The Five-Year Stellar Stock Index and The Yield On Cost Gold Mine

So, what is FYSSI (“fizzy”) all about? The Five-Year Stellar Stock Index is composed of a diverse group of about 80 companies that are among the best equity (stock) investments available. Why? Because they are well managed and profitably proven. The FYSSI does not consider foreign stocks. Foreign monetary exchange rates, additional taxes and fees are not in your favor. The FYSSI does not include shares of Master Limited Partnership companies, as they require special U.S. tax treatment and extra steps when filing yearly federal and state taxes. Let’s keep it as simple as possible. Companies qualifying for the 2023 FYSSI must have a history of: 1. Five-year total returns very close to, or above 100% (double your money). 2. Ten-year total returns very close to or above 200% (triple your money). 3. Dividends that have doubled or nearly doubled (100% increase) during the most recent five-year period. (2019 - 2023) 4. Not having a quarterly earnings loss in the past five years. The above are minimum requirements. As of September 2024, there were 63 stocks with 10-year total returns over 300%. Many are in the high hundreds to over 1000%. There are 39 stocks with 5-year total returns greater than 200% and 32 stocks with dividend increases greater than 200% in the same time period. The Stellar High Dividend / Income Stock List The companies that make up the Stellar High Dividend / Income Stock list add another useful dimension of return that differs from FYSSI stocks. Their initial higher dividends, if reinvested will compound into an even greater dividend return, increasing the initial yield on cost (YOC) as time passes into 5- 10- 15-year durations. A great way to combat inflation for both future and current retirees. More about YOC later, especially in Chapter 8. These stocks have large five- and ten-year total returns similar to many FYSSI stocks, but they do not have five- year 100% dividend increases. Most of these stocks pursue profitability much differently than most of the FYSSI stocks (explained in later text). They tend to be less volatile and possibly a bit more conservative. Add them to your IRA or use them to supplement dividend income in a regular brokerage account. Let your money work for you. You get paid while you wait Good Companies Will Not Go Unnoticed The FYYSI index chooses to focus on just four criteria because different industry sectors experience different market challenges, constraints, and opportunities. Comparing other stock metrics, such as the price / earnings ratios of banks to semiconductor companies is unrealistic. Different regional, national, or global markets, may dictate different business models, thereby influencing debt levels, profit margins, corporate taxes, etc. Stock analysts often try to compare companies to their peers in order to obtain an apples-to-apples comparison, but that should be taken with a large grain of salt. Company earnings reports and other financial data might also be questioned due to a wide array of legal creative accounting maneuvers. A lengthy consistent positive earnings track record is a good sign. Which is why a stock in the FYSSI index must have 5 previous years (20 quarterly reports) of positive earnings. How long can a company hide behind creative accounting before their other financial obligations and responsibilities fall apart? Dividend Raisers A common saying in the investment world; “The safest dividend is the one that’s just been raised” The FYSSI lists a diverse collection of companies that deliver at least a 100% total return, and 100% dividend increase in a five-year period. That rate of return certainly beats the S&P 500 or Dow Jones Industrial 30 indexes. At least FYSSI stocks have a history of doing so in the past five- and ten-year periods. If a company can raise its dividend every year, ending with a 100% increase after five years, everything else financially about the company should be okay. Companies that can maintain and grow their dividend have good management and competitive advantages that enable them to earn above average profits. They are cash rich, focused on growing their dividends and maintaining investor confidence. Above average profits and a strong cash position enables them to endure market downturns without cutting dividend payouts and experience accelerated share price increases in up markets. And perhaps most importantly, they are a primary means of maintaining buying power, providing protection against inflation. A rising dividend is fundamental to an investor’s ability to preserve purchasing power through their equity (stock) portfolio. As you review the Total Return Analysis tables in Chapter 9, you can easily see how dividend growth investing does more than provide some protection from inflation. According to the U.S. government’s current methodology of calculating the Consumer Price Index (CPI), the US dollar has lost 66% of its value in the last 20 years. As this book is being written (2024), the dollar has lost about 18% of its value since 2020. If inflation stays at about 3.4% (the 2023-year average) for the next five years, the dollar will lose about 15.4% of its value, worth a bit less than 85 cents. In ten years, it will lose about 28% of its value. (smartasset.com). If you purchase a 5- year $5,000 CD (certificate of deposit) at the current going rate of about 4.6%, you would see a 25% increase in value to $6260.78 (if compounded annually), which isn’t bad. However, subtract the five-year inflation rate of depreciation (15.4% as stated above) from your 25% CD return, and now you end up with a much smaller 10% total return that took 5 years to obtain. Compare that with the FYSSI minimum 100% five-year total return, minus 15.4%, and you end up with an 84.6% total return. Much better! Good luck with a savings account or a CD.