Will China buy Bitcoin? If I were President Xi Jinping, looking across the Taiwan Strait, I would. Why wouldn’t he want to diversify his $1 trillion pile of Treasuries?
But there’s one thing that Xi—or any autocrat, for that matter—needs more than coins: Real assets with cash flow.
We’ll talk dividend trades that will benefit from these global trends in a moment. First, let’s start with crypto, because (indulge me, please) I need to get caught up on these questions.
I’ve been saving a note from Joseph B., who asks what recommendations we have on cryptocurrencies.
Fellow reader Ted F. also asks about crypto, but from the Federal Reserve’s perspective. “Will the Fed create their own coin and if so will that destroy the competition—dogs and bits?”
Well put, Ted. Now before we dive in, let’s start with our usual disclaimers:
- Cryptocurrencies don’t pay dividends.
- These are (generally) short-term trades, not long-term investments.
- A digital coin with lasting value would have a distinguished Weimaraner on the cover.
(Shout out to my handler, Bizzi—who is working to redeem her reputation after a weekend of counter-surfing.)
Now look, we could craft stories about why crypto is going to the moon, but I think the easy money has been made. These coins may have additional upside, but for real percentage windfalls, they are 2020 trades.
And it’s 2022 and tanks are rolling around Eastern Europe. Real assets are the play because they provide cash flow. This is why we contrarians keep pounding the table on energy dividends like ONEOK (NYSE:OKE) and Exxon Mobil (NYSE:XOM).
To XOM’s credit, they announced winding down their Russian operations (with no new investment to come). XOM did not mince words, either:
ExxonMobil supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation. We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people.
XOM scores a point for good behavior. Unfortunately, there is still a market for Russia’s oil and gas, which remains the funding behind Putin’s war machine.
It ain’t crypto he’s spending—it’s oil and gas profits.
Quietly, insiders are scrambling for assets that provide cash flow. This applies not only to energy, but also food and even good old-fashioned real property.
I say we buy this stuff before the autocrats do. The OKE and XOM gains I mentioned earlier have since ballooned to 182% and 64%, respectively. Both have been much better plays than Bitcoin, and they paid dividends, too.
But we need to move fast. The world has changed in the last two months, to put it lightly. Mere “conceptions” like crypto and profitless tech stocks are being sold on strength.
This is why the markets have been so volatile. Prices gain enough steam for the smart money to get out—and then pull back again.
It’s creating wild opportunities for nimble investors like us. Let me show an example.
Last summer, the market-at-large was already beginning to wobble beneath the surface. Crypto had one more run in it, but again, it only helped the wise guys exit.
Vanilla investors chased Bitcoin all the way up and rode it back down. Check out the orange line below—the degenerates who bought and held Bitcoin did poorly. Those who chased it higher and higher fared worse.
Contrast that with our DST trade over the same timeframe. We bought Preferred Apartment Communities (NYSE:APTS)—an old-school property firm with a new twist. APTS is an upscale landlord that rents the ultimate “work from home” abodes.
Most information workers have plugged away from home for two years and counting. Many will log in from home indefinitely. Which means they will keep paying up for APTS’s premium places.
We identified this trend, secured a 7% yield and enjoyed sweet 73% total returns in a matter of months!
A Dividend Swing Trade For 73% Gains
This was a twist on the “real asset” theme that is unfolding this year. We became property moguls with one ticker, collected dividends and watched this ticker soar.
Better than Bitcoin? Oh yeah.
Markets are rocky, but we have opportunities in dividend stocks. Heck, we’re already up 30% on a recent “real asset” purchase in less than two months!
Disclosure: Brett Owens and Michael Foster are contrarian income investors who look for undervalued stocks/funds across the U.S. markets. Click here to learn how to profit from their strategies in the latest report, "7 Great Dividend Growth Stocks for a Secure Retirement."