Seeking Alpha's First Millionaire

May 31, 2019 7:00 AM ET221 Comments80 Likes
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Summary

  • Congratulations to Rida Morwa and High Dividend Opportunities!
  • The Marketplace service just passed the $1M/year milestone.
  • Below, we talk to Rida about the growth in High Dividend Opportunities, what it’s like to run a Marketplace community, and how High Dividend Opportunities has evolved over time.

by Daniel Shvartsman

Rida Morwa’s service, High Dividend Opportunities, achieved a major milestone this April, becoming the first service on the Marketplace to reach $1M in annual revenue.

We launched the Seeking Alpha Investor Marketplace in April 2015 to empower authors to create specialized investing services that could offer guidance, research, and analysis to readers looking for more. Since then, the platform has grown and now hosts host over 170 services with over 11,000 subscribers. And the platform now has its first million-dollar service.

I asked Rida about the milestone, the evolution of High Dividend Opportunities over the years, and what he’s learned from running the business.

Congratulations on hitting the $1M mark in annual recurring revenue with High Dividend Opportunities! What led you to start writing on Seeking Alpha and then to launch on the Marketplace? What were you hoping to get out of it?

Rida Morwa: Thank you! Starting High Dividend Opportunities (HDO) was the result of two passions I have, which are investing and writing. I have been a high-yield dividend investor since the age of 18 when I opened my Schwab account while I was attending college at Indiana University. High-yielding stocks have always appealed to me because they pay you money no matter how the market goes.

I always liked the idea of receiving fixed paychecks from my investments, and this became one of the greatest passions in my life. Over time, I learned the best methods for researching high-yielding stocks and securities and to understand why the yield is so high and assess the safety of the dividends.

Investing in high-yield dividend stocks has an unfair advantage over low-yielding dividend or non-dividend stocks. As long as you are cashing on those paychecks, you do not have to worry much about the emotional and sometimes irrational market moves from day to day. While other investors are hitting the panic button, high-yield investors can collect their dividends, live on them, and/or use that cash-flow to buy at market lows. This is why being an income investor is so rewarding.

When I started HDO, it provided me an opportunity to share with other investors what I have learned over the +30 years of investing: How to generate stable and safe income. I also get to interact and know hundreds of people I never would’ve otherwise, and I get to see them share in our success!

When did you launch?

RM: We launched High Dividend Opportunities in January 2016. This is the 4th year we have been offering the service on Seeking Alpha.

How many subscribers do you have?

RM: In May 2019, we reached a new milestone with over 2500 members. We are working together with the objective to generate safe and steady income.

What will it cost me to join?

RM: As of June 1st, the base cost of the monthly plan is $64/month and the annual plan is $509/year. We encourage members to take the annual plan which results in 34% savings. It is worth noting that these rates are grandfathered for life, which means those who join based on the annual plan lock this rate for life, regardless of future price hikes.

How would you describe High Dividend Opportunities to someone who hasn't heard of it before, in basic terms?

RM: High Dividend Opportunities, or HDO, is a large community of income investors and retirees who interact together and with our team of analysts to learn and share investment ideas. I like to think of it like a family of income investors. We seek out and invest in the best dividend-paying opportunities in the market that will generate high immediate income for reinvestment or living revenue, with a target yield of 9% to 10%. Our average yield for the last 3 years has been well over 9%. Essentially, we find high quality choices that produce the income our members live off or reinvest. We make it easy for investors by providing several income tracking tools, including our Portfolio Tracker and importantly, our Dividend Tracker which helps our members know exactly when to receive their next dividend paycheck.

What has surprised you most in your experience running High Dividend Opportunities?

RM: After all these years I am both excited and humbled by how quickly we’ve grown! The growth of HDO has picked up rapidly because of our unique income generating method, which has been very successful. In short, our method consists of pairing conservative high-dividend, lower-volatility stock picks, with super high-dividend picks yielding over 10%. Overall, the results have been great. The total portfolio volatility has been relatively low and the cash flow stream for income investors has been solid and consistent. Earning cold hard cash in your account is our specialty and we focus on exactly this.

