A quick update for 2018: In the first two quarters since publication, the portfolio in the book has already more than lapped the market, running ahead of the market by a stout 7 percentage points -- in just 6 months. The portfolio will very likely beat the market in its first 12 months since publication. (Together with the portfolio in the author's original book, Investing in Dividend Growth Stocks, the portfolios in the author's books will have now beaten the market at least 12 out of the last 13 years/attempts.)
Among the many thousands of possible investments and hundreds of possible investment strategies, few really work, meaning few really generate good returns with relatively low risk. A dividend growth investment strategy is one of the best, if not the best, strategy for the typical investor.
Why? The math simply works. With these stocks, the math -- from the company's business to its appraisal in the stock market to the returns that the investor earns -- simply works. Everything fits, maximizing your return, keeping risk moderate. With most other stocks, the math simply does not work -- something along the line breaks, ruining your returns.
In Dividend Growth Whisperer, the author distills the very essence of dividend growth investing. The book is short, gets to the point, and can make you a virtual expert in less than a week.
Written for the intelligent investor, the book has six chapters, the first five requiring an hour or so of your time, the sixth requiring about two:
- In Chapter 1, Traits of a Good (Long-Term) Business, the book establishes the key qualitative aspects you should look for in a business. Most businesses fail. There's a reason for this.
- In Chapter 2, Numbers as Confirmation, you will learn about the quantitative signs of a good business. Numbers matter. Management often gilds their company's performance. Unless entombed in outright fraud, the numbers do not lie. But which numbers matter? Not all. A few do. And one is crucial.
- In Chapter 3, Strong Returns, the book segues to the investor and asks, What are the constituents of an investor's return and how do these arise from both the business and the stock market? Three numbers matter here.
- In Chapter 4, Searching for Stalwarts, the book shows you how to find high-quality dividend growth stocks. High-quality dividend growth stocks are a select few, numbering fewer than a 100 or so -- out of 15,000+ stocks. Blindly throwing darts will not work.
- After finding your stalwarts, you must estimate what return to expect. Operating blindly in this regard can decimate your returns. For example, popular stocks do not always generate the best returns. In Chapter 5, The Right Kind of Magic, the author presents an entirely original method that will answer the final question, What return should you expect?
- But of what good is talk in and of itself? In Chapter 6, Examples, the author presents a plethora of examples of very strong dividend growth stocks. Each is studied carefully and thoroughly. And each includes the long-term return that you can expect. As a bonus, this chapter also shows you how to value a dividend growth fund and the stock market itself. The stock market is certainly not a bargain these days!
The book also includes a checklist that you can use to evaluate any dividend growth stock and concludes with the seven keys to make you a top-notch dividend growth investor.
(Please note: This book builds on Parts 2 and 3 of the author's earlier work, Investing in Dividend Growth Stocks. You may consider this book an update to those parts of the earlier book -- with considerably new research, additional stocks, and a brand new way to benchmark and value dividend growth stocks correctly.)
