The Latest Dividend Playbook from Josh Peters, CFA

Peters begins in the Introduction by introducing his favorite investor, Marjorie Bradt.

No, you’ve never heard of her. She was a client of the brokerage for which he once worked as an assistant. Ms. Bradt’s father gave her about $ 6,000 worth of AT&T stock in the late 1950s and early 1960s. She enrolled in AT & T’s dividend reinvestment program, and simply kept the stock. and continued to reinvest dividends. In 1984, a court ordered AT&T to separate from the “Baby Bells,” and several companies have since spun off. Most of them pay dividends that she continued to reinvest. By 1999, his portfolio was worth more than $ 1 million. Interestingly, given the subject of this book, Peters does not tell us what his annual dividend income was.

I must wish you could have given us more information about Mrs. Bradt. Did you even remember that you owned these shares? Have you ever been tempted to liquidate the shares? At some point, she and her husband must have felt the need for more money. Why didn’t you add more money to the portfolio?

Still, it’s a great story. It’s not easy to double, because $ 6,000 was a lot of money in those days – a respectable annual income for the middle class, believe it or not. And because the AT&T story is unique. Not all actions would have worked so well, even for forty years.

Unfortunately, Peters himself doesn’t show that much patience. Mention the sale of stocks that don’t meet your expectations.

And he is very interested in the analysis of individual stocks. At first you discount the value of mutual funds and exchange-traded funds, and then you criticize the concept of diversification, which, of course, is why investors invest their money in mutual funds and exchange-traded funds.

I find this a bit strange in a book by a Morningstar employee, which was founded to provide investors with guidance on mutual funds. (Peters is the publisher of Morningstar DividendInvestor, your dividend investing newsletter.)

And this is the weakness of the book, in my opinion. The author is a financial analyst and clearly understands a lot about companies that generally pay dividends and how to calculate their numbers.

However, this makes the whole process seem very difficult for the average investor who is not a CFA. They may spend many hours of their free time trying to duplicate what he does and will not come close. They don’t get paid to do it as a full-time job, like him.

Most readers won’t even try. Either they will forgo the investment of dividends or they will subscribe to DividendInvestor to receive advice from Mr. Peters on a regular and ongoing basis. And it’s hard to believe that anyone at Morningstar, whether it’s the author or not, isn’t expecting that result.

I salute the author for making a point that I thought only I understood: that investment risk is not price volatility, but real-world events that force companies to cut or stop paying dividends.

Still, I recommend this book to anyone wondering if investing for dividends is a good idea.