How has the growth of the service affected your investing approach or how you consider the market?

RM: With such a large service, working as a team is more important than ever. High Dividend Opportunities has grown as a team, and now has six different authors with extensive experience in income investing. Each one of us specializes in specific sub-sectors of the high-yield space in order for us to cover the needs of all of our members. We also have been growing our administration team to help support members’ questions and requests. Our team works great together and we complement each other. This is what makes HDO such a successful service.

At first, High Dividend Opportunities was mainly attracting income investors. But recently, many of our members are growth investors too. Some investors had for years been trained that investing for capital gains, or counting on the price change of a security, was the best way to see your wealth grow. At HDO, we’ve spent countless hours educating our members and the public that high-yield investing produces phenomenal long-term results. This is especially true today as we are faced with the prospects of a slowing economy. Investors can no longer rely on growth stocks to generate high capital gains that we have seen in the past. With a slowing economy, value stocks tend to outperform, and this is why our portfolio is overweight high-yield value stocks that do not depend much on the state of the economy. The vast majority of our recommendations are stocks and funds that we believe are well positioned to generate high income in both good and bad times. We recently have shifted our portfolio with the hope to ‘recession proof’ it and ensure that the income will keep flowing in both good and bad times.

What do you think has driven the success of the service over the past 3+ years?

RM: Several factors have driven the success of our service. First of all, a lot of hard work and dedication. Also very important, is the experience that our experts provide to our members. I have been investing for 35 years now, in both equities and real estate, and I have seen all of the economic cycles and the real estate cycles during that period. Today, there is a whole generation of investors who have never seen a bear market and do not know how to prepare for it. This is where my role comes as the leader of our team. One of the biggest value adds to our members is to monitor the macro economy and market conditions to stay ahead of the game. This means that we stay fully invested when the economy is doing well, and take a more defensive position when recession risks rise. I always remind our members that keeping the macro-economy in check is more than 50% of the due diligence required to be a successful investor.

Another point to note is that High Dividend Opportunities is not a one-man show, but a team of experts. This has been a specific value of HDO from the get-go. It allows us a broader scope in the high-yield market. From the beginning I realized that I can’t cover the entire high-yield market on my own. So I have carefully created a team of experts – the best in their fields – committed to work together in order to bring our members the best high-dividend ideas. This diversity of expertise has helped drive our success.

I strongly believe that collaboration helps bring out the best in people. Everything we publish at HDO is a product of collaboration between at least two of us, and often more. The result is a product that is substantially superior to anything any of us could have produced individually. Our subscribers aren’t hearing one voice in the desert, but have access to a group of experts who are in constant communication and working together to find, research, and monitor the best high-dividend opportunities.

What advice would you give to a new author starting out on the Marketplace or considering launching a Marketplace service, or just writing on Seeking Alpha?

RM: For a new contributor, it is essential to find your passion. Many writers cover various securities in an algorithmic way that sounds forced or robotic. Having passion for what you are writing about will come through in your writing and it will attract readers. Having a passion for the topic will also drive you to want to research and write more. Those who are writing just for the sake of making money will produce a boring and uninspired product, and can result in losses if not well researched.

For a new Marketplace service, the goal is to take your ideas out and present your view in a compelling way to another individual. Why should they want to hear what you have to say? Can you back it with previous success? Although many of our calls have been successful, nobody gets it 100% all the time. Overall, our service over the past three years has achieved our targeted aims, and this is what matters most.

If you have a compelling message and a successful investment methodology don’t give up. I’ll also add that you shouldn’t be afraid to work with like-minded contributors. One voice is strong, but two can be very powerful.

What are you most looking forward to in 2019 and beyond on HDO?

RM: I’m excited to see our continued growth and the value added by our new experts. Authors Beyond Saving (our Lead REIT expert) and Treading Softly (our lead Immediate Income expert) have already brought valuable expertise to our service, and interact with our members on a daily basis to provide the best guidance possible! Authors PendragonY (our Dividend Growth and BDC Expert) and Preferred Stock Trader (our Fixed Income expert) have been instrumental for the development of our all preferred and bond portfolio.

