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How to Invest in the Next Billion-Dollar Startup

It’s every investor’s dream—the one trade that makes a fortune.

Of course, more fortunes have been lost in pursuing that dream than have been made. The idea of finding one tiny investment where a mere $1,000 investment can turn into millions seems like a pipe dream.

That makes sense. After all, if you bought $1,000 of a stock and it went up tenfold, you might think about taking the money and running with it. The true test is to buy, hold, and stick to it.

That’s the simple secret of success behind many of history’s greatest investors. Of course, many of the investment greats have done so with one hand tied behind their back. That’s because they were limited to buying shares of publicly-traded companies after those companies had gone public, and after they’d already grown enough to become sizeable firms in their own right.

There’s a way to drill into a pool of companies that haven’t gone public yet. Some might, some might not. But even fi they don’t, as an investor in these companies, you could reap substantial profits.

This isn’t some fly-by-night offer, either. There’s over $1 trillion in these privately-held companies.

And best of all, anyone can invest in them, even if they only have $100 to put to work.

Flight of the Unicorns

In the world of companies that haven’t gone public yet, the unicorns reign supreme.

Unicorn is the term for a company that has a valuation of over $1 billion dollars. How are these valuations tracked? By private buyers and what they paid. Say a company sold a 10 percent stake to a private equity firm for $150 million. That implies a valuation for the whole business of $1.5 billion.

Think about it. This isn’t a company that’s publicly traded. Someone making a large commitment—and putting up a huge percentage—isn’t looking to buy on Monday and sell on Friday. They’re looking to see their investment grow… substantially.

Crunchbase estimates that there are 276 companies right now that are unicorns. And the value of these companies is $967 billion dollars. Add in the smaller companies that haven’t hit that billion-dollar mark, and you’ve easily gotten to over $1 trillion in private wealth that you can’t access by calling your stockbroker or logging onto your online account.

These unicorns might be where the Silicon Valley fat cats play around with their venture capital. But individual investors can play that game too, thanks to the power of crowdfunding. By getting in before a company even hits the unicorn stage, it’s very possible that an investment of just $1,000 could grow tenfold or more in just the space of a few years.

What a Difference a Decade Makes

Think back to 2008. We all remember the housing market bubble and collapse. And while it’s been a decade since the peak fear hit, it seems as though the economy is still struggling to find its way forward.

In some sense that’s true. But in others it isn’t. We’ve made some profound changes in how we live in the past decade. But the chances are it’s been so gradual that you haven’t even thought about it.

But a decade ago the world was a very different place for many other reasons:

Touchscreen smartphones were still in their infancy. The most popular brand of phone among the business community was the Blackberry.

While we had the Internet on our phones, we didn’t have the quality streaming video capabilities of the 4G Network.

If you needed a ride, there wasn’t an app for that.

Those are just a few changes in the world of technology.

And, of course, the hot financial topic of 2017 was cryptocurrencies. They didn’t even exist a decade ago, much less surge over $500 billion in value like they did in 2017.

But there’s another financial innovation of the past 10 years that can also create wealth like that. I’m talking about crowdsourcing.

In many ways, crowdsourcing is a lot like traditional investing. A group of people pool their capital and take a stake in a company—sometimes in the form of ownership (called equity) or sometimes by lending the company money and becoming a bondholder.

But the truth is, crowdsourcing is far different than buying a stock online. But it gives you a chance to invest in the companies that we’ll look back on in 2028 and wonder how we ever got by as a society without it.

Winning Strategies for Crowdsource Investors

With all the dozens of crowdsourcing opportunities out there, you’ll need to be armed with some simple, easy-to-understand concepts to succeed. Knowing how to invest is critical, and will make the difference between a great investment and a poor one.

Here are a few key things you need to know:

1) Diversify, Diversify, Diversify!

