Monday, March 06, 2006

Resource Site - Dividend Based Investing

I found another great resource site yesterday - Dividend Based Investing (at dividendgrowth.org). With an emphasis on Canadian companies the author, who spent 16 years in the investment industry, promotes dividend growth investing, a practise that combines growth and value approaches by looking for stocks that are undervalued but which have high and sustainble growth rates. Citing work by other analysts and theorists, the author maintains that growth of yield is the single best piece of information an investor can have since it implies:
  • A company is financially strong enough to raise its dividend.
  • There are sufficient earnings to support a dividend increase.
  • Management has a clear commitment to grow the company.
  • Management is confident enough about future cash flows to share current prosperity with share holders.
The author performs quite a bit of stock analysis, which he distributes free on charge via a monthly email newsletter (archives and the current version are available on the site). He also petforms rigourous due dilligence on prospective purchases - here is a sample he worked on for Great-West Life. His approach to measuring value is, again, to look at dividend yield, suggesting that stocks that are currently higher in yield than their historic levels are undervalued/oversold, while those that are historically low may be overvalued/undersold.

1 Comments:

Anonymous Mike said...

Thanks for the kind words.

Mike

3/07/2006 7:26 AM  

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Disclaimer: These articles are for information only, and are not to be construed as financial advice, legal advice, or a solicitation to buy or sell securities.