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Buy itMany people believe that the key to success in the stock market is buying low and selling high. But how many investors have the time, talent, and luck to earn consistent returns this way? In The Ultimate Dividend Playbook: Income, Insight, and Independence for Today’s Investor, Josh Peters, editor of the monthly Morningstar DividendInvestor newsletter, shows you why you don’t have to try to beat the market and how you can use dividends to capture the income and growth you seek.
| Publisher | Wiley |
| ISBN | 0470125128 |
| Features |
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| Format | Hardcover |
| Author | Morningstar Inc.,Josh Peters |
| EAN | 9780470125120 |
| Label | Wiley |
| Edition | 1 |
| Dewey Decimal Number | 332.6322 |
| Studio | Wiley |
| Number Of Pages | 352 |
| Title | The Ultimate Dividend Playbook: Income, Insight and Independence for Today's Investor |
| Publication Date | 2008-01-02 |
| Manufacturer | Wiley |
Review by J. Calve, 2010-03-10
Index funds based on US stock indexes have performed poorly. Dividend investing and Josh's approach seems to be a better approach. Obtaining income from dividends and dividend growth + capital appreciation seems like a better way of investing than with US stock index funds.
Review by John Buckley, 2010-03-03
I thought I would get new insights especially in light of the current environment. The author knows his stuff but so what. These are extraordinary times and I don't need conventional wisdom. I was hoping for more.
Review by Munir F. Bhatti, 2010-02-09
Although published in 2008, the content in this book (judging by the included information in the text, tables and charts) was authored through 2006. In 2006 and 2007 the markets rose. In 2008, it plateaued and--later that year--it fell off a cliff as we entered the worst worldwide economic downturn in 70 years. As of 2010, the market has recovered a great deal but many companies were nonetheless critically damaged or forced into bankruptcy. With the benefit of hindsight, we can examine the central thesis, particular methods, and specific recommendations of this book and see how well they have held up over the past 4 years. Given the severity of the decline, this should indicate how well the ideas and investment methods would hold up in hard times in general, and therefore how dependable this strategy would be for investing.
What is the central thesis? Josh Peters' compelling idea is that one can purchase companies that pay dependable and growing dividends. These dividends should grow faster than inflation, allowing the investor to depend on stable and growing income during retirement. It's an alluring thesis, and one that seemed highly plausible in 2006. However, of the thousands of companies screened and approximately 26 selected using the authors sophisticated Dividend Drill Return Model, a fairly high proportion have declined in value 30%, 50%, or even 95% while cutting the dividend in half, decimating the dividend, or eliminating the dividend entirely. To use Mythbusters' terminology, we can safely declare the central thesis--that one should retire on dividend paying companies rather than bonds--busted.
In fact, as I write this in early 2010, retirees who were invested primarily in bonds are the ones with dependable income and intact retirement portfolios that are able to swoop into the market and purchase nice retirement villas in Florida, Arizona, and other retirement havens. Bonds would appear to survive hard times far, far better than dividend paying stocks, both generally and specifically those highlighted in the two portfolios mentioned in the book.
The only exception is the consumer staples stocks that Mr. Peters selected--and, actually, consumer staples in general. This sector didn't decline too much, has mostly recovered, and has kept paying its dividend and raising its dividend along the way. Provided that one rejects the other recommended industries and companies (banks, REITs, energy MLPs, and utilities) and limits oneself to consumer staples, then the thesis appears confirmed for this special case.
This is no small point. The book goes to great lengths to recommend banks, real estate investment trusts, energy master limited partnerships, and utilities as industries from which you can mine gems that will pay dependable and growing dividends. If you actually go and compare the stocks highlighted and recommended in 2006 versus their performance over the next four years and their condition today, the insolvency, losses and dividend cuts are enough to strike fear and cold sober reality into the heart of any investor or retiree.
The fact that so many of the selected companies and their industries tanked, not in the distant future, but in less than 5 years also draws into question the forward-looking power of the Dividend Drill Return Model (DDRM) introduced and discussed prominently throughout the work. Peters places great emphasis of the forward-looking power of the method. Given the utter failure to see huge investment losses and dividend cuts just three and one-half to four years later, however, we must conclude that the model has no meaningful forecasting ability.
Having swallowed these bitter pills, the reader can nonetheless find much of value in the work. Mr. Peters' discussion of how companies decided to pay and raise dividends, the use of the DDRM to determine to what extent share buybacks will be possible, and the discussion of the tax treatment of different types of dividend-paying investments are presentations that are rare in investment literature. He is also to be commended for warning investors that it can be better to take the dividends from a company and reinvest them manually in undervalued issues rather than automatically reinvesting in the company that paid them. In this regard, the book and the appendices are valuable information for those serious about seeking to aggregate wealth via capital gains and dividends.
The book also contains advertisement-like language for Morningstar and the Dividend Investor Newsletter. Since I generally regard Morningstar and Josh Peters favorably, I didn't mind this too much. However, it is a bit annoying. If the methods in the book are wonderful and useful, then people will naturally gravitate to the newsletter and Morningstar and there is no reason to plug it so emphatically.
Finally, to some degree the book tries to be a guide in how to beat the market. This is an old saw for investment books and, in this case, the book is not deep enough nor value-focused enough to succeed in doing this. If you plug in the model portfolios, you will see that this is not an approach that will beat the market or even provide dependable dividends.
We can now rate the book:
Central thesis (retire on dividends): one star (busted)
Modified thesis (restrict oneself to consumer staples): five stars (confirmed)
Forward-looking power of DDRM: two stars (many companies that performed will in the DDRM ended up cutting or eliminating the dividend)
Informative nature of DDRM: four stars (forces you to think about the inner workings of the company)
General information on dividend-paying investments: five stars
A way to beat the market: two stars
An advertisement for Morningstar and DividendInvestor: one star
Overall, I rate the book three stars. I hope that, in the years ahead, Mr. Peters can modify and update this book. In the meantime, I would recommend 'The Future for Investors' by Jeremy Siegel as one that takes the modified thesis and runs with it in a way that is useful for value investors, those seeking dividends, and those seeking amazing investment returns.
Review by JLDET5, 2009-06-27
A great explanation on dividends and why they matter. Also an advertisement of his newsletter which I tried out for a few months.
Review by Jeffry E. Labarge, 2009-06-01
This book got me into dividend investing. It has changed my retirement strategy completely. It is a little dated because of the market downturn of late 2008, but the theory is the same. Dividends stocks are even more attractive at the lower prices after the downturn.
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