424 Dividend Boost

I got this blurb from Stansberry Research as a sponsor to the Zacks.com Profit From The Pros email letter that I receive.

While most folks earn tiny 2%-6% dividends on Blue Chips (like Pepsi, Johnson & Johnson, and AT&T) savvy Americans are secretly "boosting" those small yields to dizzying heights – earning incredible 30%-50% on the exact same shares. Originally available only to executives at America's richest Blue Chip firms, this income secret is now available to regular folks like you and me.

How the heck is it possible to make 10 to 20-times more than "normal" dividends?

Pretty simple actually.

I'll show you...

"The Best-Kept Secret on Wall Street"

~The Wall Street Journal

Right now you can "boost" an ordinary miniscule dividend yield to 20%... 30%... even 40% or more simply by taking advantage of what was once an obscure corporate perk...

Don't worry, you don't have to use options or sell covered calls... or anything tricky or speculative like that. It simply takes one small but radical change in the way most people buy ordinary stocks. It's a perk Fortune 500 employees have been taking advantage of for decades.

I call it the "424 Dividend Boost." And I first learned about this benefit after spending several years working at one of the companies' that offers it, Citigroup.

Working there, I saw firsthand how this secret enabled co-workers and some in-the-know shareholders to earn an enormous 34% on their initial stake—while most other folks were getting the company's regular 2% dividend.

Best of all, The 424 Dividend Boost Research Report is absolutely free of charge.

The only thing I ask in return is that you try my monthly dividend research advisory called The 12% Letter.

* * *

Sounds too good to be true. But that's because of the way they wrote it.

Looking it up, here's what the Stock Gumshoe has to say

Sounds pretty nice, eh?

I haven’t written about the ads from Stansberry & Associates too much lately, though they may be the most aggressive marketers out there … but in recent weeks I’ve seen lots of ads for Tom Dyson’s 12% Letter from Stansberry, and had several questions about what they’re calling the “424 Dividend Boost.”

So let’s have a look, shall we?

We get several examples from Dyson to support the incredible claims — the three claims at the top of the ad are as follows:

“Johnson and Johnson:
Current yield: 2.7%
With the “Dividend Boost”: 39%

“AT&T:
Current Yield: 5%
With the “Dividend Boost”: 43%

“PepsiCo:
Current Yield: 2.4%
With the “Dividend Boost”: 53%”

Sounds unbelievable, doesn’t it?

But it is, in part, real …

You see, the “424 Dividend Boost” is nothing but another iteration of what Dyson used to call the “801K Plan” — it’s a teaser for investing in Dividend Reinvestment Plans, or DRIPs.

Using this strategy, you could certainly have put down an initial investment a few decades ago in a stock, like Johnson and Johnson or AT&T, and reinvested your dividends, to the point that the dividend you receive today is equivalent to a 40% or even much higher yield on your original investment.

That’s because of two things — raising dividends, and the compounding from dividend reinvestment. Most large American companies that pay dividends try very hard to raise those dividends every year, or at least keep them stable in bad years. That means if you bought shares in Johnson and Johnson back in 1970, for example, you would have received an annual dividend of just under a penny a share. Today, the annual dividend for JNJ is $1.84, so that’s incredible growth right there.

But the real power comes from dividend reinvestment — as those dividends climbed over close to 40 years, you could have turned each one into more fractional shares of JNJ, and the following quarter those fractional shares would have entitled you to slightly more dividend, so each quarter you would both add to your number of shares, and increase the dividend payment on each of those shares, which builds upon itself like compound interest, the force that Albert Einstein is reputed to have said (he almost certainly didn’t) is the most powerful force in the universe.