Back Up the Truck...

A Tale of Two Dividend Stocks

Written by Jimmy Mengel
Posted October 11, 2017 at 8:00PM

Allow me to offer everyone one basic piece of advice: always make sure you have a friend with a pick-up truck...

They are magical vehicles capable of great feats of strength.

Over the years I have relied on the kindness of friends to pull off tasks that would be impossible in a typical four-door sedan. Moving furniture, hauling trash, and even pulling my helplessly unmanly car out of a deep, muddy ditch.

I’m sure this isn’t news to most of you — and I’m not here today to jealously covet thy neighbor’s truck.

This is an investment story.

During my most recent truck ride, I shared a stock tip with a good friend who was kind enough to lend me his Ford 150 — and his ear.

I desperately needed a truck for one of the great American pastimes: throwing large objects sight unseen into the caverns of the county dump. We loaded up a busted old couch and a grill that was more grease than metal, and headed to the graveyard of consumerism.

“Man, I really owe you a favor,” I told him.

“I’m sure I’ll call one in someday,” he said.

Little did I know that I would return the favor 10-fold once we began talking stocks on the drive back...

I’m well known by my investor friends as a dividend stock fiend. I’ve been collecting dividend payments ever since I was a youngster, and have sung their praises to anyone who would listen.

So it was a touch of divine providence that after heaving the debris into the dump, he asked me about his stock portfolio. He told me he was growing more concerned about a market correction every time he saw the DOW hit a new all-time high, and asked me which stocks he should ditch.

While looking out at the mountains of trash, we started playing a rapid-fire stock market game: trash or treasure. He’d shout a stock that he owned and I would give it the thumbs up or thumbs down. After mentioning Johnson and Johnson (thumbs up) and General Electric (thumbs down) I quickly realized that he held almost all dividend-paying stocks.

After cracking the window to air out the musty smell of old couches, I asked him: “What is your favorite dividend stock?”

He pondered for a moment…

“I'd say Verizon. It’s a juicy dividend and a sound business.”

I agreed — Verizon is a beast and currently yields 4.73%.

Then came my questions...

I asked him how often he purchased Verizon stock. He mentioned that he’d add to his position every month or so.

“How long have you been doing that?” I asked.

“Going on twenty years or so. And I’ve made a killing.”

He is right:

180% is a damn fine return, no matter how you slice it. He mentioned that he had put around $10,000 into it — giving him a solid $18,058.44 profit. 

But when I told him how my Verizon stock did over the last twenty years, his jaw dropped…

You see, when I love a dividend stock enough to put it into my long-term portfolio, I don’t buy it through your typical avenues. That is to say, I never use a broker of any kind.

I buy my shares on what is called “The Underground Stock Market.”

It’s a private stock exchange where you can buy publicly-traded shares “off market” at a discount... with less risk... and practically guaranteed higher returns.

I’m talking about getting 177... 364... and even as much as 665 higher percentage points than on stocks you’d normally buy on the NYSE and NASDAQ.

While my friend reaped 180% and $18,000, I made a ton more on the exact same stock. Check it out:

Which would you rather have? A $18,000 or $30,000 profit?

That's basically the easiest decision you could ever make.

I also asked my friend how much he had spent on broker fees over that time. He had no clue...

Going on the most simplistic math, if he bought Verizon stock through a discount broker, he'd average around $10 a trade over that time. That adds up to around $2,400 — which doesn't seem terrible over 20 years. But if he had used the "Underground Stock Market" he would have never had to pay a broker fee. He could have taken that broker money and turned it into almost $10k on his stock — enough to buy a used Ford F150 like the one we were riding in.

I think the choice is pretty clear. There is simply no reason to buy long-term stocks on the standard stock market.

Go underground. 


Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of the personal finance advisory, The Crow's Nest, and cannabis stocks advisory, The Marijuana Manifesto. For more on Jimmy, check out his editor's page.

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