Day Job: Retired attorney
Strategy: Income stocks
Ten-year Average Return: 7.7%
Top Picks: Enterprise Products Partners (EPD); Williams Partners (WPZ)
In 2004, at age 58, doctors told attorney Jane Freeman that her pneumonia had caused brain damage and that she’d never be able to drive or balance a checkbook again, let alone practice law. So after 43 years in Colorado she was forced into an early retirement and moved to “God’s waiting room” Florida. Thanks to opportunistic real estate investing while living in Colorado Springs, her brokerage account stood at $2 million, but all she could expect from Social Security was about $900 per month. Freeman went to work learning about investing online at various websites, including message board Valueforum.com. Her goal was to be able to provide at least $100,000 per year in income, without having to eat into her principal. Today her brokerage accounts stand at $3 million, she takes two vacations a year and is already prepaying for two of her six grandchildren’s college educations.
STRATEGY: Freeman spends nearly all of her time researching high-yielding dividend stocks that will pay her at least 6%, plus have a history of consistent dividends and forecasts of increases. She focuses on 20 stocks, and a third of her holdings are concentrated in the dividend-friendly stocks of companies controlled by Norwegian shipping billionaire John Fredriksen (Freeman is also of Norwegian descent). Exercising her shareholder rights, Freeman travels to Bermuda each year for Fredriksen’s annual meeting, where she politely but firmly asks hard questions. Next year she’ll ask why he cut the dividend on Seadrill and when he’s going to raise it. Occasionally she wakes at 3 a.m., when the Norwegian stock market opens, to read Norwegian newspapers, visit shipping site Tradewinds and do some research before the trading day begins.
2015 BEST IDEAS: Despite oil’s decline Freeman likes pipeline MLP Enterprise Products Partners (EPD, 37). Its profit grew 18% in the last quarter, and it’s positioning itself for export of U.S. natural gas and propane by expanding docks and terminals. It’s been her most profitable MLP, and although the dividend is now 4%, down from 8%, it has never missed a payout, and she’s holding on. Williams Partners (WPZ, 50) is another natural gas MLP she likes. It has a 7% dividend yield and a growing presence in the lucrative Marcellus Shale.