The Secret to Crushing Returns with Dividend Eliminators

Everyone on Wall Street likes to keep track of dividend increases.

Dividend ETFs and mutual funds have been the flavor of the last 30 years.

It does make sense as companies that return cash to shareholders in the form of dividends, and stock buybacks generally outperform the indexes over time.

While that is all good and wonderful, I’m not looking to beat the indexes by a little bit.

I’m far more interested in crushing the indexes like Mike Trout crushes a hanging curveball.

While I’ve found a few ways to do that and talk about them, often one of the best ways to do that is to learn to think like a private equity or distressed securities investor.

For that reason, while dividend hikes are nice, I get excited by companies that eliminate their dividends


The Weird Way to Big Returns

Recently I was able to sit down to dinner with a group of astute investors and analysts who I consider some of the sharpest minds in the industry.

As we talked over steaks the size of a catcher’s mitt and some of my favorite bourbon, an interesting conversation came up about the relative attractiveness of global stocks as opposed to U.S. stocks, and it’s had my wheels turning ever since.

The Cyclically Adjusted PE (CAPE) Ratio measures price to 10-year average earnings, and if you take a look at it, you can see that the U.S. markets are expensive with a CAPE of 30. That’s high, but it isn’t bubble magnitude just yet.

What did look particularly attractive to the group were emerging markets.

Most of those in attendance at dinner were actively looking for exposure outside the U.S., and at least one was all-in on emerging markets.

Now it may take some time for these foreign markets to catch up with, or potentially pass the United States, but history tells us that buying into those nations markets with lower CAPE ratios is a solid strategy for long-term investing.

Let me show you


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