042 - Why You Should Ignore Dividend Aristocrats And Buy Stocks In Other Categories

Everyone talks about dividend aristocrats but did you know there’s actually 5 other categories? The aristocrats only fall in the middle and have metrics that by definition make them trendy growth stocks, which isn't what we're looking for. 

The main thing to focus on with these dividend categories is how many years of dividend growth they need to get the title. 

When you invest in great stocks that consistently increase their dividends, you inherently reduce the risk of your investing portfolio.  

Dividend Achievers have raised their dividends for at least 10 years plus other metrics (400 total).

• PFE 
• BMY
• CTO
• EPD

Dividend Contenders have raised their dividends for at least 10 years (340 total).

• ABR
• NEP
• VZ

Dividend Aristocrats have raised their dividends for at least 25 years plus other metrics  (68 total). 

• O
• CVX
• LEG

Dividend Champions have raised their dividends for at least 25 years (150 total).

• MMM
• ES 
• ALB

Dividend Kings  have raised their dividends for at least 50 years (50 total):

• MMM
• MO
• ADM

Questions? Email Tim at debrine9@gmail.com

Want FREE weekly market updates, Tim's top 10 dividend picks, and our portfolio updates delivered right to your inbox? Subscribe to our email list.

Stay connected. Follow us on social!

**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

Episode music was created using Loudly.

