Seven Generational Ruminations

Investing with dividends is part of a dream I had a long time ago. That dream in part led me to writing my own treatise on personal-finance. In the late 90's the market was full of hype, they called it the death of value stocks. Traditional investing has advised to invest in stocks with great business value, a growing earnings rate, strong margins, etc. In the death of value era they were looking at the startup companies and expecting every company to be able to enjoy that kind of dramatic growth. But that kind of growth (e.g. 100% a year) only happens in the early phases of a business, and cannot sustain itself.

The dividend style of investing recognizes that dividend-paying companies are generally more stable than ones who don't. I like to think it gives the management a reality check to have to send money to the shareholders every quarter. Cash doesn't lie.

In any case, with dividend based investing you have the promise of a continual stream of money. I can't say it better than Matthew Emmert did in this article, and that's why I subscribe to his newsletter. So I'll just leave this with a pointer to the article.

Retire Early With Dividends (By Mathew Emmert (TMF Gambit) March 14, 2005)