Streetwise
Lauren Rudd
Sunday, October 18,
2009
The One Investment Guide I Would Not Be Without
“When this old world starts a
getting me down...,” (James Taylor, 1998).
World affairs can get you down. And to make matters worse,
Wall Street has not exactly been a walk in the park of late. Many investors were
either unprepared or too complacent with regard to both the rapid downturn and
subsequent rebound on Wall Street. Nonetheless, this is not the time to cower
behind money market accounts or CDs.
Yes, the recent bear market was a train wreck. Between
October 2007 and March 2009, the S&P 500 index lost 55 percent of its value.
Now, even after back-to-back quarterly gains of 15 percent, the S&P 500 still
needs to advance another 39 percent for the index to simply break even for the
decade.
So what do you do? I have a short-cut you might find
extremely useful and one that might enable you to exceed the return of the S&P
500 index going forward. However, let me preface what follows with the mantra
that stocks are, and always have been, the best investment for increasing your
wealth. The only difficulty is determining what to buy and when. The last point
is easy, anytime and especially now when they are on sale.
Therefore, the only remaining question is which companies do
you invest in? Suppose you had a list of 282 solid high quality dividend paying
companies that have withstood the test of time...would that help? Well such help
is available by means of the Mergent Handbook of Dividend Achievers and it
remains, in my opinion, the single most useful tool for individual investors.
Dividend Achievers is published quarterly by Mergent and
profiles those companies that have increased their regular annual cash dividend
for a minimum of 10 consecutive years. To put things in perspective, less than
10 percent of 3,300 listed dividend paying companies make the Dividend Achievers
list.
Mergent is not content to simply list the stellar dividend
performers. Rather it takes the list and proceeds to slice and dice it in a
variety of ways. For example, it ranks the entire list by total return based on
1, 3 and 5 year increments. Then it lists the top 20 companies in 12 different
categories such as total assets, return on assets, return on equity and dividend
yield. The web site addresses for the companies are also listed.
Yet, the various lists comprise only 36 pages of the book.
The remaining 282 pages are devoted to a detailed description of each company, 6
years of annual financial data along with the two most recent quarters and a
chart of stock prices covering a 10-year period. There is one page per company.
No, I do not have a financial tie-in with Mergent; although
as a matter of complete disclosure I do receive a complimentary publisher’s
review copy.
I have been using and writing about the Handbook of Dividend
Achievers for over eighteen years and I believe it to be one of the few true
bargains in the arena of independent investment research. If you took away my
computer systems, access to the Internet, my telephone and only allowed me the
use of one printed book for selecting companies in which to invest, this book
would be my choice.
For example, if you are interested in knowing which company
has the longest record for increasing its dividend every year, it is a three way
tie. American States Water, Diebold and Procter & Gamble have been increasing
their dividends for 55 consecutive years. And you say you cannot figure out what
to invest in.
What do I not like about the book? Mergent has become quite
commercial with what used to be a relatively inexpensive investment tool. Four
issues per year is probably overkill for many investors. In addition, they have
licensed the Dividend Achievers name to several mutual funds. The beauty of the
book is that you do not need assistance, or a mutual fund, to benefit from what
Mergent has put together.
Mergent is selling the book both as a
one year subscription for $199 or as a single copy for $50 plus a $6 shipping
charge. If you would like to obtain a single copy or a subscription, contact
Mergent at 1-800-342-5647.
