The Dividend Toolkit
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1) The 200 page PDF Stock Analysis Guide for individual investors, which describes the extremely efficient method to analyze a dividend stock, how to build and manage a dividend portfolio, and what you need to know about MLPs, REITs, and asset allocation. It offers plenty of content, but is divided into modular sections so that it’s easy to read through. The first chunk of the book is introductory content for new investors, and the later part of the book gets into the useful specifics. Even if you rely on newsletters or blogs for your stock ideas, this guide will give you a deeper understanding of your investments and will give you specific tools to check the accuracy of any stock ideas that you’re given.
2) The Valuation Spreadsheet File, which contains a streamlined and easy-to-use tool to instantly calculate the intrinsic value of a stock. Unlike many financial books that give equations without an efficient way to use them, this book comes with the the tool to apply the specific concepts in the book. It has a few different options, including the Dividend Discount Model, so that you can calculate the fair value to pay for any stock.
Value investing fundamentals don’t change, even if the markets do. The importance of Discounted Cash Flow Analysis and the easier and more focused Dividend Discount Model have been around for decades and aren’t going away, but many individual investors do not fully understand them.
The Dividend Toolkit explains the valuation methods, including Discounted Cash Flow Analysis, in easy terms. They’re elegantly simple once they are understood. There’s an introductory section on the investing basics, and then it gets into more detail in the advanced sections. But for each topic, it brings everything back down to practical and actionable things to help make you a better and more efficient investor, right away.
The Straightforward Method to Quickly Analyze a Dividend Stock Unlike many other investing books, I’ll show you my specific step-by-step method for analyzing a company. It’s based on the 80/20 rule to focus on the most useful information. The description of the method tells you exactly what to look for in each financial statement, and you can gather the information in a fairly short period of time. And yet, the result is quite complete; it covers growth, balance sheet safety, dividend metrics, qualitative information, and a fair value estimate. You can follow the method exactly as-is, or you can combine it with your own investing style.
Why “Buy and Hold’� Investing Is Alive and Well (If You Do It Right) The “Lost Decade’� of 2000-2010 wasn’t nearly as lost as some people think, and using the principles of this toolkit, you can make sure you never make the same investing mistakes that people did in the beginning of that decade.
The Two Key Valuation Methods, and the Shortcut so You Don’t Need to Always Use Them The dividend book covers two critical methods to determine the fair value of a stock:
1) Discounted Cash Flow Analysis (DCFA) This bread-and-butter valuation technique is used by professional investors in many different forms, including by Warren Buffett.
2) The Dividend Discount Model (DDM) This uses the same exact concept as DCFA, but it’s tailored for dividend stocks. So under the right conditions, it’s quicker, cleaner, and easier to use.
The book explains, in straightforward terms and with easy examples, why and how these methods work. But then it goes a step further, and shows you the simple shortcut equation so that you don’t necessarily have to use the full stock valuation methods every time. Plus, the streamlined stock valuation spreadsheet tool makes using those full methods easy, quick, and accurate for when you do want to use them. (The spreadsheet does it in seconds.)
The #1 Thing That’s Even More Important than Asset Allocation What size of a bond component should you have in your portfolio? How much of an impact will it have on your total returns, and to what extent will it reduce volatility? People have wildly different opinions about asset allocation and modern portfolio theory, but how do we know what really works?
Specifically for this toolkit, I wrote a computer program to help me sort through raw market data from the last 35 years, and in the dividend book I present the clear results in simple, colored charts and explanations. If you’ve read my articles, you know I don’t just present opinions. I back things up with facts and numbers and present them with straightforward charts and explanations, and then provide a conclusion about the results.
-How much better would a 100% stock portfolio have done over the last 35 years compared to a rebalanced 75/25 stock/bond portfolio, or a rebalanced 50/50 stock/bond portfolio? If you want to maximize returns while building a sturdy portfolio, the answer may surprise you. This period covered the late-1970’s recession, the bull market in the 1980’s, the 1987 market crash, the huge bull market of the 1990’s, the popping of the tech bubble, the early-2000 recession, two long wars in the Middle East, the growth and the pop of the housing bubble, the financial collapse, the Great Recession, and the partial rebound. This program helped me organize information over this diverse period so… Read more…
