The biggest dividend yields you've never heard of...

 Today, we take a break from our normal market coverage. Instead, we're going to provide you with something much more valuable than our typical Digest...

 

In today's Digest, we discuss one of the most useful pieces of research you'll read all year. It's about an idea that can safely make you a huge amount of money in stocks.

 

Best of all, reading this research... learning a key investment secret... and understanding exactly what this secret is telling you to buy, right now, is 100% free.

 

More on this in a moment...

 

Before we discuss this research, we need to briefly cover a core belief we have at S&A... something we've gone to great lengths to help our readers understand.

 

 This core belief is the idea that capitalism is about capital – how much you earn and how much you keep.

 

To achieve long-term investment success, you must own companies that efficiently produce cash... and that pay out that cash to shareholders or invest it wisely into growing the business.

 

If the average investor doesn't take this idea to heart, he is unlikely to ever make money in stocks. If he doesn't focus on cash flow and how much gets to him – the shareholder – the investor will spend his life chasing hot tips, buying overpriced initial public offerings (IPOs), and falling for every scam Wall Street banks can dream up.

 

 Regular Stansberry & Associates readers know that, ideally, you want to own companies with excellent brand names. You want to own companies that produce high returns on assets. These are the companies you can own for decades... and compound your wealth at high rates... like 15% a year. Porter has termed this idea "capital efficiency."

 

If there is a secret the "little guy" can use to build a lot of wealth in stocks, this is it.

 

 This secret allowed Warren Buffett to build the largest investment fortune on Earth. Buffett has a made a fortune owning capital-efficient businesses like Coca-Cola.

 

This secret has also brought Stansberry's Investment Advisory subscribers a 170% gain in Hershey (HSY). When Porter recommended Hershey in 2007, he pointed out its incredible ability to return capital to shareholders. He said Hershey would end up being the greatest recommendation of his career. And so far, Hershey is proving him right.

 

The secret has also brought Porter's readers a 57% gain in less than three years on the capital-efficient video-game maker Activision Blizzard (ATVI).

 

With the idea of capital flowing to shareholders in mind, we urge you to read a brand new piece of research from our friends at The Palm Beach Letter...

 

 As many Digest readers know, The Palm Beach Letter is a corporate affiliate of S&A founded by our friends Tom Dyson and Mark Ford.

 

Tom is a former S&A analyst who has put his expert accounting skills to work finding the world's safest income-producing securities. Mark is a legendary entrepreneur, New York Times bestselling author, and wealth-building expert. He has mentored many of us at S&A, including founder Porter Stansberry. Together, Tom and Mark have started the most successful new company in our industry.

 

 Tom and his research staff just published a report on a huge inefficiency in the stock market... one you can use to find some of the market's safest, biggest dividend yields. Some of the securities Tom is recommending because of this inefficiency are paying yields of more than 6%.

 

However, you'll never find these yields on a stock screener. You'll never see them reported by major financial news and data providers like Bloomberg or Yahoo Finance.

 

 That's because – as many investors don't realize – there are two types of dividends. Many financial sites only report one type. That's a huge opportunity for investors who know what's going on...

 

Most investors only know about regular dividends – what companies pay regularly to investors, normally on a quarterly basis. But some companies use a second type of dividend called a "special dividend." These are nonrecurring payments – you can't expect them as you can with regular dividends.

 

A company pays a special dividend when it has excess cash but it doesn't want to lock itself into a dividend increase. It's a way for management to return cash to shareholders, while not committing to an ongoing, increased regular dividend payment.

 

Because special dividend payments are unpredictable, most websites and stock screeners don't factor them into the current yields they report. But this little-known inefficiency could mean a great deal to you...

 

It means you can earn giant dividend returns from safe, high-quality stocks that most investors overlook. Because cash-starved income investors don't know about these companies, they haven't piled into them, driving up stock prices. That means you can get these huge "stealth" dividends without overpaying.

 

 Our colleagues at The Palm Beach Letter are tracking down the best secret dividend-paying companies for their readers. And these companies are making big payouts. They can be two or three times larger than a single quarterly dividend.

 

When you combine special and regular dividends, the true yield is far greater than what the media report...

 

 According to Yahoo Finance, one company has a regular dividend yield of 2%. That's about the same regular yield it has offered over the past few years. But from 2009-2012, it paid a lot of special dividends.

