You know, I expect, that there’s no secret trove of “programs” where you can “sign up” and get a free check in the mail every month. But still, the notion that there’s “hidden income” out there is tempting… the newsletter promoters know that many of us are worried about income, or about not getting enough from Social Security or our retirement savings, and they use that to tease us with the notion that there are untold checks on the way to your mailbox if you’ll just “enroll” in their special secret plan.
We see these kinds of ads all the time, of course — the most aggressively promoted one recently has been the “Freedom Checks” spiel from Matt Badiali, though the “Liberty Checks” we looked at last week, teased by Ian Wyatt, are also somewhat similar.
And all of these ads are somewhat similar… they talk about how the government is out to get you, give us the feeling that those fat cats are making all the money, and tell us there’s one secret way you can get your revenge by signing up for your special checks.
This latest one, from Mike Burnick, also throws some red meat on the pile by calling them “Trump Bonus Checks”… which, like last year’s “Cash for Patriots” pitch from Lifetime Income Report, puffs things up a bit by giving the feeling that yes, I love America and therefore I deserve these checks.
Burnick is selling subscriptions to his Infinite Income service for $99/year… and the first part of the ad makes it seem so easy to sign up for these huge checks, including several examples. Here’s one:
“Meet the 74-Year-Old Veteran in Tennessee Who Has Raked in More Than $10,348!
“Fred S. lives in Memphis, and even though he turns 74 this year… he still works…
“Running the same business he started over 40 years ago!
“I guess two tours of Vietnam as a U.S. Marine instills a certain work ethic.
“While fighting for our country, Fred earned the Silver Star, the Bronze Star and two Purple Hearts.
“And Fred loves to give back when he can.
“He supports the Red Cross… Heart to Heart… the United Way and the Salvation Army.
“If anyone deserves a ‘Trump Bonus Check,’ it’s Fred…
“And he just got a ‘Trump Bonus Check’ for over $10,348!”
That’s helps to fuel the imagination, and it also plays right to the target market: Newsletters like this are targeting older folks, in or near retirement, who are desperate for a little income… and they’re hoping that a little pandering will go a long way with the notion that yes, as someone who served his country you, too, “deserve” a “Trump Bonus Check”… and yes, you’re still working, too, well after retirement age, but you do it because you come from a strong generation and you’ve got a great work ethic. You can just about hear the hymnal music coming up behind the commentary (and you can almost hear the muttering about the “millennials” under his breath).
Not that any of that is untrue, necessarily — but when you see the flag waving and start to feel like they’re speaking to you because they know your sacrifice and your patriotism, and therefore they’re looking out for you (as soon as you send in your $99 to get these “bonus checks)… well, then you’re being played.
That Fred S. does receive these “bonus checks”, but it’s not because he’s a veteran or because he has a strong work ethic or because of his inner virtue, it’s because he founded Federal Express in the early 1970s — that’s Fred Smith, who is indeed a veteran (and has a distinguished service record), but he’s not getting by on his “Trump Bonus Checks,” he’s a multi-billionaire who happens to get a lot of dividend checks because he owns a lot of shares of FedEx.
I don’t begrudge him his success, he took huge risks (with the $4 million he inherited) in building the company that he had dreamed up while at Yale University, and he almost lost it all a few times (he once famously went to the gambling tables in Las Vegas to make enough money to pay the company’s fuel bill in the early years), but he pushed forward with his vision… and FedEx is a huge and successful company as a result.
But the $10,348 dividend checks he gets are rounding errors in his checking account.
So yes, “Trump Bonus Checks” are just dividends. Here are a few other bits of the ad to flesh it out a little…
Just know that ‘Trump Bonus Checks’ can’t be destroyed or tampered with by government bureaucrats…
“And you can count on them to keep flowing during market ups and downs!
“That’s what I call a shot at disaster-proof income.
“No wonder a Forbes contributor said: ‘Talk about an income. Get on board the [Trump Bonus Checks] express.’
Yes, that quote was from a commentary published on Forbes.com — the actual quote is: “Talk about an income. Get on board the dividend express. As a shareholder, you paid for your ticket. Now take the ride.”
And, of course, that was published four years ago… back when Donald Trump was still mostly just a second-rate reality TV star. And it includes that part that most teaser ads like this like to gloss over or ignore, the “you paid for your ticket” bit.
And Dennis Gartman, author of the popular financial Gartman Letter, said that ‘Trump Bonus Checks’ are ‘what retail investors will want.’