Transcript

Welcome to roaming returns, a podcast about generating a passive income through investing so that you don't have to wait till retirement to live your passions. Everyone talks about dividend aristocrats, but did you know there's actually five other illustrious titles and the aristocrats only fall in the middle? Today, you'll learn about each category, like how many years of dividend growth it takes to earn that credo. You're going to want to tune in because this is another way to find great stocks for your portfolio that are by definition less risky.
Fasten your seatbelts. We're ready for takeoff. We're back, we're back.
What are you doing? I don't know. All right. So today, I think, is the long awaited episode for the aristocrats, achievers, dividend, whatever the heck.
I mean, what is the list actually called? I don't know. Just dividend. They have a dividend aristocrats is what everyone knows, but I like the aristocrats are.
Just one piece of the like different categories that are nice in categories. They are nice classifications. Well, there's the dividend aristocrats, but there's other ones that have the same like.
When we get into it, you'll see that there's other ones that have just as much years of growth as the aristocrats, but the aristocrats get all the pub. Yeah, they do get all the pub. So there's apparently how many categories are there? I have one, two, three, four, five, five categories.
Are you going to count? No, because I have to remember, I have to remind them that we talked about economic moats last week and economic moats are super duper important. And every one of the every one of these has a moat of some sort. That's how they have their dividends.
They might not be like a wide moat, but they have some sort of moat to raise their dividends for X amount of years for so long. OK, I would call these dividend categories for dividend increases because that's essentially what they're they're based on. Right.
Yeah. I tell you an increase. But then they have other stupid things that go in with them.
But yeah, it's mainly how many years they raise their dividends. OK, so this is super important. You encounter whatever like I know, like there's a like Coke, for example, is like one of everyone's favorite.
And what Coke does to keep their streak alive is they'll raise their dividend like one cent. Mm hmm. That's trash.
Sneaky, sneaky. I don't like when they do that, but a lot of these particular companies do that. I mean, it makes sense to stay in that category, because if you miss one year, like you have to it's a rolling 50 or rolling 25.
Right. I think the last one I remember was Walgreens did it slashed its dividend and its stock tanked. So I guess there's a reason why they do the one cent thing, because rather than not have a dividend increase and risk your overall, you know, market cap going down a lot because everyone's like, oh, my God, there's problems in the company.
And Walgreens is not a great company. It wasn't. It's shit.
And like, I don't even know how they were dividend. I think they were aristocrat. I don't know how they had that many years of dividend increases.
They're a crap company. They may be back in the 80s. They were cool.
But like we're talking, I don't even know where a Walgreens at. There's one in Dover. That's like literally the only one I know exists in the area.
And it's like we're in a pretty populated region in the northeast. So Walgreens at one point had a moat. They were like one of the only company, like only companies that had stores that did pharmacies.
And then CVS came in and picked away at it. And Rite Aid came in and picked away at it. So their moat shrank and shrank and shrank.
And then and CVS and Rite Aid were cheaper than Walgreens and in better locations. And Walgreens just got squashed. So that goes back to the location, location, location.
I wasn't going to say that. I was going to say the long term moat. We said that that was one of the criteria last week's episode.
Well, I like what I want you to take away from this. Like we're going to go over quick, like the different categories. And then I'm going to give a couple examples in each one.
But what I want you to take away from this is when I give you, say, a dividend aristocrat, think of the moat they have and then apply that to your research for whatever. Yeah. If you use it to in conjunction, you'll know whether it's a BS.
That's why we did these in tandem, because they kind of go hand in hand, because like each of these that I bring up, you should be able to determine a moat. And if you like mentioned what the moat is. But I think this is an easier like this is an easier way to get started in your portfolio.
You can just you can have a couple of these undervalued ones that have a decent dividend that grow their dividend every year. But then I want you to actually be able to take the moat and do your own research, come up with your own ideas and then have like ARLP, for example. I don't know any other fucking company that has coal associated with their thing.
And it gives I think it's like 15 percent yield. It's like it's the only coal company I know might be another one. But it's like it's one of two or three.
So that's a moat in itself. There's only like three companies that's like on the on the stock exchange that sell coal. Same with like the shipping ones.
Like if you can find a good shipping one that has good profit margin and good dividend growth and good revenue and stuff like that, that's a pretty good one because there's only like, I don't know, 10 shipping companies. All right. So let's let's get back to the point before we rehash too much of last week's.
Oh, OK. So the first one is a dividend achiever. There's about 400 total.
So the moat's quite narrow in these guys. Achiever sounds so lame. Yeah.