 

That means the true dividend yield (combining special and regular payments) during those years was actually 8.2%, 8.7%, 7.5%, and 12.3% – but you would have never known it from looking at Yahoo Finance.

 

 The financial research firm Morningstar shows another company's dividend yield is 2.4%. But it pays multiple special dividends every year – 12 special payments in the past two and a half years alone. That means the combined yields are 6.4%, 6.7%, and 5.7% for the past three years, respectively. So the various financial websites are missing more than 70% of the company's real yield.

 

 Then, Tom and his team also recommended a third company just two weeks ago. But they tell me this company has paid a special dividend for 11 straight years. That's unheard of. To my knowledge, no other company has a special-dividend streak of this length. The Wall Street Journal reports a dividend yield of about 1%. But combine regular and special dividends... and it's closer to 8%.

 

 And Tom and his team also recommended one of these special-dividend payers in February 2014. Since then, it has already paid a special and regular dividend. In our current low-yield environment, that extra income makes a big difference.

 

But perhaps the most attractive thing about owning these stocks is the lack of worry and stress that comes with them...

 

 If you're worried about the economy slowing, you want to own these businesses. They typically sell basic products like household consumer goods and petroleum products. These products enjoy constant demand. This ensures repeat business and reliable cash flows (which support reliable dividends). You're not investing in companies that depend on a roaring economy to make money.

 

 If you're concerned that the broad stock market is set to head lower, you want to own these businesses. It doesn't matter if the Dow falls 10% or 20%. These businesses will continue producing large cash dividends for their shareholders.

 

 If you don't want to spend time trying to pick which tech company will have the next hot product, these businesses are for you. Again, they typically sell basic products. Many people aren't attracted to basic businesses like this. But to sophisticated investors interested in cash flow and dividends, boring is beautiful.

 

These companies won't double overnight because of a new innovation. But they don't sell products that could be rendered obsolete next year. This is often the tradeoff in stocks. Sophisticated investors would rather own the company that isn't going to double overnight... but won't go out of business in a few years.

 

By owning these companies, you don't worry about startups coming out with better "apps" or better forms of social media. This is a constant worry for shareholders of companies like Twitter and Facebook. One day, you're enjoying share price gains, the next day your stock drops 20% because competitors are cutting into its growth.

 

 These "low stress" attributes mean you don't need to check price quotes every day... or every week... or every month.

 

With these businesses, you might check in on them every quarter, just to check in on how business is doing. Of course, anything can happen in business. But these quarterly checkups usually amount to hearing about modest growth and the latest dividend payment.

 

 At The Palm Beach Letter, Tom has compiled all of his research on this idea into one special report titled: "5th Payouts: How to Boost your Income 503% Overnight." Inside the report, you'll learn how special dividends work, why some companies often pay them, and exactly which "habitual special dividend payers" to buy right now. This is a list of elite, extremely valuable businesses.

 

 Even if you don't buy a single recommendation in this report, it's important to learn about the key concepts of special dividends. It's important that you learn the attributes these businesses have... like safe payout ratios... and strong insider ownership.

 

To encourage folks to read this report and try The Palm Beach Letter... we invite you to take advantage of us. Take advantage of our 100% money-back offer for a subscription to the Palm Beach Letter. Take advantage of this opportunity to access hundreds of dollars' worth of Tom and Mark's educational material on wealth building. Read through their work on special dividends. Take a full year if you like.

 

If you don't find an incredible amount of insight on wealth and personal security, we'll refund 100% of your subscription. There is zero risk for you... and a lifetime of wisdom to gain. You can watch a detailed video about this idea, and learn how to access Tom's research – right here.

 

 

 New 52-week highs (as of 4/17/14): Alcoa (AA), Berkshire Hathaway (BRK), Anheuser-Busch InBev (BUD), C&J Energy Services (CJES), Callon Petroleum (CPE), Comstock Resources (CRK), Carrizo Oil & Gas (CRZO), Devon Energy (DVN), Eni (E), Freehold Royalties (FRU.TO), Intel (INTC), Qualcomm (QCOM), Range Resources (RRC), Targa Resources (TRGP), Union Pacific (UNP), and U.S. Commodity Index Fund (USCI).

