same boat in the future as today's income seekers, who are taking on too much risk by chasing yield.
The 10–11–12 System outlined in Get Rich with Dividends will enable investors to achieve yields of at least 11 % (and possibly much more) in the next 10 years – all while investing in some of the most conservative stocks in the market. These are companies with track records, some decades long, of taking care of shareholders. And if you don't need the income today, 12 % average annual total returns (which crush the stock market average) are easily attainable. Earning 12 % per year more than triples your money in 10 years, quintuples in 15 years, and grows by well over 10 times in 20 years. In other words, earning an average of 12 % per year for 20 years turns a $100,000 portfolio into nearly $1.4 million. And that's with no additional investments.
What would an extra $1.4 million mean to you in retirement? First of all, it might spin off enough income that you wouldn't need to touch the principal. The money could be used for vacations with your family, a grandchild's college education, or peace of mind that you'll always have the best medical care.
Perhaps most important, you'll learn how my 10–11–12 System can still enable you to earn significant yields and double-digit returns in flat or down markets. Despite the nastiest bear market, you'll be sleeping comfortably, even smiling, once you implement my 10–11–12 System.
As you make your way through this book, you'll learn everything you need to know to become a successful investor. It's easy to read and even easier to get started.
In Chapters 1 and 2 we go over why dividend stocks are the best kind of investment you can make for the long-term health of your portfolio. Since you don't want to invest in just any old company paying a dividend, we discuss the special kind of stocks that you should select and how to find them.
I don't expect you to simply take my word for the claims I'm making, so in Chapter 3 I show you how I arrived at the various numbers, taking you through examples of how your income and total return can grow every quarter, with an example of how the 10–11–12 System still works and even thrives in bear markets.
In Chapter 4, we look at the big picture and the reason companies pay dividends. You'll understand why it's an important factor in determining the health of a business.
You'll see why certain conservative stocks are your best bet in Chapter 5. There's no reason to take excess risk to achieve your goals when some of the most conservative stocks on the market will achieve better results.
Chapter 6 discusses some interesting types of stocks you may not be aware of – stocks that typically yield more than regular dividend payers.
In Chapter 7, we lay the foundation for your portfolio, and then Chapter 8 is where you'll learn all about the 10–11–12 formula that you'll use to set you and your family up for long-term, double-digit yields and returns.
In Chapters 9, 10, and 11, we go over dividend reinvestment plans (DRIPs), foreign stocks, and options – all ways to turbocharge your returns.
Chapter 12 discusses everyone's favorite subject – taxes. Even if you use a CPA to do your taxes for you, be sure to read Chapter 12 as there is important information that could make your investments much more tax efficient.
And we wrap it all up in the conclusion and set you on your way to a lifetime of market-crushing returns and nights of worry-free (at least about your portfolio) sleep.
The strongest endorsement of the 10–11–12 System that I can make is this: I'm using it for my investments and for my kids' money as well.
Writing this book has been a labor of love because I know there will be thousands of families who will achieve financial freedom, be able to send a kid to college, make a down payment on a house, and enjoy retirement as a result of following the 10–11–12 System.
I'm glad yours will be one of them.
CHAPTER 1
Why Dividend Stocks?
Let me start by making a bold statement: The ideas in this book are one of the most important gifts you can give to yourself or your children. On the pages that follow is the recipe for generating 11 % yields and 12 % average annual returns for your portfolio – significantly more if the stock market or your particular stocks cooperate.
I'm not trying to brag. I wasn't the one who first came up with the idea of investing in dividend growth stocks. I just repackaged it in a compelling, easy-to-read book that you will cherish for a lifetime and want to buy more copies of for all your friends and family, or at least lend them yours.
Enough jokes (for now). What I did was create an easy-to-learn system for investing in dividend growth stocks. You'll not only understand why dividend growth investing is one of the most lucrative and uncomplicated ways to invest but also learn the simple steps of how to do it.
If you follow the ideas in this book and teach them to your children, it's very conceivable that many of your concerns about income in the future will be over. And perhaps just as important, if your children learn this strategy at a young age, they may never have financial difficulties. They will have the tools to set themselves up for income and wealth far before they are ready to retire.
Keep in mind that I cannot teach you or your kids how to save money. If you would rather buy a new car at the expense of putting money away, I can't and won't attempt to fix that. This book is for the people who already know how to save and are trying to make that money work as hard as they do.
As far as saving money is concerned, the only advice I'll offer can be found in one of my favorite finance books, The Richest Man in Babylon, by George S. Clason. In that book, first published in 1926, Clason writes: “For every ten coins thou placest in thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to thy soul.”
Many personal finance gurus proclaim the same advice, but with a more modern bent to it, stating, “Pay yourself first.”
Even if you are not able to save 10 % of your current income, saving anything is crucial. As you will see, the money you save and invest using the ideas in this book will grow significantly over the years. So if you can save only 8 % or 5 % or even 2 %, start doing it now. And if you get a raise or an inheritance or win the football pool, do not spend a dime of it until you have put away 10 % of your total income.
Here's a scary statistic. According to a 2013 survey by the Employee Benefit Research Institute and Mathew Greenwald & Associates, 57 % of American workers had less than $25,000 saved for retirement, with half of those people reporting less than $1,000 saved (see Table 1.1).1
Table 1.1 Total Savings and Investments Reported by Workers in 2013 (not including value of primary residence or defined benefit plans)
Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, 2013 RCS Fact Sheet #3: Preparing for Retirement in America, 2013, accessed November 15, 2014, www.ebri.org/files/Final-FS.RCS-13.FS_3.Saving.FINAL.pdf
And in 2013, the average 65-year-old's 401(k) account had just $25,000 in it.2
If you are serious about improving your family's financial future – and I know you are because you're investing the time to read
