It’s funny the things you catch yourself saying out loud.
Most investors spend their entire lives chasing income. Dividends, yields, monthly checks. That’s the goal.
Not me.
You can keep your dividends. I don’t even want them.
I’m here for price. I want stocks that go up a lot. That 8 or 9% yield is not what moves the needle.
Now, to be clear, there’s a time and a place for that. My wife’s retirement accounts, my three kids’ college funds, long-term compounding. Sure, pay me all day.
But that’s not what we’re doing in The Divergence portfolio.
This strategy is about finding stocks that can double, triple, 5x. We’re not here for single-digit payouts. We’re here for outsized moves.
And yet, this is the highest yielding portfolio I’ve ever had.
I catch myself laughing about it.
Because somehow, the portfolio throwing off the most income is the one where I care about it the least.
I didn’t go looking for income.
And still, here we are.
Not What I Signed Up For
So how did we get here?
We built a big position in oil and gas midstream stocks.
And those businesses, by design, throw off cash.
So here I am owning a bunch of stocks that act like toll booths for energy. They collect fees, pass the cash along, and suddenly I’m getting paid whether I want to or not.
Some of these yields are 3 or 4%. Others are 8 or 9%. Not that long ago, before prices started moving, some of them were even higher, in the double digits.
And I catch myself smiling when the cash hits the account.
Because I genuinely don’t care.
Whenever I’m evaluating a stock for The Divergence, the dividend is the last thing on my mind.
I’m not screening for it. I’m not even asking about it. I don’t want to know.
I just want the price to go higher. A lot higher.
But certain types of companies come with it anyway.
So now, almost by accident, this has turned into the most income-heavy portfolio I’ve ever run.
And it’s not even close. Which is what makes it so funny.
I didn’t sign up for this. But I’ll take it.
Because at the end of the day, it’s not about the dividend.
It never was.
Know Who You Are
Some of you probably think I’ve lost it.
“How do you ignore a 9% yield?”
I’m not ignoring it. It’s just not the point.
In our retirement accounts? Pay me all day. Same thing with the kids’ college funds. Let it compound for decades. That’s exactly what those are for.
This is different.
The Divergence strategy has a job to do. And that job is not to pick up a few percentage points here and there.
We’re not here for 9%.
We’re here for 200%. 300%.
That’s the target. So everything we do starts there and works backwards. What gives us the best chance to achieve that outcome?
It’s not clipping coupons.
It’s owning stocks that are moving. Stocks with momentum. Stocks where positioning is wrong and price is resolving higher.
If those happen to pay a dividend along the way, great.
But that’s not why we’re in them. And it’s not what’s going to get us where we’re trying to go.
Most people get this part wrong. They mix strategies. They chase income in a growth strategy. They look for home runs in an income portfolio.
Pick one.
Know what game you’re playing.
Because once you do, the decisions get easy.
And for us, in this strategy, the decision is simple.
You can keep your dividend.
Call me when the price doubles.
This Week in Everybody’s Wrong
On Monday, we saw that, in addition to consumers being down in the dumps, the smart money is feeling sad now, too.
Meanwhile, stock market indexes all over the place are hitting new all-time highs.
Here’s why we’re betting on higher prices.
On Tuesday, we debunked some more nonsense.
“Buy low and sell high” sounds good.
It’s also a great way to spend your time doing a lot of guessing.
It’s a stock-picker’s market.
It’s always a stock-picker’s market.
On Wednesday, we explained why that is.
On Thursday, we talked about why utilities are your special teams.
They’re not flashy, but what they do is essential.
And that group can quietly win you some games sometimes.
On Friday, we celebrated the end of April.
If you’ve been around for a while, you know what that means.
Tupac, Spanish wine, and fresh monthly candlesticks…
On Saturday, Jason Perz returned with an update on what’s happening with inflation.
As you’ve probably figured out by now, Jason, Sam, and Grant are the brains behind this operation.
Jason explains how we’re well positioned for the new regime.
Have a great Sunday.
We’ll see you Monday morning…
Stay sharp,
JC Parets, CMT
Founder, TrendLabs