The Ultimate Dividend Playbook by Josh Peters, CFA


Mr. Peters begins in the Introduction by introducing his favorite investor, Marjorie Bradt.

No, you’ve never heard of her. She was a client of the brokerage she once worked for as an assistant. Mrs. Bradt’s father gave her about $6,000 worth of AT&T stock in the late 1950s and early 1960s. She signed up for AT&T’s dividend reinvestment program and just kept the stock and kept going. reinvesting dividends. In 1984, a court ordered AT&T to break up into “Baby Bells”, and since then they have spun off several companies. Most of them pay dividends that she continued to reinvest. In 1999, her purse was worth more than $1 million dollars. Strangely, given the subject of this book, Mr. Peters does not tell us what her annual dividend income was.

I have to wish that he had been able to give us more information about Mrs. Bradt. Did she even remember that she owned these shares? Was she ever tempted to liquidate the shares? At some point she and her husband must have felt the need for more money. Why didn’t she add more money to the bag?

Still, it’s a great story. It’s not easily duplicable, because $6,000 was a lot of money in those days — a respectable middle-class annual income, believe it or not. And because AT&T’s story is unique. Not all stocks would have done so well, even for forty years.

Unfortunately, Mr. Peters himself does not show such patience. He mentions the sale of shares that do not meet his expectations.

And he is very interested in the analysis of individual stocks. At first, he dismisses the value of mutual funds and exchange-traded funds, and then criticizes the concept of diversification, which, of course, is why investors put their money in mutual funds and exchange-traded funds.

I find this a bit strange in a book by an employee of Morningstar, which was founded to provide investors with guidance on mutual funds. (Mr. Peters is the editor of Morningstar DividendInvestor, its newsletter on dividend investing.)

And this is the weakness of the book, in my opinion. The author is a financial analyst and clearly understands a lot about companies that typically pay dividends and how to crunch their numbers.

However, this makes the entire process seem very difficult for the average investor who is not a CFA. They can spend many hours of his free time trying to duplicate what he does, and they won’t come close. They don’t get paid to do it as a full-time job, like him.

Most readers won’t even try. They will forgo dividend investing or subscribe to DividendInvestor to receive advice from Mr. Peters on a regular and ongoing basis. And it’s hard to believe that someone at Morningstar, author or not, doesn’t expect that result.

I salute the author for pointing out a point I thought only I understood: that the risk of investing is not price volatility, but real-world events that force companies to cut or stop paying dividends.

All in all, I recommend this book to anyone wondering if investing for dividends is a good idea.

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