Streetwise for Friday, October 19, 2018

My mailbox has been inundated with a variety of media commentary and investment letters, all of which are profess the same theme, that Wall street is headed for a major correction. Some had the audacity to suggest a decline in the order of 50 percent. (Note: In 2008 the S&P was down 38 percent.)

I must take umbrage to such callous statements, many of which seem to lack both data and academic credentials, relying instead on a seemingly mystical crystal ball. What is unfortunate is that unfettered words of that nature have the potential to become believable in the minds of many when repeated continuously.

As both an economist and Wall Street analyst, I am concerned over the continued decimation of investor confidence brought about by the resultant rising fear of the markets. However, there one investment route you might find useful in today’s capricious investment climate.

Academic studies have shown unequivocally that equities are the best investment vehicle for increasing your wealth. The key question is what to buy and when. When is easy to answer. Anytime. The only remaining issue what do you invest in?

Suppose for a moment you had a list of about 269 solid, high quality, companies that have withstood the test of time and have continuously increased their dividends, would that help?

Each fall I introduce my adult students who are seeking to enhance their investment skills to the Mergent Handbook of Dividend Achievers. The book is probably the single most useful tool for individual investors.

Moreover, I was once asked that if you removed my computer, access to the Internet, and only allowed me one item with which to select investment candidates, what would it be? The Dividend Achievers Handbook would be it. In fact, at one time I was quoted on the back cover making just that statement.

No, I do not have, and never have had, any financial ties to Mergent, although as a matter of complete disclosure they do offer my students a student discount.

The book profiles those companies that have increased their regular annual cash dividend for a minimum of 10 consecutive years. Less than 10 percent of all listed dividend paying companies make the Dividend Achievers list. If a company misses a year, it is off the list and must increase dividends for 10 consecutive years to be added back.

Mergent is not content to simply list the stellar dividend performers. Rather it takes the list and proceeds to slice and dice it in a variety of ways. For example, it lists the top 20 companies in 12 different categories, such as total assets, return on assets, return on equity and dividend yield.

Yet, the various lists comprise only about 50 pages of the book. The remaining pages are devoted to a detailed description of each company, including 5 years of annual financial data.

I have been using and writing about the Handbook for over 25 years and I believe it to be one of the few remaining bargains in the arena of independent investment research. Moreover, you do not need any form of professional assistance to benefit from what Mergent has put together. Some of the companies discussed in this column were initially brought to my attention via the Handbook.

If you are interested in knowing the name of a company with the longest record for increasing its dividend every year, it is a two-way tie. American States Water and Procter & Gamble have been increasing their dividends for 64 consecutive years. And you say you cannot figure out what to invest in.

What do I not like about the book? First, Mergent has become quite commercial with what used to be a relatively inexpensive investment tool. While not prohibitive, the $90 price is high.

The other point is minor but annoying. The print is rather small. This is a result of having to incorporate as much data as possible in a relatively small space. Personally, being a bit long in tooth I keep a magnifying glass nearby, just in case.

If you would like to obtain a single copy or a subscription, contact Mergent at 1-800-342-5647. It cannot hurt to mention I sent you and maybe they will offer you a discount.

Lauren Rudd is a financial writer and columnist. You can write to him at Phone calls accepted between 9 AM and 3 PM at (941) 706-3449. For back columns please go to