I know, I know. It’s not the exciting advice you want to hear. But let’s face it: you need to diversify. Investment professionals stress that anyone with less than 20 stock positions isn’t sufficiently diversified. Any fewer positions, and you run the risk of any single position causing devastation to your portfolio if it goes belly-up. That’s a bigger risk with crowdsourcing, as many companies could potentially lose money. But if you’re diversified, you’re increasing the chances of having more winning investments on your side.

With early-stage companies, that’s no exception either. In fact, it’s even more important. Here’s why:

As with any investment, you can’t just put all your eggs in one basket. When investing in smaller, startup-level companies as you are in the crowdsourcing stage, some businesses simply won’t pan out. It doesn’t matter if they run out of money, can’t compete with a better business model, or otherwise fail. The fact of the matter is that most businesses fail, and typically well before they ever get on the public’s radar.

Most venture capitalists expect their investments to go belly up a lot of the time. But one success will more than offset a dozen failures. The important thing is to build a diversified portfolio of startup level companies across a variety of industries.

Remember, diversification isn’t just about the total number of positions you have. It’s where those companies are located in their industry. Owning 10 different startups working on a new ride-sharing app doesn’t make you diversified. Especially if it means potentially missing out on a promising app company outside that space.

2) Start Small and Scale Up

Investing is supposed to be about rationally allocating your capital. But let’s face facts: people can get emotional about their investments. One important factor to consider with investing is to be able to sleep well at night. Yes, that may sound silly. But think about it this way: If something’s keeping you up at night, it might be because you’re too exposed to it. You’d be better off elsewhere.

As with any other investment, then it pays to start small, get comfortable with what you’re doing, and then scale up. If you only have $5,000 to invest, putting more than 10 percent into any one opportunity may mean creating a big risk of loss. Even at that level, a huge profit from an early-stage company can more than grow your portfolio as a whole without putting too much risk into a single position.

Sure, some investments sound better than others. But sometimes a great story behind a company doesn’t have a fairy tale ending. That’s why by starting small, you can scale up later. It’s impossible to start with all your money and scale up any further—and that may lead to difficult losses later down the road. Putting a lot of money into a single investment may seem like a great idea at the time—but at some point, it’ll cost you sleep. Better to start small and scale up.

3) Investing is a Marathon, Not a Sprint

When investing, consider your timeframe. You don’t need to make millions overnight. And trying to do so will just encourage a lot of frustration along the way. Early-stage companies might hit it big in a few months after you invest—or it may take years. Many successful companies didn’t get there on their Plan A. Rather, they were on Plan B… or Plan C. you get the idea.

Taking the time ensures that you’re making the best choice possible with your money. It means you’re not rushing into an investment. You have the time to do your research, and get comfortable with an investment. Likewise, by monitoring and reviewing your positions over time, if there’s a potential problem, you’ll have the time to see how it develops. Rather than sell out at a panic, you might see a company transform its business model and move on to more successful endeavors.

This goes hand-in-hand with diversification. If you’re diversifying, you’ll have money set aside for a future opportunity that may come along. When you don’t need to rush, you have the ability to build a great portfolio of crowdsourced companies over time.

4) Buy the Company, Not the Story

It’s easy to get caught up in a great story. And when it comes to early investing, when a company doesn’t have a track record or years of financial records to analyze, it’s tempting to give into the story.

While it’s fantastic to live in an era where there are so many innovators looking to change the world for the better, not every opportunity will pan out that way.

Consider what you’re getting for your equity stake when you invest in a crowdsource opportunity. Make sure a company isn’t overvaluing its potential relative to the produce or service it expects to provide. Stay emotionally disciplined. A story that sounds too good to be true might be.

Remember the Internet tech bubble of the 1990’s? Any company could go public with little more than an expectation of being profitable within five years. Towards the end, a few companies even added “dotcom” to their names just so their shares could go along for the ride. Many of those companies went bankrupt, and investors in those companies lost out because they focused on the story, not the company.

To some extent, you can also avoid the story by buying in areas where you are using a company’s product. By buying into something you understand, you improve your chances of making a great and profitable investment. It’s already some area that you have tangible knowledge of. That’s a good sign that you’re buying the company on the merit of its products, not just some concept.

5) Follow the White Rabbits

As with the old children’s fable, slow and steady wins the race. Focus on building a portfolio that’s balanced across a variety of sectors. That may prevent you from investing as much as you’d like in a compelling opportunity. But you only need one huge winner in an early-stage company to build surprising amounts of wealth from small amounts of capital.

Some companies will act like the hare—making big changes in valuation in a short amount of time. Others will act like the tortoise. But remember, these are early-stage companies.

Many may simply limp along from the starting line only to drop out of the race entirely. That’s okay. We’re here to profit from the best opportunities possible—but sometimes being the best at something in the business world isn’t enough.

But in investing, you can do well following the proverbial white rabbits. Those are the big players in the market who are investing.

By buying alongside major venture capitalists and hedge funds, particularly those with a track record of success, you’ll likely increase the chances of a winning opportunity. If you’ve ever seen Shark Tank, you know that Mark Cuban, the early venture capitalist in Facebook, selects his deals wisely. His years of making deals in early startups has given him a keen eye that not everyone else has (not to mention the ability to make quick decisions on the show!).

The point is, there’s no rule and nobody to stop you from following the news. If a company gets major funding from a hedge fund with a great track record and there’s a crowdsource opportunity, that might play a deciding factor. Remember, these aren’t just the big players—they’re also following these same rules that we’ve looked at in this report.

Conclusion: How to Make the Best Crowdsourcing Investments

It’s clearly a new era. We’re constantly innovating as a society, finding new and better ways to do things. Ways that are often disruptive—and have the potential to create huge sums of wealth along the way.

The things we take for granted 10 years from now may just be an idea in some innovator’s mind today. But thanks to tools like crowdsourcing, they can get the capital they need to make their idea a reality. Some of those realities won’t be very profitable. Others may become the next Facebook or Google. Time, patience, and luck will tell.

By combining the tools of diversification, patience, scaling, emotional discipline, and following key industry players, anyone can make a profit from the leading companies of tomorrow.

It’s a growing space, so there’s still plenty of opportunities out there. One trade can make a fortune. But many good prospects won’t pan out. That’s okay. You have the tools to succeed. Take the time, be patient, and get started.

LP Blogs

7 High Yield Dividend Stocks to Buy Now

Many investors seek out dividends as a means of providing a return that isn’t based on a company’s share price. There are several factors to consider when buying a company for dividends. Some of those factors are dividend yield, consistency of historically paying the dividend, the dividend growth rate and the type of corporate structure (equity, equity REIT, Mortgage REIT, MLP, etc.). In this list we’re including traditional equities and equity REITs that pay over a 5% dividend yield.

The approach to evaluating equity and equity REITs is a little different. In both of these types of investments it’s important to consider the cash flow the company is generating and the valuation, but the way the companies are analyzed is different. For example, free cash flow (FCF) would be important for equities and funds from operations (FFO) would be important for REITs. In the case of valuation, measure like price-to-FFO (P/FFO) would be a means of evaluating REITs as compared to price-to-earnings (P/E) for equities. This is a result of the fact that REITs are pass-through entities and are required to pay out 90% of their net income in dividends. This allows them to avoid paying taxes and is why they retain very little earnings.

In our list of 7 high yielding stocks, there are four traditional equities and three Equity REITs to consider buying now. The approach to analyzing them will be consistent with the type of equity investment being considered.

1. AT&T Inc (T)
Price: $29.56
Market Cap: $215.25 billion

Business Summary

AT&T Inc. is a holding company that provides communications and digital entertainment services in the United States and the world. The Company operates through four segments: Business Solutions, Entertainment Group, Consumer Mobility and International. The company was formerly known as SBC Communications Inc. and changed its name to AT&T Inc. in November 2005. AT&T Inc. was founded in 1983 and is based in Dallas, Texas.


