Sometimes we have a tendency to forget that the reason to own something is almost always to earn money on your investment — and that’s where dividends come in. Movements in stock prices and capital gains depend on the vagaries of the market, with stocks sometimes priced at 10 times earnings and sometimes at 30X earnings, but the hope is that your share of a company’s actual earnings — the corporate dividend — will grow more steadily in line with the growth in the underlying business and actually put some cash in your pocket.
So at times like these, when folks are fearful for the future movement of the S&P 500 and the Dow, wondering about a “double dip” and seeing weak stock prices and not-necessarily-cheap valuations, it’s no surprise that we get the “look for dividends” advice from lots of pundits, particularly folks who are reminding us to look at the relatively inexpensive, cash-heavy megacap stocks who grow their dividends year-in and year-out.
But we also get the high dividend advice — especially from teaser-meisters who are hawking their high-dividend newsletters, recommending stuff like preferred shares, income trusts, high yield bonds or closed end funds, and stocks that pay unusually large regular or special dividends. That’s what we’re looking at today, a pitch from Ian Wyatt for his High Yield Wealth newsletter that tells us we can earn buckets of cash from “The One Oil Company Paying Shareholders a 10X Bonus Dividend.”
So, not to put too fine a point on it, what the heck is he talking about?
Here’s how he introduces his idea:
“It’s no secret that oil companies are doing very well these days.
“The fact is some are doing even better than what’s officially reported.
“I’ve analyzed many oil stocks and found one company that is delivering regular dividends more than 10x the published rate.
“They’ve been doing it for four straight years, including delivering dividends worth 20x the published rate one year.
“Few people know about this (I’ll let you know why the real dividend rates are not announced). If you’re looking for more income — and who isn’t with CDs and savings accounts yielding next to nothing? — you should consider getting in on this before the next payment.
“Here’s some information on this company and its secret bonus dividend you won’t get anywhere else, but you will today…”
Well, not to steal Mr. Wyatt’s thunder … but yes, you can learn a wee bit about this company’s “secret dividend” right here if you’ll just lend us your eyes for a few more paragraphs. Oh, and yes it’ll be substantially more well, free (though we also dearly love our Stock Gumshoe Irregulars, of course).
We’re told that this mystery company is connected to two billionaire brothers, which probably already gives some of you enough dots to connect in drawing our picture … but just in case, here’s some more of the spiel …
“The story of this oil company begins with two billionaires in the early 1990s (doesn’t it seem like billionaires and oil always seem to go together?). Their names are Bob and Larry and they were billionaire brothers who they wanted to put their money to work for them.
“So they looked for a business that produced hefty dividends. They found it and got in at the right time. The business?
“Offshore oil drilling.”
Some more hints about the stock?
“A good deal of this company’s drilling is in oil friendly South America — in particular Brazil….
“… the company I’m telling you about has one of the largest fleets in the world of semi-submersibles and high — specification rigs capable of drilling in very deep waters.
“So it’s not surprising it has more offshore rigs working in Brazil than any other company. And it is the largest offshore oil drilling rig provider for Petrobas, Brazil’s biggest oil company….
“The company achieved its equipment advantage early on in the development of the offshore oil industry. Soon after the billionaire brothers first formed the company, they amassed a large fleet of topflight rigs with their purchase of a competing drilling company.”
Wyatt goes on to tell us that the company has a policy of paying out significant sums to shareholders, and that part of the reason they keep doing it is that the insiders and the founding family own a huge chunk of the shares — dividends are how they get paid.
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“Insiders (basically the family that inherited the com