It's like the Achievement Awards for last place or like what is it? Those ribbons for every place in the thing. Everybody gets it. Everybody wins or whatever.
They've only raised their dividend at least 10 years in a row. Other criteria is they must be listed on the New York Stock Exchange or the Nasdaq Exchange. And they have to have a three month average daily trading volume of one million dollars.
So there's a couple of criteria that go along with it. It can't just raise their dividend 10 years in a row. You have to have numbers.
The second one is dividend contenders. I should preface that you can be in multiple categories. I think you said that earlier.
Dividend contenders. There's 340 about. I think there's 340 exactly total raised.
They've raised their dividends over 10 years in a row, but less than 25 years in a row. And they don't have that other crap that goes with it where they have to be listed on the stock exchange or have any monthly averages. Yeah.
So the only criteria for that one is between 10 years and 25 years dividend increases. The one that everybody knows. Everybody invests anyways.
There might be people that don't know. But it's dividend aristocrats. There's 68 total.
They've raised their dividends 25 plus years. They have to have a minimum market capitalization of three billion dollars for some reason. I don't know why.
I guess that's just a criteria that they came up with to make the list. Cool. That's interesting.
They must have a three month average daily trading volume of five million dollars. I don't know why they can't because of how they come up with these. I know because they don't have criteria for the next year.
It's kind of arbitrary things. Then you got Dividend Champion, which is the same as Dividend Aristocrat, but it doesn't have the other crap with it. It's just Dividend Champion.
There's no market cap. Raise their dividends 25 plus years. And that takes the total from 68 Dividend Aristocrats to 150 Dividend Champion.
To me that looks like the two categories of Aristocrat and Champion should literally just be combined and the whole minimum capitalization and the daily trading volume should be out the window. What is that? Why? That's stupid. I guess so.
And that's a heck of a gap between this one and the next one. So the last category is Dividend Kings and they are only 50 and they have raised their dividend 50 plus years. So they go from 25 years to 50 years.
I don't know. That's that's a heck of a gap. I guess.
I imagine there's people in between. Most of the time they hang out in this one for a while and then they eventually roll over to a Dividend King. They hang out in the Aristocrat area and then they roll over to a King after some point.
I guess it makes them feel good. I would imagine if you like the small caps like you do, you want you're looking for champions. Champion.
It's very difficult to find small cap because of these stupid. Well, that's what I mean. They won't be labeled as aristocrats.
They'd be labeled as champions, if anything. All right. So.
So like I said, you can be you can be in more than one list for prime examples. MMM. Triple M. It's both a Dividend Champion and a Dividend King.
Yeah, we got a hard on for this company lately. They just did a spinoff today, so I don't know what the hell is going on with the share price, to be honest. They spun off their I think their pharma into something.
So they got rid of pharma. Yeah. Interesting.
OK, so I'm going to give you a couple of each category here. Dividend Kings is Triple M. Wow. That one's actually a King.
It's currently trading around. I think it's 95. I just looked.
But when I did this, it was trading 92 and its fair market value is 162. So it's vastly undervalued. Currently yields six point six and has raised its dividends 66 consecutive years.
That's incredible. So it's that's one to possibly like I got into that as soon as I saw it dropped down to like 90. Now I can see why you have such a hard on for Triple M. I mean, I was just looking at it from a product standpoint.
But that's fantastic. They have everything. Yeah.
Another Dividend King is MO Altria. It's currently around 40 ish and it has a fair market value of 73. It yields nine point nine and has raised its dividend 55 consecutive years.
So like way to start a good portfolio for income. Like literally, if you put those two together, that's what is that seven about eight point two, eight point three percent just between the two of those. And you're getting Dividend Kings, which are paying pretty good.
They're more than a lot of the aristocrat, like the big market cap, trendy ones. And then we got a little sissy, a little sissy one here, ADM. It's currently around 53, has a fair market value of 100.
It yields three point seven. Ew. And has raised its dividend 50 consecutive years.
OK, so those are the three big ones. That's what you like. When you look these up, they'll be like one point two point eight.
So even if they're raising their dividend every year, their yields only point eight is trash to me. I like if you're looking for income, that's that's yeah, interesting. OK, I imagine Coke fill in this category.
Coke is a dividend king, but their yield's only like three point something. So that's why Coke is not on the list here, in case you were wondering. OK, dividend champions.
I just to provide this to prove that I'm not full of crap. Triple M's a dividend champion as well. So everything I said about Triple M a couple of minutes ago, rehash.
Well, it's like the quadrilateral example that I like to use or I probably for people who aren't math geeks like I am the square versus rectangle example. All squares are rectangles, but not all rectangles are squares. So they carry down.
Oh, my God. Sorry. Very interesting.