Forward Annual Dividend Yield: 6.88%
Dividend Payout Ratio: 71%
5-Year Average Dividend Yield: 5.36%
3-Year Dividend Growth Rate: 2.1%
Years of Consecutive Increases: 34

T is considered a Dividend Aristocrat for a reason since it’s had a long history of paying a dividend and posting annual increases to the dividend. Currently, T pays out 71% of its income in dividends. That is below the 13-year median value of 81%. The current yield is higher than the 5-year average yield of 5.36% and is above the 13-year median yield of 5.41%. The current yield is only slightly below the highest trailing annual yield over that period of 7.17%.


Price-to-Earnings (P/E): 5.60
Price-to-Book (P/B): 1.17
Enterprise Value to EBITDA (EV/EBITDA): 6.47

T is trading near its 10-year low P/E value of 5.51 and below its current industry median P/E of 19.33. Over the past 13 years it has had a median P/E of 14.41. The P/B value ratio of 1.17 is close to its 10-yrar low of 1.12, is below the 13-year median value of 1.75 and below its current industry median value of 2.07. Its current EV/EBITDA of 6.47 is slightly below its 13-year median value of 7.00 and is below the current industry median of 8.29. From a valuation perspective, T is trading near historic lows in several measures.

Price History

52-Week High: $37.81
52-Week Low: $26.80
52-Week Change: -16.70%
200-Day Moving Average: $31.36

The price of T is trading about 10% off of its 52-week low and just below its 200-day moving average. While it has underperformed the S&P 500 over that period, the low price is contributing to the relatively high historic yield and the low valuation.


2. Invesco Ltd. (IVZ)

Market Cap:$7.64 billion

Business Summary

Invesco Ltd. (Invesco) is an independent investment management company. The Company provides a range of investment capabilities and outcomes, which are delivered through a set of investment vehicles, to help clients achieve their investment objectives. It has a presence in the retail and institutional markets within the investment management industry in North America; Europe, Middle East and Africa (EMEA), and Asia-Pacific. Invesco Ltd. was founded in December 1935 and is based in Atlanta, Georgia with an additional office in Hamilton, Bermuda.


Forward Annual Dividend Yield: 6.40%
Dividend Payout Ratio: 56%
5-Year Average Dividend Yield: 3.47%
3-Year Dividend Growth Rate: 5.7%
Years of Consecutive Increases: 10

The current dividend yield of 6.40% is well above the 13-year median of 2.48% and its 5-year average yield of 3.47%. The payout ratio of 56% is above the 13-year median value of 43% but is in line with its current industry median value of 56%. The 3-year dividend growth rate of 5.7% is close to its 13-year average of 6.00% and is above its industry median value of 5.20%. IVZ is currently paying a historically high dividend and based on its payout ratio it appears like they should be able to sustain the dividend and its historical growth rate.


Price-to-Earnings (P/E): 8.68
Price-to-Book (P/B): 0.85
Enterprise Value to EBITDA (EV/EBITDA): 9.43

IVZ is trading near its 13-year low P/E of 5.61 and considerably below its median value over that period of 15.79. The current industry median P/E is 14.21. It is also currently trading below book value at 0.85, which isn’t abnormal for financial stocks. The 13-year low P/B is 0.56 and the median value over that period is 1.48. IVZ has a current P/B ratio that is below the industry median of 1.04 as well. The 13-year median value for EV/EBITDA is 12.3, which is higher than its current value of 9.43. Its current EV/EBITDA is also below the industry median value of 11.05. From a valuation perspective, IVZ is trading at a value both compared to its own history but also compared to its industry.

Price History

52-Week High: $35.03
52-Week Low: $15.38
52-Week Change: -41.35%
200-Day Moving Average: $21.32

IVZ is down considerably over the past year and is currently trading below its 200-day moving average. This has contributed to its historically high dividend yield that it’s currently paying and valuation. The relatively low payout ratio and free cash flows indicate that, despite the price weakness, they are capable of maintaining their dividend.


