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Q&A: Beyond Great Expectations

Q:

Where can I find competent 20% yielders or higher? I am a dividend investor looking for monthly income.

A:

I’m assuming you are looking for stocks with relatively secure dividend yields of 20% or more. Wow! If anything like that existed everybody would start buying it and, as the price rose, the dividend yield would plummet.

I’m not saying that 20% dividend stocks don’t exist, they do. They just aren’t safe. Of the handful of stocks I recently found, almost all were oil and gas partnerships – where part of the dividend is a depleting asset (the stuff they’re pumping out of the ground) – and one was a Russian television network. Are these stocks or their dividends safe? Not a chance! They are extremely risky.

Small investors – that includes everyone with less than about 1 billion dollars – need to understand the massive scale of the securities markets. Every single day millions of investors are analyzing thousands of stocks to place billions of trades – worth trillions of dollars –  worldwide. If there was anything out there with a safe 20% return it would be bought up faster that presale tickets to a Justin Bieber (or for our older readers), a Paul McCartney concert.

You might want a safe 20% return, someone might even tell you you can have it to make a sale, but the truth is, you can’t!

Lowering Expectations

Rough Road Investing