| Dear Reader, As you may know, we’ve recently initiated a project that is our ‘Fat Tail’ take on income stock investing. It’s called The Royal Dividend Portfolio. And it’s a six-stock selection by Greg Canavan that focuses on what he calls an income/growth ‘sweet spot’. Holding #1 in the portfolio is a great example of this balance. It’s in a sector that has been deeply out of favour in recent years. But Greg believes that’s about to change. As such, Royal Dividend Holding #1 is now…in his judgement…significantly undervalued. This is what sets these apart from stock-standard income plays. With each Royal Dividend holding…there must be the potential for a decent upside in the share price. You want to buy good-value stocks with an attractive dividend — not an attractive dividend from an overpriced stock. This applies to all six plays in Greg’s Royal Dividend Portfolio. But to Royal Dividend Holding #1 especially. The share price has declined 50% from its March low. But…as you’ll see here…it’s just started to stabilise. What you’re doing here is buying in at a major low…and collecting a hefty dividend while you wait for the price to change direction. So…what’s that dividend? Royal Dividend Holding #1 trades
on a forecast dividend yield of 7.3% Not a complete showstopper yield, compared to top-rankers. But…that’s the whole point of this strategy. As you’ll see here, many of those dazzlingly high 10% pluses are ‘sucker yields’. And 7.3% is hardly chicken feed. It’s a way-above-bank-interest income stream that PAYS YOU while you wait for a capital gain as well. It’s also an absolutely consistent stream, too. Another non-negotiable criterium of Royal Dividend plays. Royal Dividend Holding #1 has paid a consistent dividend…twice a year, without fail…since 2005. While there are no guarantees, of course… …you can be fairly assured… with that 18-year payout record… the dividends will continue. It’s a big company, too: market capitalisation of $2.8 billion. Share price is around $25. Greg’s valuation process indicates the scope for this $25 share to rise to $35 or higher in the medium term. But this share price and market cap is a key characteristic of Royal Dividend holdings. Except for the odd very special exception…these plays will be large caps. As Greg says: ‘These aren’t conventional growth stocks. But we’re after an income stream with some share price growth too. And if we pay below intrinsic value… we’ll more than likely get it! ‘Yes, you can lose money on them if things go badly. But those losses, if I’m wrong on my valuation, should be small and gradual…rather than fast and brutal.’ Employed correctly…this could be the ultimate strategy for where the market currently sits. To learn about The Royal Dividend Portfolio, go here. Regards, James Woodburn,
Publisher, Fat Tail Investment Research | 