The Single Best Investment: Creating Wealth with Dividend Growth

by Lowell Miller

This witty guide advises readers to stop playing the stock market or listening to television gurus and instead put their money into dividend-paying, moderate-growth companies that offer consistent returns and minimum risk. Citing statistics that show companies initiating and raising dividends at the fastest rate in 30 years, this analysis declares once-stodgy dividends to be "the next new thing" and provides simple rules for choosing the best stocks, using traditional evaluation tools, reinvesting dividends, comparing stocks and bonds, and building a portfolio. Technical aspects of the stock market are explained in the final pages that include two new chapters and revised statistics as well as academic studies, historic back-tests, examples of real-time performance, and a list of resources for further research.

Genres: Finance, Money, Business, Nonfiction, Personal Finance, Economics

265 pages, Hardcover

First published January 1, 1997

Reviews

[Jonathan · Rating 3 out of 5]

Quick, light reading. A useful framework for analyzing companies from a dividend growth perspective, particularly the chapters discussing basic valuation metrics. The author's perspective on investing psychology (when to buy, hold, and sell; how to build a portfolio) also seem very helpful.

That said, this book is written with a very breezy, evangelizing voice -- these strategies may have worked out well for the author's investment firm (no performance data here), but, as always with stock-picking, it's useful to ask what the downsides are. Miller is a professional: he certainly reminds readers to monitor investments carefully and not to compromise on core principles, that markets are largely efficient and that "stories" of future company performance are simply a heuristic. Still, his warnings often get lost in the overall tone which promotes the wonders of relatively low volatility returns compounding to the blue sky, over time. His stories read like sales pitches, not critical analyses.

Granted, there is selection bias in the companies discussed here: by definition, Miller is writing about large-cap, stable, very successful firms. And yet it's easy to cherry-pick some of the examples he chose in 2006 which have since cut their dividends ("today GE Capital is a prime driver of General Electricʼs growth, and would be one of the largest companies in the world on a stand-alone basis"). A 16-stock list put forward as a representative "balanced" portfolio in 2005 included six companies that have since suspended or cut their dividends significantly (Boston Properties; US Bancorp; Bank of America; Fidelity National; ING; BP). These cuts occurred largely due to the financial crisis (or, in BP's case, the Deepwater Horizon disaster) -- at the very least, they serve as a reminder that a dividend growth strategy is vulnerable to macroeconomic events. (To invoke Keynes, probably incorrectly: "Our knowledge of the factors which will govern the yield of an investment some years hence is usually very slight and often negligible.")

My other concern is the chapter on using technical signals as a tool for deciding when to buy or sell. Miller deprecates charts in general, but suggests a few narrow exceptions can be useful to investors (in particular, he likes to look at relative strength). He relies on some studies by his investing firm to support his arguments here, but, as always with technical analysis, it's hard to tell how seriously to take these ideas. In any case this chapter isn't really integral to the rest of the book.

[Richard · Rating 4 out of 5]

I wish I had read this years ago. Good logic to his methods. Easy read, and something to reread as a guide for evaluating stock recommendations

[Michael Wu · Rating 4 out of 5]

To the extent one is convinced of dividend growth investing, this book is helpfully rich in detail on portfolio execution.

[Stephen Chung · Rating 4 out of 5]

everything holds as long as the money supply is stable

[Steve · Rating 5 out of 5]

"The Single Best Investment" is the single best investment BOOK I have read to date! It is not about investing in stock A or some scheme. It is an investing philosophy of prudence and patience. About finding strong companies with modest growth, growing dividends and building your "compounding machine". Build your machine with high quality parts and the wonder of compounding work to your advantage. This has already been my investment philosophy but this book both reaffirmed my strategy, while providing valuable insight to help me refine it for the better. Highly, highly, recommend for those who want to shape their own financial future!

[Jrwest · Rating 4 out of 5]

The author of this book takes one through the theory and benefits of investing in companies that pay reasonable dividends but also continue to increase their dividends. There is a good chapter on the metrics to examine when looking to buy a stock. Although I took this book out of the library, I thought that I would buy a copy to be able to access this information. This is a worthwhile read for every DIY investor.

[Anton Petkov · Rating 5 out of 5]

If I had to recommend only one book to my friends about investing - this is the one. I have read or listened a dozen of financial/investing books and this one has given me most value and is the best one I read so far.

The author lays down very convincing arguments why dividend growth investing is a very good strategy for individuals who want to build passive income for retirement. It also gives useful guidelines how to build and manage such portfolio.

[Glen Leavens · Rating 5 out of 5]

I recommend this book. A friend shared with me that I should read this book as I have been casting around for the correct income strategy. I do not agree with the exclusive stock theory proposed in the book. However, I am compelled to investigate my holdings and see how to get recurring dividends.

[Keith · Rating 5 out of 5]

This book is fantastic. It is a little older than some of the dividend investment books I've read but the information is still every bit as valuable. The book requires you to actually think about what you are reading and its one of the very best dividend books I've read if not the best. If you are serious about dividend investing then I highly recommend reading this book.

