Most people only think of one way to make money in the market: buy low and sell high. That’s just plain wrong.

Today, I’m going to double your chances of becoming a rich retiree using a two-fold attack on today’s insane market…

A lot has changed in the last 40 years of investing.

With today’s online brokers and instant internet market tracking, anyone can participate in the ebb and flow of the stock market.

Investors now have more opportunity to jump in the bond market and play fast-moving options.

But nothing has changed more than the underlying philosophy many use to invest…

This Philosophy Could’ve Turned $100 into $3K While the Market Shrank

One of the greatest investors of all time, Benjamin Graham, noted in the 1973 fourth edition of his famed The Intelligent Investor:

“In the last 20 years the “profitable reinvestment” theory has been gaining ground. The better the past record of growth, the readier investors and speculators have become to accept a low-pay-out policy. So much is this true that in many cases of growth favorites the dividend rate – or even the absence of any dividend – has seemed to have virtually no effect on the market price.”

Graham, who mentored the most successful investor you’ll probably ever hear of, Warren Buffett, knew a thing or two about investing. Here he is saying that a monstrous shift occurred in investment philosophy: instead of shareholders demanding their share of corporate profits through dividends, they became satisfied with expecting higher share prices.

Of course, this makes very little sense if you put the last decade into context. As of this writing, the S&P 500 is down 22.5% over that period, while the Dow dropped nearly 10%. That doesn’t sound like smart investing to me.

Meanwhile, certain companies do still pay shareholders their due. Take Terra Nitrogen (NYSE: TNH) for instance. This is a company I’ve noted before because of its aggressive take on shareholder value.

If you had invested a mere $100 this day 10 years ago, you’d have received $791.40 in dividend checks to date. With capital gains, you’d have turned a crisp $100 bill into nearly $3,000. A typical stock won’t yield these kinds of results.

Terra Nitrogen’s Two-Fold Attack

So what makes Terra Nitrogen’s story so unique? First, it pays a large dividend, which would immediately turn off most stock speculators. But that doesn’t mean income investors would have bought TN back then…

You see, Terra Nitrogen – like hundreds of others out there – fall into a category of its own. It just doesn’t fit either investment philosophy… yet it fits both.

The Forgotten Ones

Speculators despise companies that pay dividends. Most would tell you that when a company cuts a check to its shareholders it is saying that they’re better off with cash than company stock. Seeing how one of the only groups of market gainers over the last decade were income investors, you can see the flaw with that argument.

Income investors, on the other hand, despise companies that are too small to offer bond-like dividend payments to shareholders. This group’s logic is that if a company doesn’t have Johnson & Johnson-like size and history, it isn’t capable of steady dividends. Terra Nitrogen proves this group wrong.

That’s why it’s important to look to the forgotten group: small-cap dividends. Many of these companies pay extraordinarily high dividend yields, while offering rapid growth only small, agile companies can.

Terra Nitrogen fit that category 10 years ago. And right now, we’ve got our eye on another opportunity just like it today.

Unfortunately, I promised my Lifetime Income Report readers first dibs on investments like this one. But I will do something else for you. Something that even many of my readers haven’t been able to get…

Instead of paying $99 for your first year of LIR, I’ll cut that in half. On top of that, I want you to see this opportunity without any risk. After all, what kind of analyst would I be if I didn’t give you the chance to check out my open portfolio and decide for yourself if you’d like to stay on board?

In fact, I’ll bet you will like what you see. That’s why I’m going to give you my Triple Lifetime No-Risk Guarantee.

For loyal Penny Sleuth readers like yourself, I’m opening up one of my other recent reports to you today. In it, I’ll give you the names of five dividend payers that each carry yields over 15%. Better yet, three are small caps with Terra Nitrogen-like potential.

Click here to check it all out immediately…

Sincerely,
Jim Nelson

January 22, 2010

Jim Nelson

Jim Nelson is the managing editor of Penny Sleuth. He has been playing the stock market since he was 14, always with a preference toward smaller companies. He has honed his stock picking skills at Agora Financial since 2004, effectively combining a growth and value approach. Like Greg Guenthner, Jim also contributes to Penny Stock Fortunes on top of bringing you the Penny Sleuth every weekday. Special Report: Imagine Getting Rich as Ignored Stocks Soar- How you could turn $200 into $1.2 million!

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