A New Year’s Resolution For Solid, Stress-Free Returns

| January 2, 2024

Is one of your resolutions to figure out how to be more successful and less frustrated with your investment results?

Prior to the final two months of the year, the stock market was volatile and frustrating. If you weren’t correctly invested at the end of October, you missed out on most of the year’s gains (excluding the so-called “Magnificent Seven” stocks).

So, if your New Year’s resolution is to grow your nest egg and income in 2024 without worrying about timing the market or fretting what the markets do next…

Let me show you how to get solid, stress-free returns in 2024.

The S&P 500 stock index is market-cap weighted, so the largest companies have the greatest effect on the index value. The mega-cap tech stocks—the Magnificent Seven—accounted for most of the S&P 500’s 25% return in 2023.

Let’s look at the Invesco S&P 500 Equal Weight ETF (RSP) to see how the average stock portfolio performed in 2023This fund gives an equal weight to each of the 500 stocks in the S&P 500.

The RSV chart shows graphically how difficult it was for investors to generate profitable capital gains. It is human nature to chase share prices, which causes most investors to buy high and sell low.

And 2023 was better than 2022 for investors looking for capital gains. Here is the two-year chart for RSP:

Note that buy-and-hold investors had zero capital gains over the last two years, and stock price chasers had numerous opportunities to get on the wrong side of the market swings.

I developed my Dividend Hunter strategy to give investors a plan that does not try to time the market. The Dividend Hunter strategy focuses on generating a stable—and even growing—income stream from high-yield stocks.

Unlike share prices, dividends are highly predictable. A diversified portfolio of high-yield investments can yield 8% to 9%. Those yields are cash returns you earn no matter what happens in the market.

Once you go with the Dividend Hunter strategy, it also gets easier to invest for capital gains. When share prices on your income stocks drop, buying more shares to grow your income and average yield on cost is easy.

My subscribers find that through the market cycles, as shown above, they grow both their portfolio income and the value of those portfolios. As the market goes through shorter and longer up-and-down cycles, the financial benefits continue to accrue wealth to you.

My job is to research high-yield investments to populate the Dividend Hunter recommended portfolio with the safest high-yield stocks I can find. I also provide lots of guidance on how to structure a portfolio to achieve a high income level, with security.

This post originally appeared at Investors Alley.

Category: Dividend Stocks

About the Author ()

Tim Plaehn is the lead investment research analyst for income and dividend investing at Investors Alley. He is the editor for The Dividend Hunter, an investment advisory delivering income investments with double digit growth in share price and dividend payments. Tim’s also editor of Weekly Income Accelerator, a covered call trading service, and Automatic Income Machine, a dividend growth service focused on growing your nest egg.

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