Guide to Dividend Investing
An interesting new e-book on dividend investing has recently been published. While there are a number of books available that cover dividend income investing these are almost all exclusively aimed at US investors.
The new 90-page Guide to Dividend Investing is especially aimed at UK and expat savers, investors and (future) retirees interested in investing in London-listed shares. It shows the important role dividends play when building wealth on a solid footing.
Investors are rightly drawn to dividend income. For the last 30 years over 90% of total returns in the UK stock market can be directly attributed to dividends and dividend growth (Source: SocGen as at 31 December 2010).
Returns from savings and investments have been on the minds of many savers, investors and retirees in recent years, for good reason. Austerity measures, inflation, higher taxes, poor salary prospects and depressed investment returns have increased the appeal of varied, regular and increasing income streams.
The Guide to Dividend Investing details a straightforward system of investing in high quality blue-chip companies with reliable dividend histories and prospects. It discusses what to buy, when to buy and when to sell a company’s shares when its dividend yields instruct you to do so.
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Here’s a snapshot of the content…
• The guide first talks through the basics – what a dividend is (and isn’t); why, how, and when companies pay dividends; why some companies pay large dividends; and why high quality companies are able to pay increasing dividends while other cut their dividends at the first sign of trouble.
• How dividend income investing works… how to find historically undervalued shares, how to avoid “dividend traps”… profit from compounding and re-investing your dividends… choose better dividend shares with safer dividend yields… when to sell… and much more. All explained using a real-life example – the extraordinary dividend payer British American Tobacco Plc.
• Focuses on the importance of quality when considering dividend-paying companies, as well as the ability to buy these companies, when they are historically undervalued, as well as lock in profits when they have become overvalued.
• Provides an introduction to the powerful formulae on which the author’s valuation metrics is based for finding historically undervalued companies, as showcased by Tesco Plc.
• Introduces DII Snapshots – mini reports based on exactly the same valuation methodology used for Dividend Income Reports and the author’s own Dividend Income Portfolio, including information whether a dividend paying company is currently historically undervalued, overvalued, or, somewhere in between.
• Finally includes a resource for further recommended reading of 55+ books on value and dividend income investing.
The Guide to Dividend Investing demonstrates that by understanding the historical dividend-yield pattern of a company, an investor will be better informed as to when a company is, genuinely, historically undervalued, overvalued, or, is trading somewhere in-between.
The Guide to Dividend Investing should be appealing not only to novice investors but also to more seasoned stock pickers with its wealth of information on dividends. It also provides clear guidance on what to buy, when to buy and when to sell.
The Guide to Dividend Investing is written by Steven Dotsch who also maintains the site Dividend Income Investor.com.