That’s even older, from one of Dennis Gartman’s insufferable appearances on CNBC back in 2012… when Arsenio Hall was on his way to winning season five of Celebrity Apprentice (and Mitt Romney and Barack Obama were neck-and-neck as the 2012 campaign got under way)… here’s an excerpt:
“If you’re looking for single stock ideas, Gartman suggests dividend payers – but not just any old dividend payers – those which have been increasing their dividends.
“‘High dividend payers that have been progressively increasing their dividends,’ that’s what retail investors will want.”
Sure, yes, dividends — the portion of a company’s profits that they actually send out to shareholders — are an important part of investing… and are particularly more appealing as you get older and try to bring down the risk level in your portfolio and bring up the income. And growing dividends are even better, companies who are on a committed path to raising their dividends every year have been some of the best long-term investments in history… though it takes a long time, decades, for the “magic” of compounding to turn a smaller investment into a large one.
And there was a quote from The Economist as well…
“But you have to sign up by May 14 to get on the next big payout.
“$5 trillion is a lot of money, and it has only just started to come through the door.
The Economist said, ‘The money mountain will get much bigger…'”
That, at least, is nearly a contemporary article… it was published last June, and it’s all about the technology companies who still “hoard cash piles” without, in many cases, having any real reason for doing so… with some possibility mentioned that changing the tax code could make it easier for these companies to return more cash to shareholders… here’s an excerpt from that opinion piece:
“Maybe if the tax code is reformed the great cash build up will end. The most mature firms, Apple and Microsoft, would make a large one-off return of cash to shareholders. Amazon, Alphabet and Facebook would adopt sensible frameworks for returning cash to shareholders as their profits soar.
“But perhaps these firms love their giant insurance policy. Imperious on the outside, inside they may worry about obsolescence and regulation. Anti-trust authorities are getting hostile. Only five years ago Facebook and Google were struggling with the shift from desktops to devices. Both depend on advertising for over 85% of sales. Apple’s health depends on its latest iPhone, Amazon has thin margins and Microsoft’s profits have yet to rise.”
Much of the push of the ad is about “foreign accounts” that have American wealth “locked away”, which will fuel these “Trump Bonus Checks” … here’s a bit more from the ad:
“It’s All Thanks to the ‘$5 Trillion Trump Heist’
“… foreign accounts with American wealth locked away in other countries.
“It’s a disturbing figure, but President Trump estimates the total number goes as high as $5 TRILLION…
“And he has been screaming at the top of his lungs for THIRTY YEARS that foreign nations have been ripping us off like this.
“He promised he would put a stop to this and bring that money home.”
Burnick includes a chart with that, and it’s just the same list you’ve probably seen in many places, the list of the companies who had the largest overseas cash “hoards” — mostly tech and pharmaceutical companies who had kept their foreign earnings offshore in order to avoid paying US tax on that income (Apple, Microsoft, Cisco Systems, Alphabet, Google, Johnson & Johnson, Amgen, Gilead Sciences, etc.).
And yes, it’s widely anticipated that many of these companies will become more aggressive at buying back stock and paying larger dividends now that these foreign earnings will be “coming home” at a lower tax rate… and, indeed, the lower corporate tax rate means that companies should generally have more cash available for paying and growing dividends, even if they don’t have any “overseas cash.”
Not all of the companies are clear on what they’ll do with any surplus cash, but past “holidays” for foreign tax did generally lead to lots of special dividends and share buybacks — though ironically, President Trump will publicly say (as President Bush did last time this happened) that he wants these companies to spend that money building and hiring in the US, not rewarding shareholders.
So what are the companies that are going to let you “collect checks” for “$4,280… $6,344… and even an exceptional $8,181 per month?”
Well, on that front we don’t really get any clues. The only real clue about which stocks Burnick likes is that he notes that we have to “Take action by May 14 and make the biggest companies in the world pay you, courtesy of President Trump!”
So does that mean anything? Not really, that’s right around when second quarter dividends are likely to start in earnest, so it could be almost anyone — quite a few second quarter dividends haven’t even been announced yet, and the few that are formalized now, with their ex-dividend dates coming on May 15th or 16th, are mostly closed-end funds.
There will be many more to come as dividend announcements get made, and some of them might be larger dividends than a year ago (most companies, after all, try to increase their dividend each year, and lower taxes and a strong economy this year should make that feasible for most of them)… you can check out the Dividend.com calendar to see which specific payments are pending, for example, but do note that you don’t want the cart to drive the horse. Choose companies that have a strong record of increasing dividends, and good financial fundamentals, and you’ll do pretty well — but it’s about the company, it’s always about the company, and there’s rarely any rush to “get in early” before the deadline to collect the next quarter’s dividend.