3. The Buckle Inc (BKE)

Price: $17.3
Market Cap: $836.9 million

Business Summary

The Buckle, Inc. is a retailer of casual apparel, footwear and accessories for young men and women. As of January 28, 2017, the Company operated 467 retail stores in 44 states throughout the United States under the names Buckle and The Buckle. The Company markets a selection of brand name casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories and footwear. The company was formerly known as Mills Clothing, Inc. and changed its name to The Buckle, Inc. in April 1991. The Buckle, Inc. was founded in 1948 and is headquartered in Kearney, Nebraska.


Forward Annual Dividend Yield: 5.61%
Dividend Payout Ratio: 51%
5-Year Average Dividend Yield: 3.61%
3-Year Dividend Growth Rate: 4%
Years of Consecutive Increases: 0

The current dividend yield for BKE is well above its 5-year average yield of 3.61% and its 13-year median yield of 2.3%. It’s also considerably higher than its industry median value of 2.29%. The payout ratio is relatively high historically for BKE as its 13-year median value of 29%, but by itself wouldn’t be considered high. BKE also pays a special dividend every January, which has ranged between $0.75 to $1.75 over the past three years. Since beginning to pay a regular dividend in 2016, BKE hasn’t raised its dividend and may be using the special dividend as a means of passing on a portion of the company’s profits each year to investors.


Price-to-Earnings (P/E): 8.74
Price-to-Book (P/B): 2.05
Enterprise Value to EBITDA (EV/EBITDA): 3.93

The 13-year median value for the P/E of BKE is 12.86. That is considerably higher than the current value of 8.74, which is near its 13-year low of 7.57. The P/E is also below the industry median of 19.95. The current P/B ratio of 2.05 is well below the 13-year median value of 4.29 but is a little higher than the industry median of 1.63. The current EV/EBITDA is below its 13-year median of 6.5 and lower than the industry median of 11.82. For most of these measures, BKE is a little above its 13-year low and represents a compelling valuation.

Price History

52-Week High: $29.65
52-Week Low: $17.03
52-Week Change: -15.10%
200-Day Moving Average: $21.42

The price of BKE is trading near its 1-year low and is below its 200-day moving average. Since mid-October the price has stabilized and the large $1.25 dividend in January contributed to the large decline as the price was adjusted lower to account for the dividend.


4. B&G Foods (BGS)

Price: $25.72
Market Cap: $1.7 billion

Business Summary

B&G Foods, Inc. (B&G Foods) is a holding company. The Company manufactures, sells and distributes a portfolio of shelf-stable and frozen foods across the United States, Canada and Puerto Rico. The company was formerly known as B&G Foods Holdings Corp. and changed its name to B&G Foods, Inc. in October 2004. B&G Foods, Inc. was founded in 1996 and is headquartered in Parsippany, New Jersey.


Forward Annual Dividend Yield: 7.31%
Dividend Payout Ratio: 66%
5-Year Average Dividend Yield: 4.81%
3-Year Dividend Growth Rate: 11%
Years of Consecutive Increases: 8

The median yield for BGS over the past 13-years is 4.46%, which is considerably lower than the current yield of 7.31%. BGS is higher than its 5-year average yield and its current median yield for the industry of 2.06%. Over the past 13 years the Payout ratio has been at 107%, which means that the company has historically paid out more in dividends than they generated in net income. The current payout ratio of 66% is much more respectable and near the 13-year low of 57%. In the last 10 years, BGS has gotten more consistent about raising its dividend and has a high 3-year growth rate of 11%. That is in line with its 10-year average growth rate.


