The Dividend Man Strategy

What is The Dividend Man Strategy?

The Dividend Man Strategy is to invest in the shares of dividend-paying companies.

This strategy achieves the long-term investment goal of most investors, and has a low risk of failure.

What is the Long-Term Investment Goal of a Typical Investor?

The long-term investment goal for a typical investor is something like:

• "I want sufficient income to finance my desired lifestyle, for the rest of my life"
  

• "With low risk of failure". Failure would be if your investment income is less than you need.

If you are retired and need $50,000 to pay for your preferred lifestyle in 2013, you want your investments to provide an income of at least $50,000 in 2013. Anything less is failure. And you want it to finance your desired lifestyle for the rest of your life, which means it must keep up with cost of living increases.

If you are not retired your goal might be a lifestyle after retirement which would cost $50,000 in 2013. Failure would be the income from your investment portfolio not growing to equal $50,000 plus any increases for cost of living, by the time you retire.

Don't Ignore the Dividends: Australian Share Market Was Up Today (Not Down)

Most of the financial media reported that the Australian share market fell today (Thursday 7 November) by 0.2%. Various reasons were given, including that two of Australia's largest banks traded ex-dividend.

The reality is that the share market rose by 0.3%, if looked at properly.

What do I mean?

Yes, ANZ Bank (ANZ) and National Australia Bank (NAB) did trade ex-dividend today. Last week's post reported on these dividends. The share price of these banks was expected to fall today by the value of the dividends, as a seller of the shares gets to keep the dividends, and a buyer does not receive the dividends.

Westpac Bank's (WBC) Dividends for December 2013

Westpac Bank (WBC), one of Australia's big-four banks, on Monday declared their final dividends for 2012/13. The dividends to be paid on 19 December 2013 are:

• an 88 cent per share fully franked ordinary dividend, plus
• a 10 cent per share special dividend, also fully franked
• shareholders will receive $3.0 billion in dividends plus $1.3 billion in franking credits

The total dividends are $1.40 per share (98 cents cash + 42 cents franking credits). This is an increase of 20 cents (14c cash + 6c franking credits) over the dividend paid in December 2012.

Two Bank Dividends (ANZ & NAB)

Two of Australia's biggest banks, ANZ and NAB, this week announced dividends for their financial years which ended on 30 September 2013.

ANZ Bank (ANZ)

On Tuesday ANZ declared a fully franked dividend of 91 cents per share to be paid on 16 December 2013. The total dividend, including franking credits, is $1.30 per share (91 cents cash + 39 cents franking credits). This is an increase of 17 cents (12c cash + 5c franking credits) over the dividend paid in December 2012.

Introduction

Welcome to the Dividend Man. My name is John King.

Most investors want their investments to grow so they can finance their desired lifestyle. Which line on the chart would you like your investments to follow?

Did you choose the solid line? It looks a lot more successful than the dotted line.

The graph shows the results of two different investing strategies on the Australian stock market, from June 2000 to June 2013:

• The solid line shows the value of an investment in dividend-paying companies. The portfolio of the dividend paying companies tripled in value over the 13 years.
• The dotted line shows the result of investing in companies which did not pay dividends. The portfolio of non-dividend companies fell 30% over the same period.

It was research like this which increased my understanding of the importance of dividends to successful investing, and led me to become the Dividend Man. I want you to also benefit from my research.

The Dividend Man will provide information from ongoing research, as well as updates on dividends being paid by Australian companies.

Comments and questions, as well as suggestions for blog topics are very welcome.