The inner workings of our dividend growth investment strategy

January 31, 2013

Over the last few months a number of people have asked me to disclose how our dividend growth investment strategy works, to explain our unique dividend share valuation algorithms, how our proprietary Yield and Price charts are created, whether dividend paying shares are expensive, overvalued or undervalued, my views on whether in 2013 the bond ‘bubble’ will pop and much more.

I have decided, for the first time ever, to disclose the story behind the making of Dividend Income plus how our dividend growth investment strategy works including the workings of our various tools and charts we have developed all in simple English and as a four part article series, which you can freely access here:

  • Click Here for Part 1: How did I become a dividend growth investor?

    Here I am covering the background on why and how I became a dividend growth investor and how we developed our unique dividend share valuation methodology realising that it is all about finding out the historically repetitive extremes of low-price/high yield and high-price/low-yield patterns at high quality dividend paying companies.

  • Click Here for Part 2: Why does dividend growth investing appeal to me?

    In this article I cover the benefits of our dividend growth investing and knowing why at what price to purchase and sell high quality dividend paying companies is all-important to maximise returns over the long term. I also reveal that 2008/09 was a pivotal moment in the development of our dividend share valuation methodology.

  • Click Here for Part 3: Halma Plc – Price is what you pay, value is what you get.

    Having introduced the notion that entree and exit prices are all-important, in this article, using engineer and dividend champion Halma Plc as an example, I delve a bit deeper into Warren Buffett’s famous saying ‘price is what you pay while value is what you get’ and its impact on dividend growth investing. I also introduce the workings of our proprietary Price and Yield Charts that support our buying and selling decisions.

  • Click Here for Part 4: Financial strength is in the eye of the beholder

    In this article I introduce the concept and workings of our proprietary ratio – Price Dividend Growth ratio (PDG) – as well as the importance and constituent parts of the financial strength of individual dividend paying companies and how we manage risk

  • Click Here for Conclusion: Lloyds Banking Group – a fallen dividend champion.

    In my concluding article I refer to ‘one-off’ risks such as the take-over of HBOS by Lloyds TSB as an example that proper investment research is required in order to ascertain why a seemingly ‘good’ dividend stock like Lloyds TSB has lost its title as a ‘dividend champion’.

    It is all-important that the ultimate goal for a long term dividend income investor is to protect its dividend stream on a portfolio-wide basis. Holding a variety of high quality dividend paying companies operating in different industries and with different characteristics helps to mitigate towards the ‘one-off’ risks.

I hope these articles will clear up some of the ‘mysteries’ behind our dividend growth investment strategy. If something is still not clear, please do not hesitate to leave a comment below.

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{ 1 comment }

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