[Toni Ros · Rating 4 out of 5]

Libro recomendable para quien quiera iniciarse en la inversión por dividendos. Es un contenido muy básico y dirigido a principiantes por lo que si ya tienes tu cartera formada no te aportará mucho. Pese a no compartir algunas de las recomendaciones que hace el autor, como por ejemplo invertir en bancos o en empresas públicas, el libro me pareció de lectura fácil e interesante.

[Keith · Rating 4 out of 5]

4 stars because the book is 20 years old (would be 3 stars if written today because it is somewhat out of date in the current environment of algorithmic trading). Good perspective on dividend growth investing.

[Walter · Rating 5 out of 5]

Dividend Growth Investing Manual

This is a seminal work in Dividend Growth Investing, or DGI as it is known by its adherents. The author gives specific, actionable criteria for investing the DGI way, which many retirees and near-retirees use for income.

[Carlos · Rating 5 out of 5]

I thought the book was great. I've been in a investment kick since I started looking into the stock market and I'm blown away by what the concept of compounding dividends can do. I had already started investing but this made me solidify my decision.

[Vignesh Kannan · Rating 5 out of 5]

As a budding investor I was chasing around growth stock trying to time the market following the indicators. But this book opened up the right way to invest. I am convinced what I want.

[Brenda · Rating 5 out of 5]

So helpful. So Clear. I see why Paul recommended to me. Such a simple strategy. Wish I had started in my 20's.

[Chris · Rating 3 out of 5]

Favours the dividend approach. Buying into good companies that pay a decent yielding, but more importantly steadily growing (he says ~5%/year when it was written) dividend.

[Avo Kukrus · Rating 5 out of 5]

Conservative div. growth strategy explained and defended.

[Naveen Pawar]

Book is good for the long term investor..cover all main topic.

[Jan Urbanek · Rating 2 out of 5]

This is very subjective-:
- only 2-3 fresh thoughts - especially volume climax marks the bottom
- doesn't read well - hard to keep focus
- outdated - which is obvious

[Jon · Rating 4 out of 5]

good book

[Aditya Sheth · Rating 5 out of 5]

Very clear thought process breakdown from the author.
A good strategy that is not hard to understand and will make sense to new investors.

[Anthony · Rating 5 out of 5]

Fantastic book and quick read for anyone who is seeking to select individual stocks to accumulate wealth! The idea is to create a compounding machine by reinvesting dividends from solid, financially healthy companies with cashflow and whom will continue increasing dividend payouts. Every other page I was underlining the great advice. Compounding returns from consistent, automated investing will yield a secure future.

This is not a get rich quick scheme and will require decades of discipline and most importantly an understanding of behavioral finance. The author points out that individuals will often try to chase the hottest trend and ignore the fundamentals. It requires a mentality shift to understand that you are buying pieces of a company which you want to own, with real machines, real people, real offices, and real products.

Here are some pages with great advice if you wanted the cliff notes...

xv*, xvii*, xviii*, xix* xx, xxiii, xxiv*, xxv*, 5, 6-7*, 9-12*, 14, 17*, 22*, 26, 27*, 30*, 31-32**, 33, 39, 42*, 43*, 45, 48*,, 49, 50, 52, 54, 56, 58, 65*, 66-69*, 70-73, 76, 77, 78-79*, 80, 84, 86, 87, 94, 104, 106, 112*, 124, 149*, 151, 152*, 153, 154, 156-159, 160*, 163, 166, 172, 173, 175*, 176, 182, 183-185*, 187, 193, 196, 199, 208-210, 227, 233*, 240*, 245, 246.

[Doug Stone · Rating 5 out of 5]

There are lots of ways to make money in the stock market. This book presents a very conservative technique based on dividend growth. It is for investors who believe that "slow and steady wins the race"; if you are looking for a "get rich quick" book, this ain't it. It presents three key attributes to look for in a stock and gives lots of other good advice for selecting conservative stocks. The language is not technical and it is a relatively easy read, suitable for all investors: easy for a new investor to comprehend while the ideas presented should still be interesting to a seasoned investor. The author does come across as a bit of a cheerleader and does take some liberties with his supporting math but this did not really detract from the book for me: it was good to see the author's enthusiasm and I can do my own math. There is a bit of a jump from reading this book to selecting actual stocks so some practical examples would have been useful for newer investors.

Even though I think the author overstates his case somewhat, there is no doubting the soundness of his advice. Very solid investment book, recommended for all investors. 5 stars.

[Keith Alverson · Rating 2 out of 5]

Very light reading, in what I suppose is an engaging style, but comes across as a bit breezy. He is a believer in beating the market through a formulaic approach (which he spells out). I am not. I wonder what the long term rate of return, after fees, of his client portfolio's are now, in 2021? Particularly as big companies such as google and facebook don't pay dividends (so won't fit in his scheme). Basically he espouses value investing and dividends.

[David · Rating 4 out of 5]

For the vast majority of investors, this little book is a jewel....follow and and sleep well at night.

[Gregg · Rating 3 out of 5]

The last third is a bit unnesscessary.