 

 It seems electric-car maker Tesla can join that short list of subjects – like George Soros – that are bound to fill up the mailbag. Send your messages to feedback@stansberryresearch.com.

 

 "I am a retired Learning Disabilities Teacher. I own 20 shares of Tesla stock purchased at $254.58. It makes me furious to read articles about Tesla that will cause the stock to go down further. If you don't stop doing that, I just may have to begin a case of litigation against you. As it is, having just joined Stansberry Research, I am already considering dropping my membership." – Paid-up subscriber Sue Berry

 

Porter comment: Our mission at Stansberry & Associates is to give readers the information we would want if our roles were reversed. We would not pay our hard-earned money to be simply told things that make us feel good. We'd demand an honest (and well-researched) opinion about the best securities to buy and which to avoid...

 

And our honest opinion is that almost no company is worth 14 times its annual sales. That's an astronomical valuation. And that's what Tesla was trading for in February when shares closed at $259.20. What has happened since is simply a bit of reason seeping back into the stock's valuation. (Though just a bit... Tesla still trades at an indefensible 12.2 times trailing 12-month sales.)

 

One other point... In our view, a stock like Tesla is completely inappropriate for a retired investor to own. Whether it goes up or down in the short term, it represents an extreme amount of risk – far more risk than we think you realize. Let's put it this way...

 

We believe this stock is sure to drop by 75% or more at some point in the relatively near future. That's a function of its extreme overvaluation, its poor profitability, and the inherent difficulties in starting a new auto business.

 

Judging by your reaction to a much smaller drop in price (threatening to sue us for merely talking about the shares), we humbly suggest that you will not handle such volatility with the necessary élan.

 

 "Someone is definitely a fool. It might be me. I've missed the boat before... however. A few points that are never covered about Tesla, or any other electric vehicles for that matter, are the cost to the environment from producing the vehicles. In addition to the mining related cost to dig up the rare earth metals that are used in the batteries, by huge CO2 spewing equipment that gets 2mpg and has tires that cost over $100,000 each (how much rainforest was destroyed just to make the tires). I could go on with the hidden environmental cost to manufacture these batteries, but you get the idea.

 

"At the end of the battery life you are then faced with disposal of the heavy metal toxins in the batteries. Why everyone believes these cars are environmentally friendly, or even cost effective, is beyond me.

 

"Finally, I wonder if you have any data on how many shares of Tesla are owned by investors like Buffet, Soros, Einhorn, etc? Tesla hardly seems to fit the capital-efficient profile that builds long-term wealth. I'm sure you will get plenty of feedback on the crazy valuations of Tesla, but you have covered those at length many times previously. I think I'll take my chances with capital-efficient companies and look like a fool now rather than later. My sincere best wishes to all those who own Tesla. I'm afraid you are going to need it." – Paid-up subscriber John Plumberg

 

Regards,

 

Brian Hunt

Nassau, Bahamas

April 21, 2014

 

How to get over your fear of buying when there's blood in the streets...
 

Buying into sectors after massive crashes is one of the most difficult things in investing.
 

In today's Digest Premium, Meb Faber shows exactly why "buying when there's blood in the streets" can lead to huge profits...
 

To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.

How to get over your fear of buying when there's blood in the streets...

Editor's note: Last week, we featured analysis from Meb Faber, chief investment officer for Cambria Investment Management and friend of S&A. So far, we've shared why Meb says you probably have too much money in the U.S. and why U.S. stocks could soar (and then crash).

 

We're running more of his commentary this week in Digest Premium. Today, Meb explains how to get over the fear of investing in countries that have gotten crushed...

 

 

 It's tough for a lot of people to buy into sectors that have been destroyed.

 

That's one of the behavioral reasons that value investing works... It's difficult to invest in countries that are down a lot.

 

A lot of these countries can fall 50%-80%. At one point, Russian stocks were down more than 60% from their peak. But that's typically the best time to buy. Retail and institutional investors historically have very poor timing... Most investors are running away, while you want to be buying a lot of these countries right now.

 

One of the benefits of our Cambria Global Value Fund (GVAL) is that it buys 100 stocks in these countries for you... You don't have to hold your nose and buy Greece, Russia, or Italy.