Shut up, Tim. Yes, is currently about 59, has a fair market value of 90. It yields four point nine and has raised its dividend 25 years.
Exactly. Which one? Yes. What the heck is ES? It's a energy company.
Yeah, OK. And ALB, which is a lithium something or other. It's dividends crap, but it's like super undervalued.
It's currently like 118 and has a fair market value of 270. That's less than 50 percent. It like I said, it only yields one point one.
So that's trash. But it's raised its dividend 20 consecutive years. The reason I put that on the list is because you're going to get a lot of price appreciation if lithium keeps being a big thing, which I think it will.
Yeah, because the whole EV thing, because that's what they use for the lithium ion batteries that are basically going in everything. I mean, even a little dookie headlamps that we use are going lithium battery. All your phones are lithium battery.
I imagine the tablets and computers and whatnot have lithium crap on them. So there's a couple of ideas where I like my sweet spot is not. We're not my sweet spot yet.
But dividend risk, that's everybody's favorite category. I hate it, but OK. Oh, is everybody's favorite dividend aristocrat.
That's so funny. Everybody loves that company for some reason. I don't know why.
Currently 5250 fair market value of 90. It yields five point nine and it has raised its dividend for 31 consecutive years. It's a way to get, I guess, a good read.
If you like what they do, I don't. Why do you not like, oh, that's got a almost six percent yield and it's other ones that do the same thing that are better, that give you more yield. OK, like I'm looking for income.
Like when we get down to contenders, you'll see like the one I'm in, the reap that I'm in is awesome and it's undervalued and it yields more. Just hasn't raised his dividend in many years. Chevron CVX is currently 149 and has a fair market value of 200.
So a little bit of appreciation there. Yields four percent and has raised its dividend 37 consecutive years. Leg.
I don't know what the hell that is. I want to say Lego, but I know that's not right. No, it's like a leg and proud or something like that.
It's like I think it's like a infrastructure stock. But I don't know why it's called leg. Well, that is a fairly decent yield.
It's currently twenty twenty dollars. Fifty cents has a fair market value of forty five. It yields eight point nine percent and has raised its dividend fifty three consecutive years, so it's almost.
Yeah, I was actually wondering why this one has never come up before. I'm imagining almost a king, right? It is a king. I could put that in the king category.
My bad. OK, so there's a king with a pretty high yield. There's a king and aristocrat.
The problem with that one is like the share price has been depreciating for like the last like five years or so. OK, I was going to say, I figured your research would have ruled this one out for some reason, because I do like infrastructure stocks, but they never pay anything. So if that's what it is, I honestly.
I think you should actually look into that one just out of curiosity. Ok, pause. LEG stock, Leggett and Platt, the diversified American manufacturer that designs and produces various engineered components and products that can be found in homes and automobiles.
Zoom out on that chart. I want to see this. Oh, yeah.
It's like a penny stock chart. So I'm saying like it's like trending to zero. What is happening? Like after Covid, it shot up like everything did.
But then after like before before 2022 even happened, what was the shit time started going down? And it's just been going down ever since 2021. All right. So my guess is that met every other criteria except probably long term chart happiness.
So it's down 60 percent in the last five years. That's pretty crazy. Something has to be going on.
But I imagine you could tell by reading the quarterlies. But there's to us, I guess there's no point. I do like the diversified manufacturer that deals with homes and automobiles.
But I don't like it enough to own it. So that's you do your research on it. And anything I mentioned, honestly, do your research, because I've said it before, no one cares about your money and your situation more than you do.
Like I want you to genuinely do well, but like I don't care as much as you do. Just about your portfolio, your particular needs, your particular values. And I'm being honest.
OK, so now let's get out of contenders. Like here's where I shop at the contenders. Here's where I shop at the store contender, the contenders and the achievers is where I hang out.
Yeah, I do that with my van and go, hey, little girl, I want some candy. Yes. Roll up to the contender neighborhood.
Contenders. Oh, my God. That's so funny.
Arbor, ABR, currently twelve fifty ish fair market value of forty five. It yields thirteen point two five and has raised its dividend ten consecutive years. So like I'm saying, like it has a decent dividend increase year streak going on.
It yields thirteen point two five. So I'd rather be in this rate than, oh, I'm making twice as much, a little more than twice as much. And I'm paying a lot less for what I think is more price appreciation.
I mean, I didn't do the math, but 90s for that's like 40 some percent. And that's like more than 40 some percent. Yeah, yeah.
NAP, which I beat the table on. I don't know if anyone listened. I hope you did.
It's the alternative energy for me in Florida is currently twenty fifty has a fair market value of seventy five. It yields twelve point one five percent and it's raised its dividend ten consecutive years as well. And I know I beat the table on the next one.
Verizon. Verizon isn't actually aristocrat. Not yet.
It will be soon. Oh, all right. Somehow it's AT&T in the aristocrat category.
