Friday, August 23, 2013
What I'm about to tell you will not go over well with my Wall Street friends...
I grew up in New York. I lived there for 37 years. And I've worked in finance since I was 18 years old. Along the way, I've become friends with a lot of analysts, fund managers, and stock brokers...
Many have been working for big brokerage firms for years. They make huge money managing portfolios for a fee... They charge fees when clients buy and sell stocks... And they make the biggest fees when bringing a company public. These guys make money from customers taking "action."
Some of my friends are also financial planners. They make money by recommending mutual funds and exchange-traded funds to clients. They also sell annuities and insurance products where they make huge upfront fees. The more moves a client makes – the more "action" he wants – the more money my friends make.
It's a great living. Most have huge houses and sports cars. They are season-ticket holders. And they invite me to their exclusive parties where you can shake hands with professional athletes and celebrities.
For individual investors, this life is not so glamorous.
These investment fees start to add up. Imagine if you didn't have to pay 5% of profits to cover mutual-fund fees to your broker every year. After 10 years, we are talking serious money. This could add up to tens of thousands of dollars...
Imagine if you reinvested that cash and earned an 8% return for decades. That may sound like a huge return in this low-interest-rate environment. But it's the average return stocks have generated annually for the past three decades.
The reason I'm telling you this story is because I discovered a small group of elite small-cap stocks that have more upside potential than any other asset class I know of...
Wall Street does not want you to know about these stocks... because you are likely to buy and hold these names forever. In other words, you won't need to pay huge brokerage fees on your portfolio that has little trading activity. There's no "action" with these stocks. Just safe compounding for years and years.
Believe it or not, these small-cap names are growing faster than the average S&P 500 company. They pay higher yields than some of the biggest well-known brands in the world. They have raised their annual dividend for decades. And several have been in business for over 100 years.
Buying these stocks can turn the average investor into a millionaire. And more important, it will cost you less than $50 to find out the names of this elite list of stocks...
Let me explain...
You see, if you've been investing for more than a few years, you've probably heard about the strategy of owning companies with long records of consecutive dividend increases. I'm talking about companies like Procter & Gamble, Chevron, and AT&T.
One of the world's safest, steadiest investment strategies involves owning these battle-tested "dividend achievers" and "dividend aristocrats." These are two names given to steady dividend-payers. Many of the world's greatest investors – including billionaire Warren Buffett – used this strategy to safely get rich in stocks.
They bought brand-name, dividend-paying stocks decades ago and reinvested dividends. This is known as compounding... or reinvesting the money you make from an initial investment to make even more money.
If you do this over a long period, you can earn staggering profits from your initial investment. For example, say you start with an initial investment of $10,000. If you earn 10% annually and reinvest these gains each year, you can earn over $450,000 in 40 years. That's 4,325% returns by compounding.
You can run the numbers yourself by clicking here. It's a compounding calculator that shows how much money the average investor can make simply by reinvesting their gains.
And this total assumes you are not adding any new capital to your investment. If you contribute $100 to your investment each month and compound your returns for 40 years... your initial investment grows over 10,000% – to more than $1,000,000!
Compounding can make almost any investor a millionaire. However, most investors make a huge mistake when buying dividend-paying companies. They only focus on yield.
Sure, names like Chevron and AT&T have been raising their annual dividends for decades. However, investors buying these names 30 years ago made a fortune through reinvesting their dividends – and through capital gains.
In short, if you want to earn 10%-plus returns annually for decades, it's important to focus on high-yielding companies – with growth potential. You want to generate capital gains along with your dividends.
And that brings us to my elite, small-cap dividend portfolio.
I discovered a few dozen small-cap companies that have raised their annual dividend for decades... just as long as Chevron and AT&T. They pay high yields just like these names. They are trading at cheap valuations. More important, they are growing more than three times faster than the average large-cap stock.
I've recommended four of these names to my Small Stock Specialist subscribers in recent months. Two companies have been in business for 100-plus years. And every one of these companies has brands that most people use at least on a weekly basis.
Take Diebold, for example. Diebold is the world's No. 1 supplier of ATMs. It's also a leading supplier of security products, like bank vaults and safes.
You've probably never heard of Diebold. Yet, it's a 150-year-old company. And it has increased its dividend payment every year for 59 years – the longest streak of any company in North America.
Diebold pays a large 3.8% yield and has huge growth potential as more banks around the world upgrade to newer ATMs. It's a perfect stock to buy, hold, reinvest the dividends, and earn capital gains in for decades.
Again, the reason you never heard of Diebold and many of my elite small-cap dividend names is because they are not advertised anywhere. It's a portfolio of stocks designed for investors to buy and hold for decades. That means no investment fees for brokers. It means no "action."
But if you're interested in safely growing wealth over the long term, it's incredibly important to keep this idea in mind. It can turn any average investor into a millionaire. You don't pay big entry fees. You pay almost nothing in brokerage fees. And you don't pay for expensive advice.
You get rich... instead of Wall Street.
The press is beginning to catch on to small-cap dividend-growers, like Diebold. Frank calls these stocks "the best dividend payments you've never heard of." "If you're interested in this kind of income," Frank urges, "make sure to buy soon..."
Last month, Frank reported on "an alarming trend that bodes well for small caps"... Industry-leading companies are dying for growth, he says. "And one way they're doing it is by buying up small-cap companies with huge growth potential." This trend is accelerating. Find two simple ways to play it here.