4/6/15
Stocks have been on a great run and with the European Central Bank and Bank of Japan pumping money into the global economy–picking up where the Fed left off–expect it to continue.
Given the low global inflationary environment and the ultra-easy global central bank activity, bond yields in the U.S. have remained subdued, despite the expectation that the Fed will be raising rates for the first time in nine years later this year. The 10-year note is yielding less than 1.9% this morning.
Meanwhile, we’re seeing a rare occurrence in stocks, and an extremely bullish one. For one of the few times in history, stock dividends are paying a yield greater than U.S. Treasurys. The yield on Dow stocks is 2.25% and the yield on S&P 500 stocks is 1.99%.
This positive yield differential for stocks has only happened five other times in history; each time stocks went up big one-month and three-months later.
If that’s not enough, April happens to be the single best month for Dow stocks over the past 50-years.
With this all in mind, here are a few ways to play it:
You could buy the Dow Jones Industrials Average ETF (DIA) or the three times leveraged Dow ETF (UDOW). Or, our favored way at BillionairesPortfolio.com is to invest alongside an influential investor that has huge skin in the game. This gives you an extra layer of protection, a fellow shareholder that has the power and influence to control his own destiny. With that, you could buy these four Dow component stocks, each controlled by one of the top billionaire investors in the world:
1) Apple: Billionaire activist legend Carl Icahnowns Apple. He says it’s worth $200, and he’s recently been adding to his position. Apple has multiple catalysts in April. The company is launching its watch. Apple reports earnings this month, where we could potentially see another stock buyback announcement and/or an increase its dividend.
2) Dupont: Billionaire activist investor Nelson Peltz has nearly 20% of his hedge fund’s assets in Dupont. He owns nearly 1.8% of the company and has asked Dupont to grant him and his team Board seats, as he wants DuPont broken up to unlock value.
3) Dow Chemical: Billionaire activist hedge fund manager Dan Loeb is also agitating for change at Dow. Loeb owns more than $1 billion of Dow shares and the company has just agreed to split off its chlorine business, a byproduct of Dan Loeb’s activist efforts.
4) Coke: Everyone knows Warren Buffett owns Coke. The interesting part is that Buffett has recently orchestrated a huge merger between two of the largest big-brand food companies, Heinz and Kraft. Kraft shareholders made a 35% premium on their shares overnight. Applying the same takeover multiple to Coke, Coke could be worth as much 40% on a private equity buyout.
BillionairesPortfolio.com helps average investors invest alongside Wall Street billionaires. By selecting the best ideas from the best billionaire investors and hedge funds, our exited stock investment recommendations have averaged a 31% gain since 2012, beating even the great Carl Icahn’s record for the same period.