal of effort has been put forth to demonize the arena of private-equity investing, but at the end of the day there are two sides to every story. It is not my purpose to debate the virtue, or lack thereof, of the private-equity and wealth-management business. It is my job to figure out how to best position myself to profit from it.
KKR & Co. L.P. (NYSE:KKR) manages a group of private-equity funds and other investment vehicles that manage clients’ money for the purpose of achieving long-term capital growth. Founded by Henry Kravis and George Roberts in 1976, the business debuted on the public stock exchange in 2010 with the original founders holding the posts of co-chairmen and CEOs, positions they continue to hold. With a 37-year record of successful management performance, this business exhibits great stability and consistency.
The 6.34% dividend yield, couple with an aggressive payout ratio of 60%, serve as ample evidence of the commitment management has to rewarding shareholders. Coupled with the long-term record of success built by the current leadership, this is an excellent location in which to place a long-term investment in anticipation of achieving both growth and increasing income.
Semi-final thoughts
Three businesses in three different industries are not enough to provide a diversified income-producing portfolio. But it does get interested investors about halfway there. Those who are interested in this style of investing who allocate half of their capital available for income investing evenly among Realty Income Corp (NYSE:O), Cisco, and KKR & Co. L.P. (NYSE:KKR) will begin to draw an average dividend yield of 4.45% on the capital allocated. Be sure to watch for my follow-up piece, which will present three more picks across three new industries to complete the base of a well-diversified portfolio for income investors.
Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!
It’s the revolution reshaping every industry on the planet.
From driverless cars to medical breakthroughs, AI is on the cusp of a global explosion, and savvy investors stand to reap the rewards.
Here’s why this is the prime moment to jump on the AI bandwagon:
Exponential Growth on the Horizon: Forget linear growth – AI is poised for a hockey stick trajectory.
Imagine every sector, from healthcare to finance, infused with superhuman intelligence.
We’re talking disease prediction, hyper-personalized marketing, and automated logistics that streamline everything.
This isn’t a maybe – it’s an inevitability.
Early investors will be the ones positioned to ride the wave of this technological tsunami.
Ground Floor Opportunity: Remember the early days of the internet?
Those who saw the potential of tech giants back then are sitting pretty today.
AI is at a similar inflection point.
We’re not talking about established players – we’re talking about nimble startups with groundbreaking ideas and the potential to become the next Google or Amazon.
This is your chance to get in before the rockets take off!
Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.
AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.
The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.
As an investor, you want to be on the side of the winners, and AI is the winning ticket.
The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.
From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.
This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.
By investing in AI, you’re essentially backing the future.
The future is powered by artificial intelligence, and the time to invest is NOW.
Don’t be a spectator in this technological revolution.
Dive into the AI gold rush and watch your portfolio soar alongside the brightest minds of our generation.
This isn’t just about making money – it’s about being part of the future.
So, buckle up and get ready for the ride of your investment life!
Act Now and Unlock a Potential 10,000% Return: This AI Stock is a Diamond in the Rough (But Our Help is Key!)
The AI revolution is upon us, and savvy investors stand to make a fortune.
But with so many choices, how do you find the hidden gem – the company poised for explosive growth?
That’s where our expertise comes in.
We’ve got the answer, but there’s a twist…
Imagine an AI company so groundbreaking, so far ahead of the curve, that even if its stock price quadrupled today, it would still be considered ridiculously cheap.
That’s the potential you’re looking at. This isn’t just about a decent return – we’re talking about a 10,000% gain over the next decade!
Our research team has identified a hidden gem – an AI company with cutting-edge technology, massive potential, and a current stock price that screams opportunity.
This company boasts the most advanced technology in the AI sector, putting them leagues ahead of competitors.
It’s like having a race car on a go-kart track.
They have a strong possibility of cornering entire markets, becoming the undisputed leader in their field.
Here’s the catch (it’s a good one): To uncover this sleeping giant, you’ll need our exclusive intel.
We want to make sure none of our valued readers miss out on this groundbreaking opportunity!
That’s why we’re slashing the price of our Premium Readership Newsletter by a whopping 70%.
For a ridiculously low price of just $29, you can unlock a year’s worth of in-depth investment research and exclusive insights – that’s less than a single restaurant meal!
Here’s why this is a deal you can’t afford to pass up:
Access to our Detailed Report on this Game-Changing AI Stock: Our in-depth report dives deep into our #1 AI stock’s groundbreaking technology and massive growth potential.
11 New Issues of Our Premium Readership Newsletter: You will also receive 11 new issues and at least one new stock pick per month from our monthly newsletter’s portfolio over the next 12 months. These stocks are handpicked by our research director, Dr. Inan Dogan.
One free upcoming issue of our 70+ page Quarterly Newsletter: A value of $149
Bonus Reports: Premium access to members-only fund manager video interviews
Ad-Free Browsing: Enjoy a year of investment research free from distracting banner and pop-up ads, allowing you to focus on uncovering the next big opportunity.
30-Day Money-Back Guarantee: If you’re not absolutely satisfied with our service, we’ll provide a full refund within 30 days, no questions asked.
Space is Limited! Only 1000 spots are available for this exclusive offer. Don’t let this chance slip away – subscribe to our Premium Readership Newsletter today and unlock the potential for a life-changing investment.
Here’s what to do next:
Head over to our website and subscribe to our Premium Readership Newsletter for just $29.
Enjoy a year of ad-free browsing, exclusive access to our in-depth report on the revolutionary AI company, and the upcoming issues of our Premium Readership Newsletter over the next 12 months.
Sit back, relax, and know that you’re backed by our ironclad 30-day money-back guarantee.
Don’t miss out on this incredible opportunity! Subscribe now and take control of your AI investment future!
I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.
We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…
Should I put my money in Artificial Intelligence?
Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.
Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…
But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.
That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…
And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.
He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.