“12.6% Yield — The Wonder from the Land Down Under”

By Travis Johnson, Stock Gumshoe, March 16, 2011

The folks at KCI have been moving to a “pay by the month” format for some new “entry level” newsletters that have been released over the last year or two, and several folks have asked about Roger Conrad’s new one recently … so I thought I’d give it a look for you.

Conrad’s new letter, which they describe as a “free” monthly alert service that happens to cost $5 per month because of “email and handling costs,” is called Big Yield Hunting — and it sounds like what they basically do is give a short buy case for a high-dividend pick each month, without the larger explanation, additional editorial content, or complexity of a “real” monthly newsletter. Conrad’s colleagues Elliot Gue and Yiannis Mostrous do much the same thing for “regular” stocks (ie, not just income-focused) in their Stocks on the Run monthly service, which I’ve written about once or twice. The $5 in “postage and handling” costs for an email newsletter is laughably huge for an email newsletter (it’s roughly the same as we charge for membership in the Stock Gumshoe Irregulars, but if every reader of this free daily update threw in $5 a month the “free” site would be hugely profitable — the costs of doing research and paying people can obviously be high, but the cost of actually emailing your readers is teensy once you’ve got more than a couple hundred of ’em).

Of course, it’s clear why they do this: $5 a month can not only bring in some profit, but it sounds like very little commitment and might appeal to folks who wouldn’t want to pay $50 or $100 up front for a more traditional annual subscription, and it gets people used to spending money for stock ideas … and once you’re used to that and start to like Roger Conrad, you become a very appealing prospect to upsell to his MLP Profits or Canadian Edge for $399. That’s the way the business works — the folks who come in on the free letters are targets of upsells, and the folks who sign up for the “entry level” newsletter make for the best targets for upgrading to the priciest letters and lifetime memberships, which tend to bring in much of the publisher’s profit. As every good marketer knows, the best prospects are the folks who have already bought something from you in the past.

But anyway, what you’re interested in is the new “wonder from the land down under,” right? This is the pick that Conrad is teasing in his current promo for the Big Yield Hunting service … and in case you don’t want to sign up to pay five bucks a month, I thought your favorite little friendly neighborhood Gumshoe might sniff through the clues and identify it for you.

So what do we get by way of clues? Here’s the first bit from Roger Conrad:

“I want to take you down under to the Land of Oz—Australia. My colleague, David Dittman, and I have found a pro-dividend company in a recession-proof industry—essential energy infrastructure.

“The new CEO firmly believes that company assets are there to generate cash flow to pay dividends. Isn’t that refreshing? It has a rich yield—12.6%—and a semi-annual payout.”

And the share price?

“As I write this it currently goes for under $2 American.

“Oh, and that 12.6% yield is in Aussie terms. So when and if the Australian dollar appreciates against the U.S. dollar, expect that yield to jump.”

The Aussie dollar has already appreciated hugely against the US dollar, of course — I don’t know whether or not that will continue, of course, but Conrad seems to expect it and he’s definitely not alone. The Australian dollar was bouncing around down at 65 cents for a while when things were bleak and commodity prices falling, but now that everyone’s enthralled with China’s supermarket the US and Australian dollars trade pretty close to par (not too different from the Canadian/US dollar relationship, though the recovery of the Australian dollar was much more recent and far sharper).

Here’s the bulk of the remaining clues provided in the teaser letter:

“This new Big Yield Hunting pick holds the most solid of energy infrastructure assets and investments tied to the rapid growth of mineral and petroleum assets in Western Australia.

“Average annual growth rates for these industries over the past 10 years are a hefty 15%! Western Australia exports more than $76 bi