I have no idea. I don't care because AT&T is trash. So I don't even like look at it beyond that.
No. OK, good to know. I mean, I'm sure people like AT&T.
I just think it's trash. Verizon's currently forty dollars around. There has a fair market value of fifty one.
So not a lot of price appreciation, but it yields six point six percent and has raised its dividend 19 consecutive years. However, had you listened to us before, you would have got in at a better price. I got that for like twenty eight, something like that.
Yeah, that's pretty crazy. That's like almost 50 percent below market value. So I don't know.
I'm like when I beat the table on something, I don't normally say there's a reason to beat the table on the table for anything. But like when I do like NEP, ABR, Verizon (VZ), I've all mentioned numerous times. I think we did an example of one where you gained like a price appreciation like 30 percent in a matter of like I think less than a month.
It was NEP. I mean, I got NEP at like. But I think Verizon did something similar.
But anyway, I got NEP at like 18 and it shot right up as soon as I bought it. And then Trinity did the same exact thing. I got it and it shot right up.
We would have probably done the same thing with IEP had we saw that happen before we were actually in it. I can't. I don't know what I'm doing with it.
Like I like what he's doing. But anyway, that's that's a that's a whole side problem. Now we have the achievers.
If you recall, achievers have to be between 10 and 25 years. I think. Yeah.
Ten to twenty five. Pfizer. Yeah.
No contenders is between ten and twenty five. And achievers is a achiever and a contender. The same thing.
Well, that one has those other criteria with it. OK, so it's the same BS. OK, same nonsense with the member.
So, OK, my my achievers, I hang out down here a lot. OK, so the difference between achievers and contenders is the same thing like aristocrats and the achievers have the extra market cap requirements where the contenders do not. It doesn't really matter.
I feel like there should be three buckets. I don't care about. Yeah.
If we're literally just looking at this, we only particularly care about this from a number of year increase. And when a company has raised its dividends, it has good financials. Blah, blah, blah.
Pfizer. And I got her mom into it. I don't know if I'll ever get into it, but I think it's because I had a big dip.
Right. You were like, oh, snagging that one. You know, I got it for dirt cheap.
Currently is 26, has a fair market value of 30. It yields six point three and has raised its dividend 14 consecutive years. So decent.
I mean, like I said, and BMI is a BMI is better. So it has a less dividend, but it has you'll see BMI, which is another pharmaceuticals currently 50, has a fair market value of 80. So more price appreciation.
It yields four point seven. So it yields less than Pfizer. And it's raised its dividend 15 years.
I just like I like BMI better than PFE. That's just me. CTO is a I want to say it's like a BDC, but CTO is a REIT.
My bad. Not a BDC REIT. Currently is 17, has a fair market value of 20.
It yields eight point eight and has raised its dividend for 12 consecutive years. So that's pretty decent for a REIT. EPD, which is like every everybody's that invest in oil has heard of it.
Yeah, I'm not familiar with that one. It's like one of the better ones. It's currently 2750 and has a fair market value of 31.
It yields seven point two five and has raised its dividend for 27 consecutive years. So 27, isn't that above the 25 threshold? I know it doesn't meet the other criteria, I think. OK, so what you can do with these examples here, right, is you can pick and choose create like a core portfolio that mitigates a lot of your risk so that then you can then then you can dump money into other high yielders like ICON or ECC, knowing that majority of your money is tied up in stuff that's pretty conservative.
Like these are all pretty conservative. I mean, there's going to be price fluctuation, obviously, like anything else. But for the most part, these are pretty safe investments.
And how I constructed the retirement account for her mother is I have a lot of contenders, achievers, kings, whatever. And then I sprinkle in like Hercules Capital, which I think is a year away from being a contender. I want to say 10 years.
I think is it nine years? Hercules is another one that will soon be a contender. And I sprinkle in Hercules and I sprinkle in. I mean, I did ICON.
I have other higher risking ones, but they only take up like a small percent of the portfolio, less than 20 percent of her portfolios and riskier assets. But you mitigate some of that risk even in itself with the better price point of entry, correct? Yeah. So like what I've learned, OK, like if you've subscribed the email, you'll notice that it changed like midway through the year.
Last year, what I learned is getting something that's undervalued is more important, important than getting something that yields 10 percent or more. You can still find the 10 percent yielders, but you like the more important data point is the entry price. Yeah.
And that's what happened with IEP. So that's why like we'd like if you've listened for a while, you see how we talking about BulletShares, the bullet shares came about because I needed money in cash form so that I could dump it into other stuff. Once I determined that the super important part of the contrarian investing is actually value investing.
That's how we came up with the contrarian value investing income. And he found the bullet shares because he doesn't like to have idle money. I know he doesn't like to have idle money because he's always like, I need to put this money into something.
