Their Pitch

Imagine if you owned a money machine… automatically cranking out cash for you day-in and day-out?

And not only that… the machine reproduces itself. It breeds more little money machines — and they’re all working 24/7, making money for you.

Sounds fantastic — or at least illegal — doesn’t it? But in a very real sense, that’s just what happens when you buy dividend-paying stocks and reinvest the dividends.

Hard to believe? Just look at these examples…

• Pepsi — $2,000 invested in Pepsi in 1980 is now worth more than $200,000.
• General Electric — $2,000 invested in General Electric in 1980 is worth just under $160,000 today.
• Johnson & Johnson — $2,000 invested in Johnson & Johnson in 1980 would be worth $147,000 today.

You’d have a portfolio now worth close to $507,000, starting with a total investment of only $6,000. And your little $6,000 investment is generating $14,000 every year in dividends. You’re earning over double your original investment in dividends alone!

If you think that dividend payers are just for retirees, then think again, they are beating the market too. According to Standard & Poor’s, for the first 12 months ending May 31, 2007, dividend-paying stocks returned 23.75%, compared with -20.5% for non-dividend payers.

On top of that, thanks to a recent change in the tax law, dividends are now taxed at only 15%. Compare that to interest on your savings, CD, or money market account that is taxed as ordinary income — up to 35%!

So we at Motley Fool Income Investor believe that building a long-term fortune simply requires these two steps:
1. Buy the best dividend-paying stocks, and
2. Reinvest the dividends.

Reinvesting the income is easy, but can Motley Fool Income Investor find the best dividend-paying stocks? Well overall, the Income Investor selections have produced a total return of 19.25% versus 9.98% for the market as of April 14, 2008. Our subscribers are also enjoying an average dividend yield of 5.47%, all the while suffering far less business risk and volatility. This is not cherry-picking. This is an average return of all of the picks — the big winners and the losers. When you figure the returns on a risk-adjusted basis, they are even better.

Motley Fool Income Investor is a complete system that makes it simple for you to build a powerful wealth-creating portfolio and there’s never been an easier way to start building wealth than with Motley Fool Income Investor. We would like to give you 30 days of FREE, unfettered access to our Income Investor members-only website. There, you can read our most recent issue and soak in all past and current reports, recommendations and issues.