Price-to-Earnings (P/E): 8.97
Price-to-Book (P/B): 2.01
Enterprise Value to EBITDA (EV/EBITDA): 14.56

The current P/E of 8.97 is just off of its 13-year low of 7.39 and considerably lower than its median value of 25.60 over that period. It’s also significantly lower than its industry median of 19.86. The current P/B ratio is slightly higher than the industry median but is below its 13-year median value of 3.70. The current EV/EBITDA is in line with its 13-year average of 14.00 and has remained near this level since early 2012. The valuation ratios for BGS are in line with historical averages and below the industry in some categories. The fact that it’s not comaparatively over valued and pays a historically high yield adds to the value of owning this stock.

Price History

52-Week High: $37.81
52-Week Low: $26.80
52-Week Change: -16.70%
200-Day Moving Average: $31.36

The 52-week low was established on BGS in May of last year and showed some resilience during the sell-off in late 2018. It recently slipped below its 200-day moving average and is trading near its October 2018 low.


5. Kimco Realty Corp (KIM)

Price: $17.10
Market Cap: $7.34 billion

Business Summary

Kimco Realty Corporation is a self-administered real estate investment trust. The Company is engaged in the ownership, management, development and operation of open-air shopping centers, which are anchored generally by discount department stores, grocery stores or drugstores. Publicly traded on the NYSE since 1991, and included in the S&P 500 Index, the company has specialized in shopping center acquisitions, development and management for more than 60 years.

Dividends & Valuation

Forward Annual Dividend Yield: 6.43%
FFO Payout Ratio: 82.35%
5-Year Average Dividend Yield: 4.73%
3-Year Dividend Growth Rate: 6%
Years of Consecutive Increases: 9

Price-to-FFO (P/FFO): 11.59
Price-to-AFFO (P/AFFO): 11.66

The current yield for KIM is above the 13-year median yield of 4.01% and above the 5-year average yield of 4.73%. For REITs, funds from operations (FFO) and adjusted funds from operations (AFFO) are better measures when looking at the payout ratio. For KIM the FFO payout ratio is 82.35%, which is an indication that they are generating sufficient cash from their operations to pay their dividend. They have raised their dividend for the past 9 years and has generated a solid dividend growth rate of 6%.

From a valuation standpoint, the P/FFO and P/AFFO are at reasonable levels with values of 11.59 and 11.66 respectively. Those values indicate that is will take the company 11 years to make the current market price of its shares. Comparatively, this is at one of the lowest points for these valuation ratios in the past 7years. The combination of a stable and rising dividend and low valuations makes this stock fairly attractively priced while generating a high amount of income.

Price History

52-Week High: $17.96
52-Week Low: $13.16
52-Week Change: 24.41%
200-Day Moving Average: $16.21

The price is just off of its 52-week high of $17.96 and has traded in a fairly stable range for the past year. Recently the price has risen from a December low of $14.29 and is trading above the 200-day moving average which has also begun to turn higher.


6. One Liberty Properties (OLP)

Price: $27.83
Market Cap: $539.56 million

Business Summary

One Liberty Properties, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company acquires, owns and manages a geographically diversified portfolio consisting of retail, industrial, flex, and health and fitness properties. One Liberty is a self-administered and self-managed real estate investment trust incorporated in Maryland in 1982.

Dividends & Valuation

Forward Annual Dividend Yield: 6.47%
FFO Payout Ratio: 93.75%
5-Year Average Dividend Yield: 6.9%
3-Year Dividend Growth Rate: 5.1%
Years of Consecutive Increases: 6

Price-to-FFO (P/FFO): 13.98
Price-to-AFFO (P/AFFO): 13.07

The 13-year median yield is 7.04%, which is slightly higher than the current dividend yield. This is representative of a company that has continued to perform relatively well since 2009 and is near its 52-week high in mid-August. The high annual growth rate of the dividend at 5.1% has allowed the yield to remain historically competitive. The FFO payout ratio is indicative of a company that is generating sufficient cash to pay its dividend.

The P/FFO and P/AFFO has remained relatively stable since 2013 as the price has been range-bound and the cash from operations has increased. Similar to KIM, the combination of a stable and rising dividend and stable valuations makes this stock fairly attractively priced while generating a high amount of income.

