My friend, Dave Van Knapp of SensibleStocks.com, publishes an annual overview of the dividend-paying stock scene for $39. This year’s edition just came out and Dave was kind enough to send me a copy of Top 40 Dividend-Growth Stocks For 2011.
Here’s the table of contents:
In the introduction, Dave says the book’s strategic goal is simple: “To profit by investing in the best dividend-growing companies.” There are three phases in his process:
The first is to identify the best dividend-growth companies. These are ones that:
- Are financially solid
- Have great business models with sustainable competitive advantages
- Have a good initial yield at the time of purchase
- Consistently raise their dividends
- Are relatively low in risk as to both their dividends and stock prices (recognizing that stock market risk can never be fully eliminated)
Phase two is to value the companies so that you can purchase them at fair or favorable prices.
The final phase is portfolio management. The approach presented in this book emphasizes making timely decisions to buy, sell, hold, or replace stocks; maximizing dividend yields and dividend increases within the bounds of sound risk management; sidestepping dividend cuts; and avoiding outright loss of capital wherever possible.
Dave has a good track record at winnowing out the best dividend-growers. His 2009 Top 40 stocks delivered an average dividend increase exceeding 5 percent, and 2010’s selections averaged 10-percent increases. He points out that “most well-selected dividend-growth stalwarts never stopped increasing their dividends during the economic recession and market turmoil of 2007-09.”
After a terrific primer on the benefits of dividend income and buying companies that produce it, Dave outlines the characteristics of the best dividend stocks and then introduces the 2011 Top 40 with “sufficient variety” to “create a well-rounded portfolio” as shown in the following breakdown by sector:
Each of the 2011 Top 40 gets a one-page Easy-Rate Scoresheet for simple comparison, and those follow various lists of the 40 sorted in different ways. Given the many ways of viewing the winners, you’ll have no trouble choosing which are right for your portfolio.
Dave closes with thoughts on how to use dividend-growth stocks in retirement planning, relying on a helpful cistern metaphor. He suggests picturing that your retirement assets “reside in a cistern, with pipes bringing assets in and taking them out.” He says your retirement cistern has two goals:
- You must be able to draw enough from the cistern to fund your retirement adequately.
- The cistern must never go empty. In fact, it must never get even close enough to empty that you lose sleep or worry about the possibility.
With the help of this book, it won’t.
All in all, a fine addition to the annual series. Dave is selling Top 40 Dividend-Growth Stocks For 2011 in PDF form for $39 here. I receive no compensation if you buy it.
2 Comments
thanks for the link. Came through some nice terms on the link you provided. One thing I did not find is if the author had to cut some losses and hence sell some stock.
Hi, I am the author of the e-book. The main focus in dividend-growth investing is maintaining and raising the dividend stream. I never sell to cut losses, although there are circumstances in which I will sell if the dividend is cut or threatened. My list of reasons to sell are detailed in the e-book. The reason I don’t sell to cut losses is that if the price of the stock falls, that has no impact on the dividend stream. In fact, it may present a buying opportunity.
Dave Van Knapp