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From Tom Dyson and Grant Wasylik in The Palm Beach Letter: He’s worth an estimated $300 million and stars in ABC’s hit show, Shark Tank.
When Kevin O’Leary was a child, he’d watch his mother take one-third of her weekly paycheck to buy telecom bonds and large-cap dividend stocks.
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When she passed, O’Leary became the executor of her estate. He then discovered the power of her strategy…
It was the first time he saw the power of dividend-paying stocks.
“They blew away everything,” he said.
From that point forward, his investment strategy was fixated on dividends. And he’s put his mother’s advice to work…
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With about $1 billion in assets, his Canadian investment firm, O’Leary Funds, has 26 funds under management.
But the interesting thing is—by mandate—O’Leary’s funds may only purchase stocks that provide investors yield.
If a stock doesn’t pay a dividend… it’s off-limits.
We share Kevin O’Leary’s fondness for dividends at The Palm Beach Letter.
That’s because—as you can see below—dividends have accounted for 70% of the stock market’s total returns over the last four decades…
Since we launched our newsletter four and half years ago, 48 of our 55 stock picks (over 87%) have paid dividends. And in our current portfolio (excluding Precious Metals), 14 of 17 positions (over 82%) pay dividends.
Our existing Performance Portfolio pays an average of six dividends per month.
Just like O’Leary, we like collecting dividend checks. But we’ve never settled for just dividend payers. We’ve always sought out dividend growers…
That’s because dividend-growth stocks outperform all other stocks over the long term…
As you can see, “Dividend Growers and Initiators” have the highest annualized returns (middle column). In terms of dollar growth, a 10.1% annualized return over the last 43 years turned $100 into $6,300.
“Dividend Growers and Initiators” also returned +156% more dollars than the S&P Equal-Weighted Total Return Index.
It’s clear: Dividend growth matters. Companies that consistently grow dividends make investors far wealthier.
Our own track record confirms this. If you followed our dividend-growth picks, the positive results have shown up in your brokerage account.
Here are some of our longest-held picks… the dividend growth we’ve seen… and the healthy returns we’ve recorded. (We still hold J&J Snack Foods in the portfolio, but it’s well above its “buy-up-to” limit for new investable funds.)
You can see the correlation between dividend growth and returns.
Our best-performing stocks—throughout PBL’s history—have been strong dividend growers.
In fact, all five of these recommendations are on PBL’s top 10 list of highest-returning stocks.
This month, we’re going back to one of our most dependable and profitable dividend strategies of all time…
Our “Dividend Elite.”
Dividend Elite stocks are companies that aggressively grow their dividends year after year. They’re smaller than mega-cap dividend growers, have low payout ratios, hold little—or no—debt, and have strong insider ownership.
And we’ve added one more criterion—“discounted valuation”—as a new standard for the Dividend Elite.
This month’s recommendation meets our Dividend Elite requirements and then some…
It’s a small company, selling a product everyone needs. It’s a consumer staple.
Since 2007, the company has consistently grown its dividend each year. It’s now 620% higher than it was eight years ago (with plenty of room for growth).
Plus, it has zero debt and is trading at a huge discount.
Palm Beach Letter subscribers can review the pick, right here.
Others can access it through a 100% risk-free subscription to The Palm Beach Letter, right here.