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My secret? Recognizing mania, not succumbing to FOMO (fear of missing out), and having a disciplined investing approach.
Part of that discipline is to avoid making knee-jerk decisions based on headlines, like this one from the Daily Mail.
Most people focus on the $110 million part. I focus on the section that says the stock price dropped 23%. That’s what happens with these meme stocks that have zero fundamentals — the “investment” can turn on you on a dime, and someone is going to get left “holding the bag” filled with the big losses.
I don’t want you to be the one stuck holding the bag, which is why I stay steadfast with my focus on “pay me now” stocks.
When I say “pay me now” stocks, I mean stocks in sectors like health care, consumer staples, utilities, and insurance. They may not be sexy, high-growth companies, but they’re rock-solid household names that offer you dividend payouts in the here and now.
These are going to be the companies that are paying you income — the ones you can brag about holding as opposed to turning yourself into a cautionary tale about losing your hard-earned money on meme stocks.
And I have two that I want to share with you today.
Death, Taxes, and… InsuranceBenjamin Franklin is credited with saying that nothing is certain in this world except death and taxes.
I would argue that today, insurance should be added to the list.
If you have something important to you that you can’t afford to lose, chances are, there’s a type of insurance policy you can buy to protect it.
Home, auto, life, boats, renters, pets… there’s even wedding insurance.
Insurance companies are classic “pay me now stocks” because they collect premium income every single day of the year from insured customers but only have to pay out if and when there are claims.
In the meantime, they get to invest all that premium income known as “float” to make even more money for themselves and their shareholders around the clock.
The first insurance company on my list is The Travelers Companies Inc. (TRV).
It offers standard home and auto insurance policies, but it also has several specialty offerings that range from jewelry coverage to pet insurance and generate even more income.
The company has generated $6.8 billion in free cash flow over the past 12 months, which is another way of saying how much money the company has that doesn’t have to go to internal or external obligations.
When a business has cash coming in that doesn’t have to go toward the payment of something else, it can use that to buy back its stock, invest it back into the business, or increase the dividend payout.
TRV shareholders currently receive dividend payouts with a yield of 2.15%, and Travelers has increased its dividend payout for 18 consecutive years.
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The second company on this list is Progressive Corp. (PGR).
CEO Keith Kaplan just released a great report on Progressive, which I encourage you to check out here.
While Progressive offers the standard auto, home, and bundle packages, this is a company that also has over 30 products offering protection against whatever life throws your way.
Progressive has a smaller dividend payout than some other insurance companies, but what it lacks in flash, it makes up for with consistency.
Back in 2005, PGR was paying a quarterly dividend of $0.03. Fast forward to 2022, and it’s paying out $0.10 per quarter — that’s a 233% increase.
The bottom line is this — When you see these meme stocks skyrocket in a day, it can be too late to make money.
It’s better to keep your cool, take emotion out of investing, and think about the well-being of your hard-earned money.
Buying dividend stocks has served me well over the past 30 years, and I fully expect adding the right ones to your portfolio now can bring similar — if not greater — success.