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How to Avoid the Great Dividend Disaster |
April 6, 2009 By Richard Band, Editor, Profitable Investing |
Richard Band
As editor of Profitable Investing, Richard E. Band is the newsletter world's #1 authority on investing for low-risk growth. His flagship Total Return Portfolio has tripled in value since its inception in 1990, while taking far less risk than the popular stock market index funds.
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Big-Name Stocks to Sell Now
Normally, many top-quality financials, REITs, and utilities hold their ground in the toughest of downturns. However, the credit squeeze and a deepening recession will turn these safe havens into black holes.
If you doubt what I say, you need only look at the balance sheets of the companies you own. There you'll see with your own eyes if a company is draining cash from operations and if it can keep up with the dividend payment.
And if a company has any long-term debt coming due, watch out!
Together, those two factors will form a one-two knockout punch that could set back your savings for years.
Your best move now is to sell the big-name stocks that I've identified as headed for a fall:
Get details on 15 more big-name stocks to sell now here.
Best Stocks to Buy Now
Your second move is to buy companies that are generating lots of cash — and sharing their cash with shareholders in the form of juicy dividends.
I'm speaking of cash-generating machines like:
Companies with long-track records of growing earnings and increasing dividends year after year; companies whose cash flow is growing; and companies that are continuing to expand in this market. (See the complete Profitable Investing Buy List here.)
As you'll see over the next 12 months, not only will their profits rise but so will their dividends. The end result will put powerful upward pressure on their stock prices as well, as the market continues to get selective and investors flock to those with the biggest and safest rising payouts.
While many big-name dividend payers will collapse, others will not only flourish but hand their investors 20%, 30%, even 40% dividend growth over the next 12 months but also total returns of as much as 35%. That's why it's so important that you not only dump your dividend losers today but also add the 5 Top Income Stocks for 2009 as recommended in Richard Band's Profitable Investing to your holdings NOW. Do this and you'll not only survive the roller-coaster ride with your wits intact but could even come out of this dividend disaster 35% richer by this time next year. Details on how to join risk-free here.
