Introduction

“Dividends for the Value Investor: Nice to Have or a Necessity?” — this was the title of my bachelor thesis which I submitted in December 2017. This book is not the plain publication of my study. I re-edited my thesis for readability, I updated and extended my thesis to our changed economic and geopolitical landscape. Where necessary, I added explanations for readers not familiar with value investing or dividend investing. Therefore, you’re not reading a typical non-fiction book, but rather the book version of my thesis. 

I decided to edit and re-write my thesis is because I believe that I stumbled upon a very interesting value investment strategy. With this book, I want to share my findings and the basic idea of the value dividend strategy with value investors and researchers around the world.

I wrote this book so that other value investors around the world have access to the Value Dividend Strategy and the general idea behind it. An idea which might help them outperform the market and possibly regain some losses they might have suffered.

There is no course or product I sell you. I don’t offer seminars on the Value Dividend Strategy. You cannot hire me as a financial advisor. I don’t praise myself as a super successful value investor who has the authority to advise you on how to invest your money. All I want to give you with this book is an idea which you can use to optimize your value portfolio and develop your own “Value Dividend Strategy”.

I waited over four years to finally write and publish this book. In late 2017, when I turned in my thesis, the economy was doing great. While occasionally experts mentioned an overdue recession, the stock market kept climbing and climbing. It was a time when growth stocks outperformed value stocks in a big way. Even Warren Buffett struggled to keep up with the S&P 500. It was the perfect time to publish books on how to get rich with the next great growth stock. But it was the wrong timing to publish a book on value investing – in a time when many investors seem to have forgotten value investing as a discipline.

Now, after nearly five years, value investing is more relevant than ever. Investors finally remember the philosophy and principles of value investing and look for ways to escape the chaos we are seeing around the globe.

I am confident that, if you take a few ideas from this book, you can improve your portfolio so that you outperform the market and profit greatly after we reached the bottom of the market crash.

How to Read This Book

This book is divided into 3 parts with the aim to guide you from the background of value-dividend-investing to presenting and understanding the research results to finally applying a value dividend strategy in 2022 and beyond.

In the first part, we are looking at the theoretical background of the Value Dividend Strategy. We cover the basics of efficient and not so efficient markets, value investing, dividend investing and how both fit together. We will not only look at the theoretical background from a scientific perspective, but also at how successful investors like Benjamin Graham, Warren Buffett or Martin Whitman stand regarding value investing and the importance of dividends.

In the second part, I present you my research results. We look at how the study was designed, what I discovered, and most we look at the findings from two perspectives: before a financial crisis, and after a financial crisis.

In the third and last part, I blend and summarize the theory, my findings, and a current geopolitical and macroeconomic perspective which help may help you get started with a Value Dividend Strategy. This last chapter gives you the basics of calculating an intrinsic value, and assessing financial, business, industry, and geopolitical risks. It will make clear why it might be foolish to simply mimic a Value Dividend Strategy as of 2022, without adapting it to our current environment.

This book is structured to guide you from the basics to application. Nevertheless, if you are entirely new to value or dividend investing, I suggest you broaden and expand your knowledge to fully apprehend the topic. You will find recommended resources and books in the appendix. 

I believe that you’ll get most out of this book by reading it from beginning to end. But if you are familiar with a topic, skip to the next section.

Kindly note that this is a book about finance, while I try to avoid jargon, you’ll still find many technical terms which are common in finance. Don’t be intimidated by the jargon. In finance, it mostly sounds more complicated than it actually is. If I mention a term or concept which you do not know or understand, I recommend to pause and learn about it with a supplementary book or the internet. You can use investopedia.com, which is a great resource with outstanding explanations to all terminology.

Now, let’s dive into The Value Dividend Strategy!