Published Fri, 17 Feb 2017 10:12:47 -0500 on Seeking Alpha
Eric Ervin was making his rich client so much money that he suggested: "Hey, why don't you just quit your job?"
The investor saw the opportunity to scale Eric's "secret strategy" - and he wanted to help invest!
Both guys knew the power of dividend growth investing. But Eric's second-level insight is what made them both a boatload of cash. He figured out a way to bet purely on the higher payouts - as close to a "sure thing" as you'll ever see in stocks. Here's what I mean.
Blue chip stocks tend to raise their dividend every year. Even if it's a token increase, it keeps shareholders happy. Betting on S&P 500 dividend growth is steadier and better than wagering on price appreciation itself:
S&P 500 Dividend Growth (BLUE) vs. Price (Gray)
Problem is, traditionally there's been no way to bet on the blue line above. You'd have to buy the index and hope its price appreciates in tandem. Not as compelling a bet.
Well Eric figured out that he could buy "swaps" on S&P 500 dividend growth. He walked me through the specifics on the phone in late 2015 - before his new ETF delivered incredibly steady returns for 2016.
At the time, he managed to buy contracts that were only pricing in 1.5% dividend growth for the S&P 500 in the 2016 calendar year. Payouts rose much more (as they usually do) and Eric banked the upside for his Reality Shares DIVS ETF (NYSEARCA: DIVY):
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