All About Dividend Investing takes a clear-eyed look at this new environment, then provides a comprehensive, step-by-step dividend-investing approach designed to reduce short-term risk while maximizing long-term growth. This timely book introduces popular methods for screening dividend-paying companies, explains how the new tax laws will affect corporate policy and investor behavior, and more.
Introduction:
The only constant in investing is dividends. It is dividends that give you superior performance in both good and bad markets. It was dividend stocks that investors moved into after the 1929 crash—during the 1940s, 1950s, and 1960s—because of the return that dividends provided. In the last few years, investors have again rediscovered the benefits of dividend stocks. Yes, the only constant in investing is dividends.
The world of investing has changed dramatically, as conventional passive growth stock approaches have failed investors. If they followed the buy-and-hold mantra and stayed the course from 2000 through 2009, investors booked losses of as much as 44 percent instead of gains. The once high-flying NASDAQ growth stock index devastated investors with losses of 44.50 percent over that 10-year period. According to conventional theory, market returns will always bail you out, so investors should not worry about short-term losses. But in reality, this loss of capital makes it difficult for investors to fund their retirement sufficiently and might cause them to outlive their stream of income. Now is the time for investors to back away from conventional approaches they have been taught. Why? Simply because they do not work!
In 2008, investors found that traditional approaches failed them. Portfolio management strategies that were considered sound faltered. The markets defied the tenets of modern portfolio theory, seeing asset classes fall—and fall hard—across the board. Conventional portfolio construction theory has traditionally put forth the notion that asset diversification reduces risk sufficiently to allow investors to buy and hold. Unfortunately, this theory and actual investor experience seem diametrically opposed, suggesting the assumption is fundamentally flawed. To meet the “acid test,” investment approaches must work in both good and bad market cycles. Today more than ever, investors need to pay attention to the evidence indicating that dividend-paying stocks, not growth stocks, should be the foundation on which portfolios are built.
Times and tax laws may change, but fundamentals never change. The fundamentals of investing are
- Dividends can lower risk.
- Dividends can help investors enhance returns when markets are favorable.
- Dividends give investors the ability to achieve positive results even when markets are unfavorable.
Contents:
- The Compelling Evidence for Dividend Investing
- Dividends 101: A Basic Primer
- New Advantages of Dividend Investing
- Head Start for Income Investors
- Advantages for Growth Investors
- Why Conventional Approaches Fail Investors
- Doing Your Homework
- Filling Your Toolbox
- Laying the Foundation
- Building Your Portfolio
- Safeguard Your Capital
- DRIPs, Folios, Mutual Funds, and ETFs
- Staying on Course
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