Dividends Still Don't Lie

Summary

In 1988 Geraldine Weiss wrote the classic Dividends Don't Lie, which focuses on the Dividend Yield Theory as a method of producing consistent gains in the stock market. After the market crash of the late 1980's, the book was a large success. Investors were looking for safety and transperancy, and dividends offered the yields investors desired. Despite the advent of new technologies and the ability of investors to access information on an unprecedented basis, the old school approach of using the dividend yield to identify values in blue chip stocks still outperforms most investment methods on a risk-adjusted basis. That is the primary purpose of writing Dividends Still Don't Lie. Written by Kelley Wright, Managing Editor of Investment Quality Trends, with a new foreword by Geraldine Weiss, this book teaches a value-based strategy to investing, one that uses a stock's dividend yield as the primary measure of value. Because price on its own, without other factors, means nothing, an investor must find some way to determine whether the price of any given company is high, low or just about what it should be. Even though most investors put their money in the market with the hope of reaping a good rate of return, the most tangible source of return, the dividend, is too often underemphasized in this process. According to the dividend-yield theory, the price of a stock is driven by its yield. When a stock offers a high dividend yield, investors will buy, which pushes the price up and gradually erodes the yield. When the yield falls, the stock is shunned, until an absence of demand allows its price to fall. It then descends to a price level at which, again, the yield is attractive to investors. So rather than emphasize the price cycles of a stock, the company's products, market strategy or other factors, this book stresses dividend-yield patterns. Investors will learn to buy and sell when dividend yields instruct them to do so. The dividend yield lets the investor know, with very little doubt, when a share's price is genuinely high, low or on the move between those two points.