In the introduction, Mr. Peters introduced his favorite investor Marjorie Bradt.
No, you have never heard of her. She is a client of a former agent. In the late 1950s and early 1960s, Bradt's father gave her about $6,000 in AT&T stock. She enrolled in AT&T's dispute reinvestment plan and simply held the stock and continued to reinvest in the dividend. In 1984, the court ordered AT&T to be broken down into "baby bells" and they had spun off various companies. Most of them pay dividends and continue to reinvest. By 1999, her portfolio was worth more than $1 million. Curiously, given the subject of this book, Mr. Peters did not tell us what her annual dividend income was.
I have to hope that he can give us a deeper understanding of Ms. Brad. Does she even remember that she owns this stock? Has she ever thought about liquidating stocks? At some point, she and her husband must feel that they need more money. Why doesn't she add more money to her portfolio?
However, this is a great story. It's not easy to repeat because the $6,000 was a lot of money at the time - it's a considerable middle class annual income, believe it or not. And because the history of AT&T is unique. Not all stocks have performed so well, even over forty years.
Unfortunately, Mr. Peters himself did not show so much patience. He mentioned selling stocks that did not meet his expectations.
He is very concerned about the analysis of individual stocks. He ignored the value of mutual funds and exchange-traded funds early on, and later criticized the concept of diversification, which of course is why investors invest their money in mutual funds and exchange-traded funds.
I found out that an employee of Morningstar found this in the book a bit strange. The company was formed to provide investors with mutual fund guidance. [Mr. Peters is the editor of Morningstar DividendInvestor, their dividend investment newsletter.]
In my opinion, this is the weakness of this book. The author is a financial analyst who knows a lot about the business that usually pays dividends and how to process their data.
However, this makes the whole process seem very difficult for ordinary investors who are not CFAs. They may spend a lot of time using their work to copy what they do and not get close. They don't work full time like they used to.
Most readers won't even try. They either give up the dividend investment or order DividendInvestor to get Mr. Peters. Regular, ongoing advice. And it's hard to believe that someone in Morningstar, whether it's an author or not, didn't expect this result.
I pay tribute to the author because I think that only I understand - investment risk is not price volatility, but real world events force companies to cut or stop paying dividends.
All in all, I recommend this book to everyone and wonder if it is a good idea to invest dividends.
Orignal From: The Ultimate Bonus Handbook by Josh Peters, CFA
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