The little-known statistic that shows we aren’t out of the woods yet (and what to do about it)
Dear Reader,
Yesterday, we spoke about the statistic that everyone is reeling over right now…
The 8.5% July inflation reading.
Markets were off to the races, well into today, and it’s not difficult to understand why. The June reading was at 9.1%, so a lot of investors truly believe inflation is cooling off.
If you’re one of them, clear your mind.
We aren’t out of the woods just yet.
Inflation in the 1970s fell five times before peaking at 14% in 1980.
It’s no surprise then that the Wall Street Journal just broke that U.S. housing affordability in June was at the worst level since 1989, due to rising mortgage rates and soaring home prices.
On top of that, there’s still war, supply chain issues, potential demand destruction… and more.
That’s why, now more than ever, extra income is more important than ever.
Here are three streams you can add to your portfolio to kick off next week…
- The Dividend Aristocrats
These are top-tier companies. A total of 65 firms on the S&P 500 have both paid out AND raised dividends – cash payments – to their shareholders for the past 25 years.
Think about what’s happened in the past 25 years…
- The Dot.com bubble
- The Global Financial Crisis of 2007-09
- The Covid crash of 2020
Through all of that, these companies have survived and thrived. Many for even longer than that.
Here are the top 5 (in terms of how long they’ve been growing their dividend):
- Dover Corp. (DOV)
- 66 years of dividend growth
- Current yield: 1.2%
- Genuine Parts Co. (GPC)
- 66 years of dividend growth
- Current yield: 2.5%
- Procter & Gamble Corp. (PG)
- 66 years of dividend growth
- Current yield: 2.2%
- 3M Co. (MMM)
- 64 years of dividend growth
- Current yield: 3.7%
- Cincinnati Financial Corp. (CINF)
- 62 years of dividend growth
- Current yield: 2.2%
Find a full list by clicking here.
- Covered calls
You might already be familiar with another way to earn consistent cash using options – the covered call. This requires the lowest option clearance (typically) because you must own the stock to make this trade.
Let’s take it with a hypothetical.
Options contracts trade in lots, as I’m sure you know. 100 shares per option contract.
Let’s say 100 shares of XYZ at $10 each cost you $1,000.
What you would then do is sell call contracts on the same stock you just bought. Essentially, you’re selling a contract to someone who thinks the stock is going to appreciate above the strike price. So, you want it to stay below the strike price.
You sell an $11 call contract five days from today.
The beauty of this income play is the instant premium you’ll receive. The person buying that contract will pay you for the option to buy the stock at $11 – which is why they want it to rise above that.
Let’s say they pay you $100 to do so.
That’s $100 instantly in your account – and if XYZ ends the week at $10.50, you keep the full $100.
And you can keep doing this, over and over, so long as you own the stock.
- Crypto
One of the most unconventional income streams you can make today is with crypto. I don’t know about you, but when I think of crypto, penny cryptos going to the moon is what I think about first.
Not income.
But there are two key ways that you can actually earn income on the cryptos you own.
The first is called staking. It’s complicated to explain. But it’s like a dividend in that you’re paid for holding certain cryptos. Our in-house crypto expert, Nick Black, explains how you can get started right here.
The second is through a brand-new source – options on bitcoin.
I know. It sounds crazy. Believe me, I know.
But just as we explained the hypothetical covered call above, you can do the same thing with bitcoin. Start with just a tenth of the money you need for a single coin in your account, and you have the ability to collect hundreds of dollars each week.
I will speak to you next week,
Garrett Baldwin
August 12 2022
