Three Reasons Why Dividend Growth Investors Are Quite Savvy by Brian Nelson, CFA
There are many different approaches to investing, but we think dividend growth investors are quite savvy, especially when they combine a rigorous dividend growth process in the form of the Valuentum Dividend Cushion with the valuation rigors behind the Valuentum Buying Index. Let’s examine the three reasons why we think dividend growth investors are a smart group.
#1. Fool Me Once, Shame on You…Fool Me Twice, Shame on Me
Today’s dividend growth crowd has seen enough. First, they witnessed the dot-com bubble (1997-2000), a period in stock market history where firms’ stock prices soared in some cases as a result of just adding an “e-“ prefix to their names or a “.com” at the end. Today’s dividend growth investors then witnessed these same firms’ share prices fall precipitously (Infospace’s shares fell from $1,305 to $22 each), and in other cases, saw complete company failures (Pets.com, Boo.com, GovWorks.com).
Shortly thereafter, today’s dividend growth crowd heard about the Enron scandal and the dissolution of Arthur Andersen, followed by Worldcom and Tyco International–unfortunately, the list goes on and on. The accounting scandals added to the distrust of companies that was only exacerbated by the conflicts of interest brewing within the global financial system. Today’s dividend growth investor was nearing the breaking point.
The Global Settlement in 2003 finally separated the investing banking and analysis departments at the largest investment banks, but this wasn’t enough. Today’s dividend growth crowd still doesn’t believe sell-side research from investment banks is completely free from conflicts of interest. After all, how could it be when sell-side researchers still get paid based on commissions crossing their trading desks? Today’s dividend growth crowd knows that sell-side analysts are just that: sales people. Today’s dividend growth investor only trusts independent research from firms that are free of bias, firms like Valuentum.
If that weren’t enough for today’s dividend growth crowd to completely abandon the stock market, they witnessed the real estate bubble…
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INSIDE THIS ISSUE
1 Three Reasons Why Dividend Growth Investors Are Quite Savvy
3 McDonald’s Modest Dividend Growth (ticker: MCD)
3 Assets Need to Go: Vale Edition (ticker: VALE)
4 Packaging Corporation of America Bets Big on Boise (tickers: PKG, BZ)
5 Our Dividend Growth Portfolio
7 Biglari Wants to Create More Value at Cracker Barrel (ticker: CBRL)
9 Demand Remains Modest at Emerson Electric (ticker: EMR)
10 Stocks with High VBI Ratings and Strong Dividend Growth Prospects (see article for tickers)
11 Our Dividend Growth Watch List
12 Yields to Avoid
13 They Like It. They Really Like It! Reviews Praise New iPhone (ticker: AAPL)
14 New Management Will Not Change Realty Income (ticker: O)
15 Microsoft Raises Its Dividend in a Big Way (ticker: MSFT)
16 Why We Don’t Like Dividends of Banking Firms: 4 Very Good Reasons (see article for tickers)
19 About Our Dividend Cushion™
22 Featured Reports: EMR, MSFT, WMT, MDP
26 Our Valuentum Buying Index
29 Valuentum Definitions