Carl Icahn has an opinion on just about everything.
Admittedly, he is a career activist investor. That’s someone who wants to bring about a change in a company and buys up enough stock to force value out of it.
This can include shaking up management, demanding sales and downsizing, and overhauling company images. Sometimes all three.
So yes, activist investors are usually pretty opinionated. Yet Icahn manages to stand out anyway with statements like:
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“You learn in this business, if you want a friend, get a dog.”
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“Some people get rich studying artificial intelligence. Me? I make money studying natural stupidity.”
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“Everything I have is for sale except for my kids. And possibly my wife.”
And there’s plenty more where those came from.
Yet that dry derision seems to work well for him. When Icahn buys big into a stock and shakes things up, it tends to go up. Investors recognize his activist “opinions” usually make companies stronger in the end.
There’s even a term for this specific phenomenon: the Icahn Lift.
Here at Intelligent Income Daily, my team and I do our own independent research and come to our own conclusions. But we know the value of taking notice when movers and shakers speak out – especially when it could impact the dividend-paying stocks we base our own wealth-building strategy around.
Today, I want to highlight what Icahn’s current view of the market is, how it aligns with our own, and how we can use it to buy select companies.
“The Worst Is Yet to Come”
The markets dropped repeatedly last week.
On Wednesday, the Federal Reserve put an end to all the speculation… and officially raised interest rates another 75 basis points.
As a result, the Dow fell 522.45 points, or 1.7%. The S&P 500 lost its own 1.71%. And the Nasdaq dropped 1.79%.
Yet even in the middle of that negativity, Icahn was making a bold prediction: “The worst is yet to come.” The way he sees it, “A lot of things are cheap and they’re going to get cheaper” still.
For the record, he’s been warning about that all year. And you know what?
His company, Icahn Enterprises (IEP) saw its net asset value (NAV) gain $1.5 billion – a 30% increase! – between the start of the year and the close of the first half.
Meanwhile, the Dow dropped more than 15%, the S&P 500 lost more than 20%… And the Nasdaq was down almost as much as Icahn was up…
All this shows is that even in the face of gut-wrenching downturns, intelligent investors can come out ahead.
That’s something I’ve experienced myself more than once. Even while my real estate investment trusts (REITs) – my favorite kind of dividend-paying stocks – were having a miserable 2020 in terms of performance, I recommended my readers buy into many of those intensely undervalued companies.
Then in 2021, I helped them capitalize on the sector’s intense, market-beating surge.
It really all depends on what you know, when you know it. That and whether you’re willing to act on it even in the face of so much fear.
A Win-Win Situation
That’s why I’m hailing Icahn’s opinion as a win-win situation for many dividend-paying stocks.
For starters, a market filled with this much fear is one that’s bound to trend toward value over growth. Investors are already turning to safer stocks and will continue to do so the more negative sentiment gets.
That will ultimately boost dividend share prices – probably by a lot.
For example, value stocks saw great gains in the aftermath of both the recklessness of the dot.com boom and the housing bubble. When crisis strikes, people tend to run to safety, after all.
But my strategy isn’t just about buying up any old dividend-paying stocks at whatever price. I want the best, most sustainable assets at bargain prices.
That way, not only can we make money off their dividends… we’ll also make money from the stocks themselves.
Now, yes, Icahn could be right that the markets are going to lose more from here. However, like him, I believe in evaluating each company individually to see if it’s a good buy in the moment.
Take Boston Properties (BXP), a REIT that operates 193 attractive office buildings in key U.S. cities, while also developing more life sciences and residential properties. That healthy business (with a strong balance sheet, earnings growth focus, and limited near-term lease expirations) allows Boston Properties to offer investors a $3.92 per-share annual dividend.
Some could accurately claim it’s in the investment doghouse, trading at $75.53… after starting out the year near $120. But the company stayed strong, maintaining its dividend despite the 2020 lockdowns.
So, I’m confident it can take on whatever is still to come.
In the meantime, we can enjoy that dividend and the juicy – though healthy – 5.08% dividend it’s currently sporting.
In short, I see a whole lot to love and not much to lose. And like Icahn, I see the benefit of acting on strong companies when they’re out of favor.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily