best books value investing image
Jack S
Some guides ive found so far are:
-The Warren Buffett Way, Second Edition
-The Intelligent Investor: The Definitive Book on Value Investing.
-pick stocks like warren buffet
please comment on any of these on whether or not they are worth a look.
I am going to start investing soon and know a little about stocks and corporations. I would like a resource that helps me or teaches me how to pick good beneficial stocks.
What would you recommend?
Thanks in advance :)
Answer
first observe all the movements that select the best 10 And invest
first observe all the movements that select the best 10 And invest
What's the diff between 'value investing' and 'dividend investing'?
sh
I understand that value investing is about picking under-valued companies and investing in them and waiting for the long term for them to grow. And dividend investing is investing on any company so long as they send dividend cheques often. (Am I right?)
But when analyzing financial statements of companies or doing general research on the companies, what do you look for when you are dividend investing? And how about for value investing?
Btw, Warren buffet is a value investor and not a dividend investor, is he?
Answer
Interestingly, many dividend stocks are also value stocks. Perhaps most. Without going into all the gory details stocks are considered generally either value stocks or growth stocks. With extremely few exceptions growth stocks pay little or no dividends. The theory is that it is to the advantage of investors for the growth company to reinvest its money into the growth of the business, or to pay big bonuses to the executives.
What a dividend investor should look for is a history of how the company has paid dividends. Have they raised the dividend annually for at least 5 years? Do they pay less than about 60% of their earnings as dividends. (you want the dividends to continue and if they pay too much of their earnings they may be cut in the future). Is the earnings and sales of the company growing at a reasonable rate to support dividends in the future--over a 10 year period earnings and sales should about double. Is debt less than 1/2 of total capital? You want a reasonably strong company.
What a value investor looks for (I am not so versed in that) is a low pe ratio, a low price/sales ratio, a low price to book value ratio, and perhaps a low price to cash on hand ratio. One might also consider any hidden assets in the valuation. Perhaps property carried on the books at a much lower value than it is currently worth. REITS might have property that is worth more than current book value. Certain manufacturing companies such as chemical companies and oil refineries and electric utilities might also have property carried at values lower than what the property is currently worth. Some companies might have a brand position that is worth a great deal more than the book value of the company. KO, MCD, PG all come into mind there.
Warren largest stock position I believe is KO. Although it does not have a particularly low pe ratio, low ps ratio, or low pb ratio, it does pay a very good dividend which it has continually raised for many many years and it has a brand which is worth we can only imagine how much.
Several of his holdings pay substantial dividends--KO, PG, JNJ, KFT, GE, COP, XOM.
Interestingly, many dividend stocks are also value stocks. Perhaps most. Without going into all the gory details stocks are considered generally either value stocks or growth stocks. With extremely few exceptions growth stocks pay little or no dividends. The theory is that it is to the advantage of investors for the growth company to reinvest its money into the growth of the business, or to pay big bonuses to the executives.
What a dividend investor should look for is a history of how the company has paid dividends. Have they raised the dividend annually for at least 5 years? Do they pay less than about 60% of their earnings as dividends. (you want the dividends to continue and if they pay too much of their earnings they may be cut in the future). Is the earnings and sales of the company growing at a reasonable rate to support dividends in the future--over a 10 year period earnings and sales should about double. Is debt less than 1/2 of total capital? You want a reasonably strong company.
What a value investor looks for (I am not so versed in that) is a low pe ratio, a low price/sales ratio, a low price to book value ratio, and perhaps a low price to cash on hand ratio. One might also consider any hidden assets in the valuation. Perhaps property carried on the books at a much lower value than it is currently worth. REITS might have property that is worth more than current book value. Certain manufacturing companies such as chemical companies and oil refineries and electric utilities might also have property carried at values lower than what the property is currently worth. Some companies might have a brand position that is worth a great deal more than the book value of the company. KO, MCD, PG all come into mind there.
Warren largest stock position I believe is KO. Although it does not have a particularly low pe ratio, low ps ratio, or low pb ratio, it does pay a very good dividend which it has continually raised for many many years and it has a brand which is worth we can only imagine how much.
Several of his holdings pay substantial dividends--KO, PG, JNJ, KFT, GE, COP, XOM.
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