Your money should always be making money. Like your cash should always be making cash. That's like all the rich people do it.
I know. I know. There's a reason why they do it.
And bullet shares are freaking golden. They don't really move too far from the datum point, the point that you buy on that. But if you've been listening for a while or you subscribe to the email for a while, you saw that we'd actually I actually changed it about I want to say like halfway through when we started doing this.
And it was that was why like I was I determined that getting into a something at a good value price. That's why the top 10 high yielding things was replaced by the top 10 things that I think are the best value going forward every week is because I what I'm giving you is all of the information that you need. Okay.
This is undervalued. This is undervalued. This is so you're getting like 10 ideas that are all undervalued that have a yield that's pretty good that you didn't do your own research with with those coupled.
And then you should couple those with some of these aristocrats and contenders and achievers. Even these I'm giving you here like there I there's other obviously there's hundreds of them, but I gave you the ones that are undervalued. Yeah, we're in the best options for you because we're in a bull market.
You have to like actually find stuff that's undervalued. You can get into anything. But if you get into the wrong price, which is what we did with Icon and for a while, it was awesome.
We got in it. I want to say fifty four dollars and it was up at like eighty eight dollars and it was awesome. But fifty four was still too much.
I should have waited to get into that till after a bad earnings report or something like if I determined that I wanted to get into it, I should have waited for a bad earnings report where it dropped like 15, 20 percent down into the 30s, which it did a couple of times. I should have got it in the 30s because even if it's at 17 and I got it in the 30s, we'd be up in it because the dividend covers. Oh, yeah.
Didn't you just reassess the portfolio? You said all of our losses from Icon, which is huge. We're up in pretty much everything except Icon, MPW, MPW and the Tesla yield max. We're break even value wise, break even value wise because of MPW.
MPW we're down 40 some percent with dividends. Icon, if we didn't have the dividends, we'd be down like 60 percent. But we're only down like 30 percent.
Icon with the dividends reinvested and the Tesla wants to shit like that was just a mistake. I shouldn't have done that. Is it because we had a heavy allotment in that because we found the yield max is pretty early and they didn't have a ton of options at that point? I like Tesla.
I like Tesla. I want to make money off Tesla. But like the person running it's trash.
They're like if you look at the yield max is we're in five different yield maxes in our portfolio. So we just had the bad luck of the one. And like all the other four are doing awesome.
The NVIDIA one's doing remarkably well. The Coinbase one's doing remarkably well. The Amazon one's doing good.
The Microsoft one's doing good. Tesla, for whatever reason, like I don't whoever's running it, they're doing their call options wrong or something. Yeah.
And we're curious to see what happens with that because they just did a reverse stock split. They did a reverse stock split like a month or two ago. Yeah.
So it wreaked havoc and everything. So I don't even know. I won't even know like how far down we actually are in it because I had to delete everything because like it just fucked everything up.
So I don't know what that's going to present. But basically there's so many other yield max options. Don't risk the Tesla one right now.
I know because I saw on Instagram that people are like touting this whole like I put $10,000 in the Tesla, look at my dividends. What they're not telling you is $10,000. They've probably lost like half of it in depreciation.
So even if the dividend, but it's not even the best dividend, the best dividends like they change from time to time based on the macro trends like NVIDIA is super hot right now. So NVIDIA is. He's so hot right now.
NVIDIA's dividend is kicking ass. And then Coinbase, because the Bitcoin halving is super, super fire right now. And like this dividend is way high.
I found with those the first like six months that have been super high. And then they start to they start to level out to what they're going to be. So I guess they're trying to entice people to come in.
It makes sense. And they give you like a ridiculous high dividend. What's nice, though, is if you do that one, that's the average of the yield max.
If you do the YMAX, it's everything. And any time they have a new one, it gets automatically automatically that one's kind of like a what are they called? An index fund. It's an index one of the YieldMax.
So like that's but like back to my point, like I got into the Tesla one at the wrong price. I should have waited until I don't know, like it was a better value. It's but those those are very difficult to learn.
Yeah, they were super new and we were trying to get very difficult to value because they start at 20 and anything under 20, you would think would be a good value. But it's not like that. The Exxon Mobil one's like a good value for the Exxon Mobil's like under 16.
A good value for the Tesla one's like under 15. So I got I was like, oh, I got it for 18. Awesome.
I got it for two dollars under par and it just fucking shot down. So don't put a lot of money that way. We only have like, I want to say 3 percent in Tesla.
We've we've warned before about putting like between one and five percent of your portfolio portfolio in the Ymax and they are higher risk. But you can if you want to have like I've read a lot of things where you should like a lot of people really live by the 12 to 16 stock things because it helps. It's easier for people to navigate.
