Top 40 Dividend Growth Stocks For 2012: How to Create and Manage a Dividend Growth Portfolio (2012) by David P. Van Knapp
I had read rave reviews of previous editions of this e-book, so I bought the newest edition as soon as it came out earlier this year. Chapters 1 and 2 are introductory and provide an overview of the book, reflections on 2011, and a look ahead to 2012. Chapter 3 explores the conceptual foundations of dividend growth investing, introducing the reader to dividends and compounding. Chapter 4, which I think is the best chapter in the book, provides a fairly comprehensive discussion of the pros and cons of a dividend growth investing strategy. Chapters 5, 6, and 8 address the three phases of the author's approach to implementing the strategy, which involves: (1) finding excellent companies; (2) valuing stocks; and (3) portfolio management. I thought the chapters on finding excellent companies and valuing stocks could have been expanded a bit. Chapter 7 provides a scoring system for selecting dividend growth stocks, which I found to be just okay (I could quibble about some of the criteria and the point scales). Chapter 11, which comes near the end of the book for some reason (I think it would have been better near the beginning, perhaps after Chapter 4), provides a good discussion of the role that dividend growth investing can play in retirement planning. Collectively, I think Chapters 3-8 and 11 form the strongest part of the book, providing an excellent discussion of the basics of dividend growth investing.
Chapter 9 introduces the author's list of the top 40 dividend growth stocks for 2012 and Chapter 10 provides a one-page score sheet (using the aforementioned scoring system) for each stock. I found this part of the book to be mediocre. One issue for me was that the author restricted his list to stocks with minimum yields of 3% (or close to it). I understand his rationale for doing that, but it resulted in the omission of many excellent companies that are superior to several of the companies that made the list. A more critical issue was the lack of value provided by the score sheets. Each sheet has a summary of quantitative data that is somewhat minimal (e.g., few multi-year trends are shown) and a summary of the company (its "Story") that tends to be very basic. While I appreciate the author's intention to make the score sheets simple enough for readers to understand and construct on their own, I expect a costly e-book to provide me with in-depth stock analyses. Quite frankly, the score sheets were of no use to me because my own stock research produces better information than what I found in this book. Chapters 12-14, which conclude the book, provide previous lists of top 40 stocks, a short resource guide, and the requisite disclaimer.
In summary, my overall impression of the book is mixed. On the one hand, I think Chapters 3-8 and 11 provide an excellent introduction to dividend growth investing and how to implement the strategy. On the other hand, I think the top 40 list and score sheets provided in Chapters 9 and 10 are mediocre and cheapen the quality of the book. However, this is far from a cheap e-book ($40). For that reason, if the main update from year to year is the top 40 list, with only minor revisions to the rest of the text, then I probably won't buy a future edition. My personal preference would be for a stand-alone e-book on dividend growth investing (based on Chapters 3-8 and 11) at a more reasonable price, with the top 40 list offered as a supplement for separate purchase each year.
Note: I originally read various parts of this e-book from January to April 2012, then re-read it from start to finish in April.
Nice review! I think I liked this book more than you did!ReplyDelete
Thanks for your comment. I suspect there are many readers who liked it more than I did. As I mentioned in my review, my impression was mixed, but I still think it is a good e-book overall.
Nice review, you are a good writer.ReplyDelete
As a novice investor, I really like David's book.
Johann: Thanks for your comment, I'm glad you liked the review. I also like David's book, but I'm just not a fan of the Top 40 list.Delete
I'm curious how much the stock line-up changes from year to year. have you looked at this year's or past years' editions? I'd expect that stocks like JNJ and KO are always on it..ReplyDelete
kolpin: In the 2012 edition he indicated which stocks made the top 40 list each year from 2008-2012. There are several stocks that made the list in almost all years, such as JNJ and KO. There were some shifts across years; for example, bank stocks were popular on the 2008 list but not on later lists.Delete
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