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Buffett and Beyond: Uncovering the Secret Ratio for Superior Stock Selection, + Website, 2nd Edition by Joseph Belmonte

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Chapter 22

A Great Dividend Income and Growth Strategy—Part II: Selecting Stocks That Are Growing Their Dividends for Our Portfolio

This chapter goes through the steps of selecting the stocks for a wonderful and prosperous growth and income portfolio. I will show you how to construct a great portfolio by hand, but folks, our computer program does all this for you in the blink of an eye.

We always want to remember that we are forming portfolios. If we are looking for a portfolio of stocks that on average are paying a 3.5 percent dividend, we can certainly select stocks with a 2.5 percent dividend or a 4 percent dividend as long as the average dividend return is close to our desired return. Why would we even consider a stock for our portfolio that is paying a 2.5 percent dividend when we want our portfolio to average a 3.5 percent dividend return? The answer is because the stock paying a dividend of 2.5 percent may have a faster dividend growth rate or a faster stock growth rate than our average desired dividend growth rate or average desired stock growth rate. What? I'm confused

Let's take some time and go through some examples. 1) First, let's begin with stocks that have high dividends.

A great dividend stock is Philip Morris. Philip Morris changed its name to Altria (MO) and then divided itself into two companies. Altria (MO) is the U.S. company, and Philip Morris International (PM) sells its products everywhere outside the U.S. The reasoning was, of course, due to the litigious ...

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