FOUND: $420 Billion to Offset the Market's Pullback
It’s been a long December and there’s reason to believe
Maybe this year will be better than the last — Counting Crows
The lyrics from one of my favorite mellow songs seems appropriate right now. With the market currently experiencing its worst December since 1931, traditional investors have reason to be a bit introspective right now.
But are things really as bad as they seem?
Today, I want to show you why the market’s pullback isn’t actually as bad as you’ve heard… And how to actually grow your wealth, even while traditional investors are singing the blues about the stock market’s correction.
It all ties back to a key figure most investors have ignored. Do you know what that figure is?
It’s About the TOTAL Return!
When most investors look at the market, they leave out a very important detail. It’s something that you may not even think to include when you’re looking through your investment returns.
It makes sense that you might overlook this figure.
After all, if you watch CNBC, or read the Wall Street Journal, you’ll almost never hear about this figure.
Frankly, this is because of lazy reporting from the financial media. These guys are professionals and they should know to include this figure. But it takes a bit of extra work, and most reporters aren’t willing to put that time and effort into their research.
What figure am I talking about?
As investors, you need to look at the total return on the market — or from your own investments — including dividends!
You might not think that this makes a lot of difference. But over time, the dividends you receive from your investment can make a huge difference in your overall returns. And if you reinvest those dividends into new shares of stock, your profits grow even bigger!
And this year, corporate dividends are hitting record levels thanks to cash reserves that came from the 2018 corporate tax cut.
When the numbers were tallied at the end of November, companies in the S&P 500 had paid out $421 billion in dividends.1 This eclipses last year’s record $391 billion in dividends for the same time period. And with dozens of companies announcing dividend hikes this month alone, the payouts are going to get even bigger!
Locking in Your Share of $421 Billion
With so many companies paying larger dividends to their shareholders, it’s important to factor these payments into your day-to-day investment decisions. Especially right now when stocks are on sale.
After all, with companies paying bigger dividends and shares costing less, you can lock in more income for every dollar you spend.
Yesterday, I put a chart on my twitter feed showing that investors are getting more dividend income than at any time in the last 2 years.
By the way, following me on Twitter is a great way for you to keep up with my day-to-day thoughts on the market and on the opportunities that we’re following. Just click here and then hit “follow” next to my name.
You might notice that the dividend yield on the S&P 500 is “only” 2.1% right now. Which means that for every $100 you invest in the market, you’ll get about $2.10 in dividend payments each year.
But keep in mind, this is an average yield for all 500 stocks in the index. And this includes many big stocks like Facebook and Amazon that don’t pay a dividend!
If you concentrate your investments in solid blue chip companies that generate reliable earnings and pay reasonable dividends, you can easily double that dividend rate. It all depends on which companies you pick.
And as these dividends steadily add cash to your account month after month, your wealth will grow regardless of which way the market trades.
So the next time you see that the market is up or down over a certain period, remember to add in the dividend payments to get a true picture of the total return investors are getting. Because the total return is what really matters to your wealth!
Here’s to growing and protecting your wealth!