Price History

52-Week High: $29.44
52-Week Low: $21.70
52-Week Change: 24.24 %
200-Day Moving Average: $26.73

The current price has rallied strongly in the last month as is has once again crossed the 200-day moving average. The price is less than 10% off of its 52-week high and up over 205 in the last year. The long-term trend has continued to rise as indicated by the rising 200-day moving average.

7. Macerich Co. (MAC)

Price: $42.83
Market Cap: $6.49 billion

Business Summary

The Macerich Company is a self-administered and self-managed real estate investment trust (REIT). The Company is involved in the acquisition, ownership, development, redevelopment, management, and leasing of regional shopping centers located throughout the United States.

Dividends & Valuation

Forward Annual Dividend Yield: 7.01%
FFO Payout Ratio: 74.75%
5-Year Average Dividend Yield: 4.11%
3-Year Dividend Growth Rate: 4.6%
Years of Consecutive Increases: 8
Price-to-FFO (P/FFO): 13.98

The current dividend yield for MAC is considerably higher than the 5-year average and the 13-year median yield of 4.11% and 4.08% respectively. The FFO payout ratio of 74.75% shows that they are only paying out that amount of the cash they’re generating from operations. That is attractive since it shows the ability to pay their dividend and still have room to increase it. MAC has consistently raised their dividend over the past 8 consecutive years with a solid growth rate of 4.6%.

As the price has come down the past couple years, the P/FFO is becoming increasingly more compelling. The current value of 13.98 is near the lowest point it has traded since 2010 and the high relative dividend yield reflects that point. The combination of lower valuation, historically high yield and consistent growth rate makes this an attractive candidate for dividend income.

Price History

52-Week High: $61.91
52-Week Low: $40.90
52-Week Change: -25.45 %
200-Day Moving Average: $51.64

The price has come down significantly over the past year and is near its 52-week low and well below its 200-day moving average. As the price comes down, the dividend yield increases and is allowing the dividend yield to attain historically high levels. The price has yet to fully stabilize and has gapped lower on its most recent earnings announcement.


LP Blogs

5 Monster Dividend Plays to Kickstart Your Second Salary

Dividend stocks are a great way to earn passive income.

So much so, they can actually help you secure a second monthly salary, by boosting your returns.

In fact, we’ve uncovered five stocks that have sustainable dividends of more than 10%.

By investing in a basket these stocks for the long term, you get to participate in the growth of those businesses, while being handsomely paid just to hold each of them.

Dividend Trade No. 1 — GameStop Corporation (NYSE:GME)

GameStop Corp. operates as a multichannel video game, consumer electronics, and wireless services retailer. It operates in five segments: United States, Canada, Australia, Europe, and Technology Brands. The company sells new and pre-owned video game hardware; video game software; pre-owned and value video games; video game accessories, including controllers, gaming headsets, virtual reality products, memory cards, and other add-ons; and digital products, such as downloadable content, network points cards, prepaid digital and prepaid subscription cards, and digitally downloadable software.


Many investors are quite intrigued by the company’s yield of 11.7%.

Granted, the company is struggling at the moment.

In fact, Interim CEO Shane Kim has even noted that:

“We are obviously facing some interesting challenges. Our goal is to find the best person to provide the best leadership and energy for the company.”

And while comparable sales are in decline after a 5.3% drop in its latest earnings, the company is stills seeing strength in sales of the Xbox One and PlayStation 4 consoles. There retailer is also seeing health in its accessory business, including headsets and controllers for PCs and consoles.

Better still, GameStop believes most of its 2018 earnings will be generated in the latter part of the year especially around the holiday shopping season. The company has also made it clear that the dividend of nearly 12% remains a stop priority.

