After yesterdays Power breakfast I thought I would write about the power of dividends today. This week I have mostly been reading a book called Behavioural Portfolio Management by Thomas Howard, PhD. It is quite technical but makes the case among other things for trying to avoid human errors when investing. This include well known things like loss aversion (typically fearing losses twice as much as gains) and anchoring (fixating on the price paid).
Not finished it yet but thought I would share one section of it which is on a subject close to my heart about dividends and also the powerful effect of tapping into growing dividends. The author wrote an article which featured similar content on Advisor Perspectives. You can click on the image below to read the article if that is of interest to you.
In addition he has also written an academic paper which cover some of the same ground as the book. So depending on your preference, if this is of interest, you can either check out the book by clicking the image above or download the academic paper below for free, because I like to be helpful like that.
Finally, as you may or may not know I tend to try and identify good quality / value yield stocks which are growing their dividends. I'm planning to provide details of my screening process for this next week. So if this has whetted your appetite then don't forget to check back here. The other reason you might want to do this, given all the volatility we have seen in the market this week, is that growing yield stocks also tend to be less volatile too as shown in the graph below from the same Advisor Perspectives report.