Remember that dude Albert Einstein; he was kind of a big deal. Some would argue that he was reasonably intelligent and perhaps one of the sharper tools in the shed. When he talked, people listened.
Any idea as to what he referred to as the 8TH WONDER OF THE WORLD?
Wrong! It wasn't electricity, gravity, black holes, time travel, or anything silly such as that. It was this:
For real, he referred to dividends as the 8th wonder of the world! Awesome, I know, right? Now you have something interesting to tell your kids.
The point is, if Albert Einstien was that intrigued by dividends, well, maybe we should be as well.
Back in the day (which I believe was a Wednesday), I read a book by Chuck Carlson titled "Eight Steps to Seven Figures". It was one of the few books that I read during my high school years. Well, if being honest, it was the only book I read back then.
Anyhoo, after reading the book, COVER TO COVER (thank you), I was intrigued and had to do one thing right away:
Invest in stocks that pay dividends!!
The book gave multiple examples of how people had become millionaires through the power of compound interest - all though merely investing small amounts of money and re-investing dividends. Over time, the numbers were staggering and added up to more than seven figures. (I would give a few examples, but this would involve far too much math. Buy the book if you need proof.)
Trust me when I say this: DIVIDENDS ARE AWESOME AND CAN MAKE YOU WEALTHY!! It's that simple.
OK, with all that said, let us look at some high dividend paying companies that report earnings this week and break down exactly what you need to know:
1. William Sonoma:
Who is William Sonoma, and what does he do? Well, Bill, as I like to call him, sells some expensive shit - housing items that cost about three months salary to the average Joe. We have a William Sonoma store located about 10 minutes from our house. I went in ONCE, to see how the higher end people get by. OMG, want to know what a couch sets you back at the old William Sonoma? Like 8-Grand! For real, that's eight thousand U.S. dollars! Absurd. But hey, who looks at the price tags anyway?
The company owns brands under Pottery Barn, Pottery Barn Kids, West Elm, and Rejuvenation. Over that last couple of years, my wife has single-handedly kept Pottery barn kids in business. Yup, apparently our two-year-old boy needs a $50 pillow and a $125 backpack with his name on it. Whatever at least it's not a 10K couch or a $1400 coffee table!!
The upper-end consumer continues to do well and is spending like never before; this puts WSM right in the sweet spot for selling its high-end products. Heck, for the margins that WSM marks up its merchandise, unloading just one bar stool a day would be more than enough to turn a daily profit.
The company has excellent management, continues to expand, has a very respectable P/E ratio that sits at 14, and pays you a healthy 3.6% dividend!! With a relatively small market cap of just 4 billion, there could be much room to the upside.
For these reasons, I'm bullish on WSM, who reports earnings this Tuesday.
I won't go too in-depth with Target, as we all know what they do and sell. I have just a couple of thoughts:
First: I'm convinced that women go to target to hang out and get away from their husbands. In fact, I'm certain that to be the case with my wife. While at target, they spend countless hours and lots of money.
Second: The company must be making gobs of money. Have you ever been inside a Target store that wasn't extremely busy? Yeah, me neither. All registers open with lines that look like a space mountain ride at Disney Land.
TGT seems to be clicking on all cylinders and should continue to thrive moving forward. We can't buy all of our stuff on Amazon. Sometimes, it's nice to log off the world wide web, get out of the house, and go somewhere.
Targets valuation is very respectable and pays a sweet 3.5% dividend! For these reasons, I'm in the stock for the long haul. TGTreports Wednesday before the market open.
Again, we can't buy EVERYTHING online. When shopping at Lowes, you are looking for a product that likely involves some type improvement to your home - perhaps a light fixture or a new toilet.
Is one likely to purchase that toilet or fixture online and have it shipped to the house? Maybe - but I doubt it. Typically, these are items that you would go to a physical store when buying.
Keeping the house up to date is a never-ending business. With the popularity of so many home improvement shows on channels such as HGTV, everyone wants to knock down walls and remodel their kitchens.
Lowes is 10% off its 52 week high and pays a 2% dividend. In my opinion, this is going to be an excellent stock to be in for the foreseeable future. LOW reports Wedneday before the market open.
So, there you have it. As of now, the consumer seems to be healthy and spending. If that continues, there is no reason why these great companies cant continues to put up very nice returns. As for the dividends they pay you to hold the stock, well, those are the icing on the cake!
Note: I'm not a financial advisor. Invesing in stocks involves the risk of loss. Only invest what you are willing to lose and speak with your personal advisor before getting started.
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