What do I mean by that? Well, we can illustrate by using an example of a fairly typical dividend that is coming on May 15… May 15 the next ex-dividend date for Target (TGT), which just means that’s the day that the stock starts trading without the right to receive the next dividend (the actual payment will come on June 10). If you buy on May 14, you get the June 10 dividend… if you buy on May 15, you have to wait until early September to receive your first quarterly dividend check.
That dividend will be 62 cents per share, which is a pretty decent-sized dividend — Target has a share price just under $72 right now, so if you hold for a year and receive $2.48 in dividends that would mean you’re buying at an effective dividend yield of about 3.5%. Buying by May 14 means that you get the 62 cents, which is taxable income to you (at a lower dividend tax rate, probably, but still taxable), but it doesn’t mean a whole lot in the context of a $72 stock — Target shares have been quite volatile, dropping by 10% once this year and, for a while, suffering a 30% dip last year, while the 62 cents really represents pretty typical daily volatility… if you had bought TGT shares over the past week, you could have paid anywhere between $71.24 and $73.55. So don’t get too hung up on one regular quarterly dividend payment.
And if you want to collect $4,280 per month from Target, which would be $12,840 per quarter, then you’d have to hold more than 20,000 shares of Target… for a total up-front investment of about $1.48 million. I’ll go out on a limb and say that if you have a portfolio large enough to put $1.5 million into a single equity investment, then you’re not wasting half a day being tempted by the notion of “Trump Bonus Checks”.
If you put in something that might be more rational for an individual investor with a diversified portfolio, let’s say $10,000, then that means you receive about $350 a year in income from your Target shares… which would be a little under $30/month.
There’s nothing wrong with that — dividend investing works well if you pick solid companies, and it can indeed grow through both dividend increases and the “magic” of compounding. If you let that $350 get reinvested in more TGT shares, then you have five more shares the following year… and those five new shares each earn their little cut of the dividend too… and if Target does reasonably well the dividend payment itself should grow (it went from $2.40 to $2.48 last year, and has almost doubled in five years), and that’s a big part of the engine that builds “buy and hold” stock market wealth for those who are patient enough for it to work.
So no, I don’t know what Mike Burnick’s recommendations are — he doesn’t hint at any of them specifically, and I have no idea whether or not he’s recommending Target as one of his dividend investments… but yes, “Trump Bonus Checks” are just dividend payments, and what you earn will be dependent on what you invest (and how skillfully you avoid companies that hit a rough spot, see their shares decline, and cut the dividend).
And I don’t expect that Burnick is actually promising massive returns to his actual subscribers — he’s been around for a long time and is probably more rational than that, but Agora and other publishers hire aggressive copywriters who try to force you into action, and for that they tiptoe along the edge of “promising” the ridiculous… with hopes that once you sign up, you’ll like the newsletter enough that you’ll forget the absurd “free money” promises you felt like they were making.
The average dividend yield for a “blue chip” type of dividend growth company is in the 2-3% range right now, so you do often have to choose between “compounding power” and future growth and a high current level of income, but a combination of both is a rational way to get some decent income and some decent growth without taking as much risk as high-flying growth stock investors might enjoy.
And, of course, you don’t have to count on a newsletter or the luck and skill of stock selection if you don’t want to research and identify individual stocks — the Vanguard Dividend Appreciation ETF (VIG), for example, has an expense ratio of only 0.08% and will get you a yield of about 1.9% by owning little chunks of Walmart, Johnson & Johnson, Microsoft, PepsiCo, 3M and a few dozen other well-known companies who increase their dividend each year.
Or if you’re looking at higher yields (which will also come with greater risk of interest-rate sensitivity — meaning they might fall in price, at least temporarily, if interest rates rise), then sectors like utilities and real estate and telecom and energy infrastructure also offer up plenty of relatively high current yields (the closed-end fund Reaves Utility Income (UTG) is often teased, for example, and yields 3.5% by owning telecom and utility stocks, or Vanguard Real Estate (VNQ) yields just under 5% owning REITs, and the Alerian MLP ETF (AMLP) that owns pipelines and gas processing stocks, among others, yields over 6%). I don’t own any of those currently, mostly because I prefer to research and identify individual stocks that interest me, but if you’re not looking for a time-consuming hobby there’s not much reason to invest in individual stocks over ETFs or low-cost mutual funds.
So that’s all I’ve got on these “Trump Bonus Checks” today … dividends are real, they are arguably the most important building block of a long-term portfolio, but they’re not “bonus checks” and they’re not free… if you want to start getting $2,000 or more in monthly income right away from those “bonus checks,” you’re going to have to have pretty close to a million dollars to invest first.