Dave Van Knapp of SensibleStocks.com has just published a new e-book called The Top 40 Dividend Stocks For 2008: How (and Why) to Build a Cash Machine of Dividend Stocks.
Like all of Dave’s work, it presents the case in logical steps that build a staircase to understanding and action. Dave is not about flash and show; he’s about getting the job done.
The book shows:
- What dividends are
- Why they’re a big part of succeeding in stocks
- Characteristics that define the best dividend stocks
- How to create and manage a dividend stock portfolio
- The 40 best dividend stocks for 2008
From page 10:
In 1934, Benjamin Graham and David Dodd wrote in their classic Security Analysis, “The prime purpose of a business corporation is to pay dividends to its owners [emphasis added].” Many investors agreed, considering the possibility of stock price increases to be speculative in comparison to a steady flow of dividends.
But 66 years later, by the end of the bull market of 1982-2000, there was far less interest in dividends among investors. The humongous rise in share prices during the long bull market dwarfed dividends’ contribution to total returns. Many investors’ interest in dividends dropped to near zero.
But times change. The bursting of the bubble from 2000-2002 sobered up many investors. There has been a rekindling in appreciation for dividends. Investors realize that a dividend stock portfolio can lower risk, grow principal, and steadily increase income over time.
Dividends are stocks’ secret weapon. Studies show that — despite their relatively small contribution during the bubble years — dividends have accounted for half or more of the total return of the stock market over very long terms. This may be surprising considering how little publicity dividends get. There is no widely followed dividend index that gets the kind of publicity bestowed every day on the Dow, the S&P; 500, and the NASDAQ — all of which reflect price changes only, and therefore give a very incomplete picture of “how stocks are doing.”
Dividend stocks are attractive as a core investment for anybody. Common misperceptions are that dividend stocks are slow-growing, boring investments; that a company’s payment of dividends is a sign of weakness, that the company cannot think of anything better to do with the money; and that dividend stocks are good only for retirees needing income. These are all incorrect, unless you consider steady income and wealth-building to be boring.
In fact, dividend stocks may just be the best investment that anyone can own.
Dave explains his Easy-Rate scoring system for assembling the best dividend stocks. It looks at earnings, revenue growth, debt, and dividend history to assign points based on their values. A stock’s points make it easy to see if it’s Excellent, Good+, Good, Fair+, Fair, Poor, or Bubble.
Dave then runs his own system to come up with the top 40 current dividend stocks, presented in four tables for easy reference: alphabetically, by quality score, by total score, and by current dividend yield.
You may be surprised by some of the stocks not on the list. A sampling from that group:
- Boeing (yield too low)
- Citigroup (average 5-year return too low; cut its dividend)
- ExxonMobil (yield too low)
- Pfizer (made list of finalists but was outscored by others)
Among the 40 winning stocks, the highest yield is 9.0% and the lowest is 2.1%. The book includes completed Easy-Rate Scoresheets for each of the 40 winners.
To read more about the power of dividend stocks and the book itself, head on over to its page at SensibleStocks.com.