You can put like eight to 10 percent, say, in the triple M or into IIPR, stuff like that that you know is a really good company and that they'll be around because they have a big moat like and triple M's moat is huge. Pfizer's moat is huge. They're like because that goes back to the one we were discussing with the patents because they have patents for freaking everything that haven't expired.
So Pfizer's moat's huge. Bristol-Myers Squibb's moat's huge. Triple M's moat is huge because they have all these different patents that don't expire for X amount of years.
ABR's moat's not so big because it's just a REIT that does like a multifamily. There's a lot of REITs out there that do multifamily. But I think they have a little bit of what I call that the blue ocean or the standout effect because they plant trees.
People are starting to get into philanthropic but if it has a big moat, you can get in with a higher valuation because you know that the moat's going to take care of any problem with price. ABR is trading so well below its fair market value that the narrow moat shouldn't be a problem because you're still going to there's a lot of room for price appreciation. NEP is like the darling because it literally has an economic moat.
It's the only because it's a utility, right? It's the only alternative energy in Florida and it's part of NEE which is the only like electrical company in Florida. So you're getting like a big moat and a big state's population is growing for something that is like 50 percent undervalued. That's that one should be a no-brainer.
Well, what you were just saying with the percent of the portfolio and the what you say 16 stocks that they recommend. I think that's personal preference. We personally like to have more stocks to hedge risk with something like ICON because had we had higher percent of the portfolio and something like that, we would be down a significant amount.
Another one with a huge moat is MO I'm like going through like trying to like help people. MO's moat is ginormous. There's only like three cigarette companies, MO, BTI and PM and even if you're against this, like if you're a smoker, but you know smokers, you know they like one brand. So MO, which I believe is like Camel and Newport and all that crap. I don't know which ones they have, but like.
And I kind of feel like the people that are still smoking are smoking. Definitely. So you're getting a company with a huge moat for like 40 percent undervalued that yields 10 percent.
So I'm hoping this is making sense how you can use the moats with the undervalued to get huge price appreciations with good dividend yield plus dividend growth. That's what this is. That's what these two things were about.
I was going to say. So basically, what I've gathered from these last two episodes is you start with these categories and then you look at whether or not they have a moat at all, narrow or wide. And then moat.
Moley, moley, moley, moley. Wide. If you can find wide, awesome.
Why, why get moat? And then if you get those, those are the ones that you should start investing in. But you definitely want to find the ones that are undervalued. So I guess it's a trifecta where you find the category that you look for the moat.
Well, I guess maybe you start with the undervalued. Well, I can't tell you right now because of how things are going. Like REITs, undervalued.
Oops, sorry. Undervalued. Utilities, undervalued.
Mining, like gold mining stocks are pretty well undervalued compared to the price of gold. And I don't know if we actually mentioned this on the podcast yet. I think this was just a sideline conversation with Tim that Powell has officially announced that they're planning to decrease interest rates three times this year.
At least three times this year. At least three times this year. So stock up on REITs.
Stock up on REITs. Because they're going up. Stock up on utilities because they're going up.
The housing market's probably going to pop off, which is crazy. But like that's what we, we, we discussed the macro trends and you have to be aware of the macro trends. That's like probably 25% of investing is having the ability to look beyond like next week and see what is going on.
Like triple M, the reason I got into triple M is because they had a lot of lawsuits. The price was hammered because of the lawsuits. But I saw they hit a huge moat.
They have a patent for like 200,000 different things they sell. They've raised their dividend for what is it, 66 consecutive years. It's over 6%.
To me, a no-brainer. You're getting, what, 40%, 50% price appreciation. While you're waiting for the price to depreciate 50%, you're collecting 6.6 at the very minimum yield.
And you're going to get a dividend increase every year. I mean, it's a no-brainer. Absolutely.
I hope it helps people because it's like, I mean, I'm making it sound simple because it is. No, it really is. It really is.
These other people that make it so complicated are, I have a lot of subscriptions where they go into all the technical jargon and they're like, it's so much work to do all this technical work, so you should probably just pay me like $200 for the year and I'll tell you everything to do. I don't like people like that. I actually despise people like that.
I've written emails to them saying that's just nonsense. It's simple. Have they replied to you? No, no.
You know they haven't. It is a complex thing, investing, but it actually is simple. I think it's simple.
You just have to put in the work and do your due diligence, basically. And that's where I'm trying to help. And stay disciplined.
