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Preface

Who this book is for

This book has been written for those who have grasped the basics of investing but are unsure as to how to build a portfolio of shares that will produce a steady and rising income.

However, investors of any experience should benefit from reading this book, irrespective of their investment criteria. Even those who have already built an investment portfolio and those who subsequently decide that they want to be active traders rather than stick to solid long-term investments will learn more about making the most of their capital.

Many investors plunge into shares with a vague notion of making money but without properly assessing what it is that they want from their investments. This book argues that regular income is a key part of any investment strategy, whatever the age or aspirations of the investor, and that shares are the best way of securing this income at relatively low risk and with the bonus of providing a hedge against inflation.

What this book covers

As the title implies, The Dividend Investor is all about buying shares for the income they generate through the dividends they pay their shareholders, as opposed to investing simply in the hope of returns from rises in share prices. The accent is on buying shares for the longer term rather than looking for quick fixes.

The focus is the UK stock market, although the arguments and guidance provided are relevant to all major stock exchanges around the world. The text refers mainly to larger and medium-sized companies because they are more likely to pay dividends than smaller ones. The concentration is on companies with a full listing rather than those quoted on AIM for the same reason.

The approach is practical rather than academic.

How this book is structured

The book is divided into four main sections: (Parts A-D) basic information on how dividends are set and by whom; how to analyse companies to maximise the yield on your investments; how to find companies that fit your investment criteria; and how to build your own portfolio using the knowledge that you have gleaned from the first three sections.

Chapters are arranged to lead investors step-by-step through the whole topic of investing for dividends. New and less sophisticated investors will particularly benefit from reading from start to finish. Even those with little knowledge of how the stock market works will feel competent to begin investing by the time they are half way through the book.

You can also use The Dividend Investor as a reference work. In particular, the chapters on the key figures and ratios that investors use to choose companies that fit their portfolios should be fully understood.

Supporting website

The accompanying website for this book can be found at: www.harriman-house.com/thedividendinvestor

Acknowledgements

Thanks for invaluable insights into how companies set and pay dividends are due to:

Paul Roberts, finance director, Wynnstay

Kulwant Singh, finance director, computer software supplier Delcam

Shatish Dasani, finance director, TT Electronics

Duncan Jeffery, marketing manager, Hargreaves Lansdown

and to Zoe Biddick and Katie Tzouliades of financial public relations company Biddicks.

Also thanks to Stephen Eckett of Harriman House for supplying extensive company data as well as for editing this book with his customary courtesy and perspicacity.