Dividend Trade No. 2 — New Residential Investment Corporation (NYSE:NRZ)

New Residential Investment Corp. is a real estate investment trust, focuses on investing in and managing residential mortgage related assets in the United States. It operates through Servicing Related Assets, Residential Securities and Loans, and Other Investments segments. The company invests in excess mortgage servicing rights (MSRs) on residential mortgage loans; and in servicer advances, including the basic fee component of the related MSRs. It also invests in real estate securities, residential mortgage loans, investments in consumer loans, and corporate. In addition, the company has an interest in a portfolio of consumer loans, including unsecured and homeowner loans.

What’s nice about REITs 1s that they can be very profitable investments. Many times, they have to pay at least 90% of their taxable income in dividends to shareholders, making them a great option for income investors.

It’s part of the reason we like NRZ, which hasa dividend yield of 11.12%.

Dividend Trade No. 3 — Buckeye Partners LP (NYSE:BPL)

Buckeye Partners, L.P. owns and operates liquid petroleum products pipelines in the United States and internationally. The company operates through three segments: Domestic Pipelines & Terminals, Global Marine Terminals, and Merchant Services.


At the moment, it carries a dividend yield of 12.09%.

What’s nice about BPL is that despite headwinds, it continues to pay out a distribution every quarter and has never reduced its distribution during its more than 30-year history, says CEO Clark Smith.

“2018 is a transitional year for Buckeye, as market conditions for segregated storage remain challenged and meaningful contributions from capital projects will not be realized until 2019 and 2020,” he says.

Plus, the company is quite confident in its future.

In fact, it just created a partnership with Phillips 66 Partners and And eavor (25% interest each, with Buckeye holding the remaining 50%) to build a new crude oil export terminal in Ingleside,

Texas. Buckeye is also working on a pipeline that can change flow direction that will allow it to expand its Michigan/Ohio business. That project is expected to be complete by the end of 2018.

Dividend Trade No. 4 —- DDR Corporation (NYSE:DDR)

DDR is an owner and manager of 258 value-oriented shopping centers representing 89 million square feet in 32 states and Puerto Rico. The Company owns a high-quality portfolio of open-air shopping centers in major metropolitan areas that provide a highly compelling shopping experience and merchandise mix for retail partners and consumers. The Company actively manages its assets with a focus on creating long-term shareholder value. DDR 1s a self- administered and self-managed REIT operating as a fully integrated real estate company.


DDR carries a current dividend yield of 10.2%.

After announcing a 1:2 reverse stock split effective May 21, 2018, we’re seeing signs of confidence in the stock with insider buying. In fact, a director has been buying shares of the shopping center-focused real estate investment trust since February, including this past week’s more than 816,000 shares. At prices that ranged from $7.21 to $7.51 apiece, that cost them approximately $6 million.

In its most recent quarterly report, the company not edit had $97.8 million in funds from operation, or 26 cents a share, which was better than estimates of 23 cents. Funds from operations are a closely watched measure in the REIT industry. It takes net income and adds back items such as depreciation and amortization.

Revenue was $207 million, beating estimates for $199.3 million.

Dividend Trade No. 5 — Energy Transfer Partners LP (NYSE:ETP)

Energy Transfer Partners, L.P. engages in the natural gas midstream, and intrastate transportation and storage businesses in the United States. The company’s Intrastate Transportation and Storage segment transports natural gas from various natural gas producing areas through connections with other pipeline systems, as well as through its ET Fuel System and HPL System.


ETP carries a current dividend yield of 11.7%.
Better yet, it’s part of the explosive Permian Basin.
According to RigZone.com:

It “plans to build a crude pipeline from the Permian basin in Texas to the Houston Ship Channel and Nederland, Texas, which will have an initial capacity of up to 600,000 barrels per day (bpd). The pipeline will be “easily expandable” to 1 million bpd, in order to serve growing a export markets at coastal ports, the company said during first quarter earnings conference call. It is likely to come online by 2020. Surging crude output from the Permian basin, the biggest oilfield in the United States and the source of most of the country’s shale crude, is straining the region’s infrastructure. Pipelines are running full, sending crude prices there to the weakest level against benchmark futures in three and a half years.”

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