I think the emotional factor is probably the bigger monkey wrench. So like if you see everything we've done like the last two months is leading up to how simple it actually is. You take emotion out of it with the psychological biases.
You take all that crap out. You're just looking at data. Then you actually apply it to the motes and you apply it to the valuation.
You apply it to dividend growth. Dude, I've made it simple. Well, essentially what I'm taking away from the whole thing is that investing actually is very simple.
You come up with which type of investing you'd like to do, which is exactly what we did. You got your goals. You got your whatever.
You are the hardest part. Knowing yourself is the hardest part. Knowing what you want to do.
And then you just align things and you fit the other stuff in. The investing part is actually very, very simple. I think the hardest part is the human behavior component.
The hardest part is there's 19,000 stocks. So the screener is super huge. I was just going to say, and the screener piece, having your actual metrics to narrow down your pool.
But I gave them that to make it simple. They literally can start with a list of 300 instead of 19,000. Then they can go through and they can look for motes on that list of 300.
Then they can look for dividend kings, dividend risk. So the rest of these episodes are just ways to actually narrow that pool down so that you actually know you're getting into good companies and you feel confident in what you're doing. So hopefully the emotional potential to make irrational decisions is less of a problem.
It is. That's what I got. And the reason that I haven't done the brokerage podcast yet is because I don't know how to be fair to everything else besides Schwab.
Because Schwab, I'm telling you. Well, maybe I'll take the lead on that episode, Ben, because Tim is so biased. You go into Schwab, you type in the search bar, whatever you're looking for, and say you want to do more research on MO.
You type MO in the search bar. It'll literally bring up all the information you need. And at the bottom, it literally has their dividend, their dividend yield.
Then you can click on the history, so it'll give you the history of the dividend. Below that, it has the PE. And then below that, it has the price valuation, the PE of its competitors.
It has the revenue, it has the debt, it has all that shit. Then you can click on it, and you can see. Then you can go into it, like the actual tab would be tobacco.
So you click on the tobacco underneath MO, and it pulls up all the tobacco stocks with their valuations all lined up. It gives you the average of all the tobacco stocks. So you can tell that MO is undervalued compared to all its competitors.
It is by far, like I've been in Vanguard, shit. I've been in TD Ameritrade, shit. Well, actually, TD Ameritrade's merging into Schwab, so I'm not sure that one even matters anymore.
I've been in Robinhood, absolute shit. Like, I don't know how to be fair. We've been in E-Trade, we've been in Scottrade, we've been in... I don't know how to be fair to the other brokerages.
That's why it's very difficult for me, because I don't want to just give a biased piece about how Schwab is phenomenal. I really do think Fidelity is the only one, and maybe some of these odd-off ones. Because Schwab literally brings up everything that you need to make sure you're getting something undervalued.
100%. All right, so next week, we are going to talk about tech resistance. I just gave... I did a two-part email about tech resistance is the first part, how everyone's just... They're resisting cryptocurrency and blockchain because whatever.
I think they don't understand it. They think cryptocurrency is literally tokens, and it's not. It's networks and programs, and so you're... Well, and I think it'll be a little interesting, too, because we were talking about different generations having resistance to different things.
And we were even evaluating ourselves, because Tim is a Gen X, and I'm a Gen... I'm a Millennial. And it is kind of interesting to think about what resistance points are potentially going to come up for us. So that's actually going to be a really interesting episode.
Reminds TikTok. It's not... But it's not just that. I hate TikTok.
No, we were talking about the EV component. Not EV. I'll never drive an EV, because I like to drive.
But that's what I'm saying. So it's like... That's going to be a really interesting episode. So hopefully you got some key takeaways for these... I gave you a whole shitload of ideas.
What is this? We keep saying dividend growth categories. We put this off for a while, but I had a plan. I wanted to make everything up to this, make sense, so that whenever you see these, it's easier for you to just say, that's a good one, that's a bad one, because you have all the tools in your arsenal now.
It's one of those things. Tim doesn't know why his brain does what it does, but in the end, it had a... It is beautiful. There's a method to the madness.
So pretty that you know everything now. I don't need to do anything. So what am I going to talk about? Which is good, because then we can just update you on market trends.
If we're moving in and out of things. If news comes out and something hits, I'm actually excited to get to the points where we're talking about. I literally just sold all my position in SLRC.
I think we should do a different episode on that. Let's wrap up. Okay.
Just ignore that. I didn't say that. All right.
All right. So thanks for tuning in, guys. I hope you enjoyed the episode.
Next week is... Tech resistance. Because tech goes with cryptocurrency, and cryptocurrency has a halving coming up in a couple of weeks. And this shit's going to take off to the moon for like eight months, and then you should sell everything.
Spoiler alert. See you next time.