Building Wealth When I worried that my mom would get bored in her retirement... I turned her onto the "Vermont Dividend Boost."
When my mom was in her early 70s, she'd been divorced from my father for 20 years and her own mother had recently passed. It would often bother me to know my mom was alone for most of the day.
She also inherited an investing portfolio from her mom. So to help her find something to do – and to make sure her mind stayed sharp – I started to teach her my strategies.
I always preach to keep learning, even later in life... So I took nearly everything from my time at Goldman Sachs and on Wall Street and brought it to my mom's house.
I gave her the full crash course in investing. I taught her about zero-coupon bonds, interest rates, yields, different kinds of stocks, you name it. It was great bonding for us. And my mom genuinely took an interest in it.
She took her inheritance and turned it into a diversified portfolio of bonds, cash, dividend-paying stocks, and more.
One stock that my mom took a liking to was Johnson & Johnson (JNJ). At the time, Johnson & Johnson was one of the biggest companies in the world. It was one of my favorites, too.
Johnson & Johnson was growing its sales, was expanding into new medical markets, and, most importantly, knew how to treat shareholders well. Every single year, management would increase its annual dividend payment. (Today, the company boasts more than 60 years of consecutive dividend increases.)
My mother owned a lot of Johnson & Johnson stock. She told me it was a stock she wanted to hold for a long time.
As our investing lessons kept progressing, I introduced her to a strategy I had been using for many years to generate extra income... selling covered calls. She quickly gravitated toward them. She was soon selling covered calls on many of her favorite stocks – in particular, Johnson & Johnson.
This strategy is nothing new for Retirement Trader subscribers. In that service, we try to get in and out of different names as quickly as possible. We buy shares that we want to have called away... Then we take that cash and move it into the next best opportunity we see.
I bring up her story because just about every year since I launched Retirement Trader in 2010, I receive e-mails from subscribers asking how to deploy our strategy on stocks they love but truly do not wish to sell. And that's what my mom did with the Vermont Dividend Boost.
And you can do it, too...
Why do I call it the Vermont Dividend Boost?
Picture someone tapping a metal spout or "spile" into a maple tree on a New England hillside. Simply turn the spout on and watch the maple syrup come out. You never have to cut that tree down, and you'll keep enjoying the best syrup for the rest of your life.
That's the idea behind the Vermont Dividend Boost.
Most investors have a few stocks they'll never want to sell. In our case, these are blue-chip companies with growing revenues, growing dividends, and a durable business that we know is going to be around for the next couple decades.
You'll probably pass these stocks down to your grandchildren. And right now, they are sitting in your brokerage account and paying you dividends.
But you're not taking full advantage of them...
My mom would sell covered calls against her Johnson & Johnson shares to collect more income. It was like getting another dividend payment.
In a recent issue of Retirement Trader, I detailed exactly how the Vermont Dividend Boost works and how readers could start using it in their own accounts to boost their income.
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
April 22, 2024