So far we have looked at dividend investing mainly from the point of view of analysing companies to find the ones that look to be solid or promising investments.
Choosing companies, then seeing if there are any problems with the type of product they offer, or the sector they are in, or the markets they serve, is known as a bottom-up approach.
As a whole, this approach tends to suit private investors. The less sophisticated you are as an investor, the easier it is for you to grasp the merits or flaws of an individual company rather than an entire sector or market. It is fine if this is your approach – many highly experienced fund managers, possibly the majority, are bottom-up investors.
Some fund managers, however, ...