As a team we look forward to seeing our success in both good and bad economic times. We are helping our members enjoy a successful investing experience through our model portfolio recommendations and the follow up that we provide! Together the HDO team and our members work as a family and we will continue to invest and succeed together – I always look forward to that and of course I’m always excited and on the look-out for more high dividend opportunities the market presents in the coming couple of years!

You have a big community. What does someone new to HDO get once they sign up to help them catch up with everything in your service?

RM: We make it easy for new members to catch up on our system. First, as soon as someone joins our group, you get an email with a link to our Welcome New Members report. This report provides links to our latest portfolio updates, and our model portfolio google sheet. The model portfolio includes our Core Portfolio targeting 9% to 10% yield. For our conservative members, we provide an income portfolio with lower price volatility consisting of our best Property REIT Picks, our Preferred Stock Portfolio, a baby bond portfolio, and a regular bond portfolio. For each investment, we provide recommended maximum allocations and recommended “Buy Under” prices.

New members often come to our lively chat room to ask for help in case they have a particular question. Between us 6 authors and other long-time subscribers, new members get an immediate reply to any questions they might have. We often hear that our chat room is one of the most unexpected added-value of HDO membership, providing the opportunity to direct specific questions to our experts or to just get general opinions from other members.

Importantly, new members also get free access to a variety of tools to assist them, including our Portfolio Tracker which helps them track their dividend holdings, and a dividend tracker which lets them know exactly when to expect the next dividend. After all, we are all income investors and the next dividend matters to all of us!

People often ask, if you’re such a good investor, why not just trade your own account rather than running an educational service. What’s your answer to that question?

RM: First of all, we are investors for the long run, and not traders seeking quick gains. We also eat our own cookies. Imagine for a second visiting a high-end restaurant, they offered the very best seafood, pasta and steaks - or so they claimed! But after being there a short time you come to find out that the head chef and the kitchen staff refuse to eat there! Would you want to eat there, or where they choose to eat?

At High Dividend Opportunities, we're not pointing out securities for someone else to invest in. We're point out securities that we are personally investing in and have a stake in our recommendations. This does not only apply to me personally, but also to the six co-authors. This makes our success much more enjoyable. When we make money, our members make money too, and this is a very rewarding feeling!

I'm an investor. Why should I consider joining HDO or one of the other Marketplace services rather than just doing it myself using the large collection of resources on Seeking Alpha or other free tools available to investors?

RM: Our objective is to make it simple for members. We provide a model portfolio targeting 9-10% with recommended "buy under" prices and recommended percentage allocation to each security. A great added value to our members is that they get immediate "buy alerts" for dividend stocks that we believe are undervalued, and they also get sell alerts to take profits or in case of change of our outlook for a particular stock. These alerts are only available to our members.

Furthermore, we provide a wide range of tools to help income investors which are not available on the free site. For example our portfolio tracker (free for members) helps investors keep track of their positions and also keeps the recommended allocations in check and warns in case the allocations have been exceeded. Furthermore, we offer our members, a dividend tracker (also free for members) which helps you know exactly when to expect your next dividend or paycheck. These tools are only available to our members.

On a final note, we are currently offering a 2-week free trial, and I would encourage readers to take it in order to have a look at our investment strategy and stock picks. I am confident that you will like the service, and that we can help you generate a higher and safer level of income!

***

We’re excited about the success Rida has achieved, and congratulate him and the team. We don’t expect it to be the last service to hit the $1M mark. We have many services providing valuable advice to readers, as evidenced by their feedback, reviews, and yes, subscription dollars. We hope and expect that to continue to grow over the years to come.

If you’re interested in checking out one of our services to see how it might help you, you can go here. And if you have a pitch for our next $1M service, email us at premiumauthors@seekingalpha.com, we’d love to hear it and see if we can get you on your way to the same end.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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