We are living in interesting times… not so different from the 1970’s… we had inflation and the mortgage interest rate on our first home was 9 ¾ % … things changed as they always do … now is the time to stay flexible… do NOT buy a house or a new automobile right now … don’t get sucked into buying Gold!
Let’s tackle the reason you should not buy a home right now. Home prices and interest rates are too high and if you could qualify, you may not be able to sell if you receive a job offer requiring a move from your recently purchased high-priced home. Housing prices and interest rates will come down… they always do. For example, for those people that purchased a home in late 2006-to-2007, when housing prices peaked, the value of their homes dropped by 33% by 2009; by 2017 housing prices rose 51%, so after about a decade, the value of their homes equaled what they paid for them in 2006/2007 but, prices turned downward again with a bottom in early 2018; prices have increased since the 2018 bottom. However, for many of the people that purchased their homes in 2006/2007, the value of their homes has not risen to what they originally paid, especially if you consider inflation. Therefore, don’t buy a home now… stay flexible, prices will come down from these highs.
Celebrities are hawking Gold as an alternative to the declining value of the U.S. dollar and are insinuating that Gold is real money, unlike the fiat dollar, or paper money backed by nothing other than the U.S. Government, which has a National Debt of $32-trillion and growing, coupled with unfunded liabilities that are at least six times that amount. Sounds good, but the price of Gold will drop and settle at a much more reasonable price than it is today or tomorrow.
Gold will NOT become a currency. A one-ounce 2023 American Gold Eagle coin is worth about $2,085 today; you cannot use a Gold coin to purchase $300 worth of groceries at Publix Supermarkets. How does Publix give you the correct amount of change? A new currency may be issued, backed by Gold and other precious metals, BUT gold will never become a currency because it is too cumbersome, complicated, and inefficient. Besides, at these prices, the upside potential of certain crypto currencies may be much better than Gold; the 52- week High for Gold is $2,085.40 and the 52-week Low is $1,618.30.
Also, buying gold coins or gold bullion bars requires storage facilities or safes. Additionally, the price of Gold over the past 100 years has NOT been stable. For example, if you bought a one-ounce American Gold Eagle in February 1980, you would have paid $2,542; by June of 1982 the value fell to $980; by April of 1993 it further dropped in price to $717; by June 2001, it continued its decline to $458 (this was the price range that we, and many of our clients paid); and today, over 43-years later, you would still be down over 18% with NO income earned from this investment over that 43-year period, and maybe even storage costs to boot!?!
The price of gold today is around $2,000 per ounce. During the 55-year period from 1917 through 1972, the price of Gold fell to $400 and below per ounce from its highs; and during the 30-year period from 1973 to 2003, Gold fell to $600 an ounce and below, from its highs. For the 10-year period from 2009 through 2019, gold settled below $1,600 per ounce after rising much higher. The question becomes, will gold prices fall to $1,600 or $600 or $400 from today’s highs? Buying Gold at today’s prices may result in a 20%-to-80% built-in Loss!
And DON’T get me started on commercial real estate limited partnerships with holdings or projects in Chicago, LA, Portland, or any other major city in the United States right now. Walmart and Walgreens, along with other businesses, are closing stores in San Francisco, Portland, Chicago, and in many other large cities. It’s way too risky and once you invest, you cannot demand your money back or sell your interest!
The only sure thing to do in these unsettling times is to buy a passive income stream that continues to grow, each, and every year, keeping up with inflation, no matter what is happening in the World. You can do this—without paying a money manager or financial planner—by investing in Great Businesses, with dividend reinvestment programs (DRIPs), that have paid and raised dividends, each, and every year, through depressions, recessions, wars, and stock market declines.
Today, we’ll concentrate first on “Dividend Kings,” Companies that have paid and raised their Dividends each, and every year, for at least 50 years or more. As of this writing, there are 48 Dividend Kings. However, they are NOT all “Great Buys” today. Of the 12 that we follow, only 5 meet our criteria. Many “Dividend Kings” are currently priced where their yields are less than 3% and as low as 1%. In addition, many only increase their annual dividends each year by less than 5%; some less than 2%, which DOES NOT meet our requirements to be able to create a passive income stream in 10-to-15 years, which covers your lifestyle expenses, resulting in financial independence.
Here are the five “Dividend Kings” that are “Great Buys” today:
1) Johnson & Johnson (JNJ), $170.19 per share, yield 2.83%, paid & raised 61-yrs
2) Coca-Cola Company (KO), $62.44 per share, yield 2.95%, paid & raised 61-yrs
3) Kimberly-Clark Corp (KMB), $137.15 per share, yield 3.5%, paid & raised 51-yrs
4) 3M Company (MMM), $104.33 per share, yield 5.75%, paid & raised 65-yrs
5) AbbVie Inc (ABBV), $143.74 per share, yield 4.16%, paid & raised 11-yrs
JNJ and KO are priced a little higher than we would normally recommend, which results in a lower yield. However, their yields are very close to 3% and if you do not own any shares in them, you should consider acquiring them. But, if you already own 100 shares or more of each, purchase KMB, MMM, and ABBV currently.
Regarding ABBV, it has only been paying dividends for 11-years since its spin-off from Abbot Labs but, because of its association with Abbot Labs, which had paid and raised its dividends for over 50-years, many, as we do, consider it a “Dividend King.” And, for the past 5 years, ABBV’s average annual increase in its dividend payout has been 17.31%.
In addition to “Dividend Kings,” there are an additional 88 “Dividend Champions,” which have paid, and raised their annual dividends for at least 25 years or more. The following “Dividend Champions” are currently “Great Buys:”
1) Exxon Mobil Corp (XOM), $103.89 per share, yield 3.52%, paid & raised 41-yrs
2) Walgreen Boots Alliance (WBA), $30.46 per share, yield 6.35%, paid & raised 48-yrs
3) Clorox Company (CLX), $155.78 per share, yield 3.05%, paid & raised 46-yrs
4) Enbridge Inc (ENB), $37.40 per share, yield 7.08%, paid & raised 26-yrs
5) Int’l Business Machines (IBM), $138.94 per share, yield 4.8%, paid & raised 28-yrs
6) Medtronic PLC (MDT), $88.96 per share, yield 3.06%, paid & raised 46-yrs
7) T Rowe Price Group (TROW), $119.70 per share, yield 4.06%, paid & raised 37-yrs
8) Bank OZK (OZK), $41.71 per share, yield 3.23%, paid & raised 27-yrs
9) Enterprise Products Partners (EPD), $26.84 per share, yield 7.43%, paid & raised 26-yrs
The next category of “Great Businesses” are “Contenders,” which have paid and raised their dividends for at least 10-years. As of this writing, there are 376 “Contenders.” Here are the ones that we have been following, meeting our criteria, and are “Great Buys:”
1) Prudential Financial Inc (PRU), $94.77 per share, yield 5.26%, paid & raised 15-yrs
2) Cisco Systems Inc (CSCO), $52.63 per share, yield 3.00%, paid & raised 13-yrs
3) Main Street Capital Corp (MAIN), $41.50 per share, yield 6.7%, paid & raised 13-yrs
4) Arbor Realty Trust Inc (ABR), $16.54 per share, yield 10.08%, paid & raised 11-yrs
5) Associated Banc-Corp (ASB), $18.34 per share, yield 4.56%, paid & raised 12-yrs
6) Cogent Communications Holding (CCOI), $62.27 per share, yield 6%, paid & raised 11-yrs
Our final category are the 215 “Challengers” who have paid and raised their dividends for at least 5-years. Of the ones we follow, here’s a “Great Buy” for today:
· NextEra Energy Partners (NEP), $58.68 per share, yield 5.73%, paid & raised 9-yrs
NEP is on its way to becoming a “Contender!”
You now have a choice of 21 “Great Businesses” that are “Great Buys” today! Are you ready to become wealthy and financially independent? Would you like to ensure that you maintain your financial freedom once you’ve obtained it? Would you enjoy seeing your children and grandchildren obtain financial freedom early in their lives, no matter their career choices? And would you find satisfaction in the thought of your parents retiring without worrying that they may outlive their money?
If you answered yes to any of these questions, you need to read, The Best Kept Secret to Financial Freedom, Amazon.com: The Best Kept Secret to Financial Freedom eBook : Beard Jr., Robert G.: Kindle Store. This book will provide you with the tools necessary to take care of your own financial affairs; to help you steer clear of the sharks on Wall Street; to outlive your money; to attain financial freedom as soon as possible; and, to maintain your financial freedom regardless of what happens in the markets and the world!
Please, get started… the journey to obtain and maintain financial freedom is waiting for you!
Dum Spiro Spero—While I breathe, I hope.
Slainte mhath,
Robert (Mike) G. Beard Jr., C.P.A., C.G.M.A., J.D., LL.M.