 

 In the late '80s, Japan had the biggest equity bubble we've seen... Longtime investors will recall the excitement – and in the case of the U.S., fear – surrounding Japan. You saw magazine covers and people talking about how Japanese businesses were going to take over all U.S. companies. At the time, Japan's cyclically adjusted price-to-earnings ratio (or "CAPE") value was in the high 90s. That was more than twice the CAPE value of the U.S. during the Internet bubble.

 

Since 1990, people have talked about the horrible returns in the Japanese stock market. We've lost two decades. And it's not because of demographics or that Japan isn't competitive... It's simply that Japan had one of the biggest bubbles we've ever seen in the late '80s, and it has taken Japan two decades to work off that bubble.

 

In the last few years, Japan finally got back to a cheap valuation. And Japanese stocks soared last year. That's what happens when you have a country become cheap again after essentially being uninvestable for the previous two decades.

 

In the late '80s, had you allocated to a global market-cap-weighted portfolio, you would have had half your assets in Japan. You find yourself in a very similar situation today with the U.S. – though admittedly not as dramatic. You're too heavily invested in the world's most expensive market.

 

 Based on valuation metrics, you're likely underinvested in foreign equities today. Even if the U.S. market doubles from here, foreign stocks will likely outperform it.

 

The bad news is that the U.S. is the most expensive country in the world. The good news is that most stock markets outside the U.S. are really cheap. In some cases, they appear to be generationally cheap. Greece hit its lowest CAPE value we have in our database (around two) about a year and a half ago. Its stock market is up around 200% since then. There's a lot of opportunity when countries get super-cheap.

 

At a minimum, you should have half your assets in foreign stocks today. But you also have to be country-agnostic and have a valuation tilt. If you just allocate to "foreign developed" instead of "foreign emerging," there's a huge spectrum of valuations with countries in both sectors.

 

 If you look at the developed world, you have U.S. and Canada on one side and Greece and Italy on the other. In emerging markets, the variation is even more dramatic. You have countries like Russia with a CAPE ratio of around five. Then you have countries like Indonesia and Colombia that are much more expensive. It's not enough to just buy the cheap countries. You also have to avoid the expensive ones. That's what tends to work over time.

 

Remember, expensive can always get more expensive... After all, U.S. stocks would have to double to reach a CAPE ratio comparable to Japan in the late 1980s. What would the global investment landscape look like if U.S. stocks doubled or tripled from here? How would the low-CAPE-ratio markets perform?

 

In our studies, we have found that markets that had a CAPE value of less than seven (which is incredibly rare, though there are several countries trading at that level today) average 20%-plus per year for the next three to five years. Just look at the recent performance of Greece and Italy as an example. You can have explosive returns.

 

If the U.S. continues to have great returns, we expect many of these dirt-cheap countries to have even better returns. You often find that coming out of bear markets, deep-value companies do incredibly well. (They also perform well during bull markets.)

 

– Meb Faber

 

 

Editor's note: In tomorrow's Digest Premium, Meb shares the one thing that could prevent him from investing in a country.

How to get over your fear of buying when there's blood in the streets...

 

Buying into sectors after massive crashes is one of the most difficult things in investing.

 

In today's Digest Premium, Meb Faber shows exactly why "buying when there's blood in the streets" can lead to huge profits...

 

To continue reading, scroll down or click here.

 

Stansberry & Associates Hall of Fame
(Top 10 all-time, highest-returning closed positions across all S&A portfolios)

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Publication

Editor

Seabridge Gold	SA	4 years, 73 days	995%	Sjug Conf.	Sjuggerud
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ATAC Resources	ATC	313 days	597%	Phase 1	Badiali
JDS Uniphase	JDSU	1 year, 266 days	592%	SIA	Stansberry
Silver Wheaton	SLW	1 year, 185 days	345%	Resource Rpt	Badiali
Jinshan Gold Mines	JIN	290 days	339%	Resource Rpt	Badiali
Medis Tech	MDTL	4 years, 110 days	333%	Diligence	Ferris
ID Biomedical	IDBE	5 years, 38 days	331%	Diligence	Lashmet
Northern Dynasty	NAK	1 year, 343 days	322%	Resource Rpt	Badiali
Texas Instr.	TXN	270 days	301%	SIA	Stansberry