All About Dividend Investing by Don Schreiber and Gary Stroik, McGraw-Hill 2004

This paper back covers the basics of dividend investing fairly well. However, the examples and data are American…rather useless to us. If you have been buying common stocks which pay dividends and experiencing dividend growth for a few years, you will not find to much new here. The authors have not developed the ideas behind dividend investing to the level we have. A novice investor, however, could find this book useful.

  1. Compelling Evidence for Dividend Investing - this chapter includes ideas like: “you can bank on the return you get from dividend payments”; “Dividends arrive every quarter, pretty much without fail.”; “you do not have to sell the stock to get the dividend”
    The authors outline five reasons why dividend investing works so well for investors. Here are three:
    “Dividends provide a steady stream of income.” I would be inclined to put it this way instead: dividends can provide an increasing stream of tax advantages income.
    “Dividend stock prices increase over time.”; Alternatively, I would say: As the dividend increases, so does the stock price. “Dividend-paying stocks generally have lower price volatility.” It's true: dividends put a floor under the price.
  2. Dividends 101 - A Basic Primer is a good chapter for beginners. It starts off, for instance, with the heading: What are Dividends?
  3. Chapter 3 is mostly about the new American law reducing tax on certain dividend income. I skipped it.
  4. Head Start for Income Investors - Among other interesting topics, in this chapter the authors cover the traditional sources of retirement Income: Systematic Withdrawal Plans (a precarious way to meet income needs), Fixed Income Investing (“these investments don't keep pace with inflation”) and Dividend Investing.
    Three categories of yield stocks were outlined: low yield, medium yield and high yield. I divide dividend-paying common stocks somewhat differently: low yield with higher dividend growth, medium yield with medium dividend growth and higher yield with poor dividend growth. I disagree with their summary dismissal of the low-yielding category. Many of these issues have double digit dividend growth and deserve a place in certain portfolios.
  5. Advantages for Growth Investors - “Total return is made up of two parts: price appreciation and income. A security that goes up in price by 5 percent and pays 5 percent in income adds as much to the financial pot as one that goes up by 10 percent in value, but pays no income.”
  6. Doing Your Homework (thirty pages) is about analyzing a company's financial statements and does a good job covering the basics: the balance sheet, assets, liabilities and equity; the income statement and the statement of retained earnings. It also covers ratios, basic financial metrics and has a few pages on resources.
  7. Filling Your Toolbox covers more basic ideas for beginners. Screens and standards, for example, as well as your investment policy statement, dividend yield and dividend safety. The authors don't like preferred stock for the same reasons I don't: the dividend rate is fixed and holders do not participate in company growth.114
  8. Portfolio design is the topic for most of the 18 pages of Chapter 8. I found it most interesting to compare what I do to what these two planners advise. They put 70% of the portfolio into dividend-paying stocks and another 14% into dividend-paying tactical choices. Their pie has a small portion of cash ( to hold incoming dividend and wait for opportunities) and a 14% slice for what they call noncollelators (bonds, real return bonds and commodities 131-133). They divide the dividend payers up into five slices of 14% each: value, growth, quality, yield and overall best. I design my portfolios differently. I try to get value and quality with every purchase of common stock. I define three tiers of common stocks in my portfolios: common stocks with high yield for maximum initial income but little or no recent dividend growth, stocks with moderate yield and normal dividend growth (4% or so), and stocks with lower yield and higher dividend growth (double digit).
  9. Building Your Portfolio seems to be about ranking criteria. I found these ideas a bit involved: they confused me. Possibly this is because it's been over four decades since I obtained my Bachelor of Commerce. However, there are some good ideas on page 148, patience, for instance.
  10. Safeguard our Capital, is about stop loss orders. As I've never used a stop loss order in some four decades of common stock investing, I skipped through this chapter rather quickly. If you purchase a dividend paying common stock at a reasonable price, the dividend is your stop loss. When the price of a dividend-paying stock falters, the yield increases. Investors step in and bid the price back up…especially if the common stock has a good record of dividend growth.
  11. Chapter 11 is about DRIPs, Folios and Mutual Funds. I did not read it.
  12. Midway through a book, I usually jump to the final chapter for a summary. I did not find the final chapter of All About Dividend Investing useful. Maybe you will.

This book is not referenced. It does, however, have an 18 page glossary.

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