How Trump Changed My Investing Plans

What I’m Doing Different…

You open your brokerage account to check in on your menagerie of stocks and under the “Activity” tab you see this:

• Dividend Received Walmart Inc. (Reinvested)
• Dividend Received Merck & Co. (Reinvested)
• Dividend Received Altria Group (Reinvested)
• Dividend Received Abbott Laboratories (Reinvested)

And on and on.

I never get tired of scanning those entries during the infrequent moments that I log into my brokerage account for some random reason.

It’s not necessarily the dividend itself that gets me going… it’s the word “reinvested.”

It’s the definition of a phrase my granny used to tell me all the time when she was trying to teach me as much about investing as she could (which wasn’t much for an orphan who dropped out of school to take care of her little sister).

But she told me on more than one occasion that, “Money at work is better than man at work.”

Which is precisely what that “reinvested” notion implies.

It says that some particular stock I own—Walmart, Merck, Altria, etc.—is working for me by paying me dividends that my brokerage firm then puts back to work in that same stock, buying me more shares, which means my next dividend payment is larger… which means that my brokerage firm is buying even more shares with the next dividend payment.

And so forth.

It’s a benevolent melt-up.

I go about my normal life and my stock portfolio goes about its task of growing ever larger simply through the process of reinvesting the dividends I receive from the high-quality companies I own.

I picked up on this strategy years ago. Decades ago, really. I can’t remember which investment book it was that I read sometime in 1989, when I was in my first job as a young reporter at the Monroe News-Star World newspaper in north Louisiana. The message the book shared was basically: “Hey, muttonhead! Take all those dividends you receive and put them back to work in the same company. Trust me, you’ll be glad you did. Thank me later.”

Granted, that’s a very loose approximation of the real verbiage. But it’s a clearer message.

So, I began reinvesting my dividends in just about every single stock I own across multiple accounts in multiple countries.

Then I moved on with life and over time good things happened. 

One example: Those shares of Abbott Labs I own. I now have 42% more shares than I started with. Which is particularly relevant because Abbott Labs’ shares are up nearly 10x from where I bought them… so all those extra shares I now own, trading at a price almost 10x my original cost, means a big ol’ chunk of wealth in my brokerage account.

Another example or three: I have 43% more Altria shares… 22% more Pfizer shares… 31% more shares in Vale, the big Brazilian miner. I could go on. But you get the point.

As I noted in passing, I apply this strategy everywhere in the world that I have or have had brokerage accounts. Which is why I have nearly 100% more shares now in a particular real estate investment trust I’ve owned in Hong Kong for years.

I do this overseas in particular because my granny’s “money at work” notion does double duty relative to my long-standing belief that the US dollar is heading lower for all kinds of reasons I’ve discussed here across numerous Field Notes dispatches.

In the tiniest of nutshells, the Trump administration has stated it wants a weaker dollar, Uncle Sam is morbidly obese with debt, and foreign investors are increasingly pulling out of US assets because they feel they cannot trust the current administration to abide by anything that might even be considered vaguely adjacent to the “rule of law.”

Best, the foreigners’ thinking goes, to just get out… in case I can’t get out later.

All of that means the dollar’s value declines relative to other currencies. You can see what that looks like right here… a chart of the US Dollar Index (DXY):

I know the numbers are impossible to see. But the numbers are not important. That red box is. That’s the index since peaking in January. It’s down nearly 10.5%—a HUGE move in the currency markets.

As the dollar declines vs. other currencies, dividends that I collect in foreign currencies buy me more and more dollars here at home. So even if the dividend itself doesn’t go up in local currency terms, the fact that the same amount of dividends is buying me more and more dollars back home means that I get a yield boost just because the dollar is heading lower.

That’s what I mean by “double duty.” Not only am I collecting chunky dividend payments to begin with, I’m pocketing a yield boost simply because the dollar is in a down cycle that’s likely to last through the end of this decade.

Which goes to my biggest message today: Own yourself some foreign dividend stocks, particularly in industries with rock-solid, inelastic demand from businesses and consumers.

Those are a big part of my upcoming, fully revised Retirement Income Masterclass. I’ve given this Masterclass a few times over the last couple of years, but this is the first version of the class in which I have felt truly compelled to focus strongly on foreign dividend opportunities.

It’s not a political statement to say that the Trump administration is out to turn the dollar into a 98-pound weakling. Reversing America’s long-standing “strong dollar policy” is a stated goal of the administration because it sees a weak dollar as a path toward rebuilding America’s manufacturing.

Whether that strategy works or not is a very different story. But the pursuit of that strategy is all I really care about, because it means the dollar will weaken out of political expediency.

And if the government is telling me it wants a weaker dollar… then I say “You do you, Boo Boo,” I and my subscribers will go look for ways to benefit and to protect our spending power.

So, I have fundamentally changed a big portion of the Masterclass to reflect this shift and to chase big dividends in places like the UK, Hong Kong, and Canada.

It’s “money at work,” just with a different accent.