There’s nothing more satisfying than earning passive income in Canada while you sleep, and earning dividend income is probably one of my favourite things about investing. If you’re just starting on your exciting dividend investing journey as a millennial starting to invest, you might want to start thinking about reading some dividend investing books. Here are some of the 5 best dividend investing books, in my humble opinion.
I’ve read a number of dividend investing books (either in PDF or print format), and there are a few that I thought really helped explain the concept of dividend growth investing.
However, before we go through the list, I would like to mention that just because I haven’t mentioned a book doesn’t mean it’s not good, these are the ones that I have read so far and liked. So if you have a dividend investing book that you want to sing praises of, let me know in the comments.
Table of Contents
The Single Best Investment: Creating Wealth and Dividend Growth
The Single Best Investment: Creating Wealth and Dividend Growth was written in 2006 by Lowell Miller. Lowell Miller is the president of Miller/Howard Investments, Inc. based in Woodstock, New York (well he recently retired in the fall of 2020).
What I really liked about the book was that he encouraged you to stop listening to the NOISE out there when investing (and boy, there is a lot of noise out there right now). The water cooler talk (now Reddit forums, I suppose) on the next hot stock tip will distract you from investing.
Here are some take aways from his book. One of which (quite controversial actually) is that you don’t need bonds in your portfolio and a high quality dividend growth equities will do. The other takeaway is that you can manage 30 equal weight dividend growth companies in your portfolio and you will be fine.
I personally have been reducing my bonds recently, now I look at my defined benefit pension as a bond.
Here are some of the other key lessons from the book, The Single Best Investment.
- Keep an eye on the dividends. If the company is cutting their dividend or not increasing it, be weary.
- Look at the annual earnings and see if it is consistently growing
- You want to buy your equities at a share price close to book value if you can
- Integrity and honesty in the company’s management is essential
I think this is a great book to get your feet wet with dividend investing and even Dripping. Easy to read and digest and not too complicated.
The best part of this book is that you can easily find it online in a PDF format to download.
The Ultimate Dividend Playbook
The Ultimate Dividend Playbook: Income, Insight, and Independence for Today’s Investor by Josh Peters is another book that I would recommend for beginner dividend investors. Josh Peters has a great sense of humour and helps make the technical aspects of dividend investing less dry.
In fact, it is so good that I was seriously considering buying a copy so that I could mark it up and use it as a reference.
The Ultimate Dividend Playbook is a bit dated, and written in 2008, but a lot of the principles are the same. In this book, Josh Peters explains the details of how dividend payments work, how dividends are taxed (in the US).
He also explains how banks, utilities, and real estate investment trusts ( REITS) work. Josh Peters also explains why banks and utilities are great companies to own in your dividend portfolio (Canadian bank stock like BMO or TD and a utility company like Fortis are my favourite Canadian dividend paying stocks that I am buying and holding forever). He explains the recommended payout ratio for each of these dividend paying classes.
Here is my review of The Ultimate Dividend Playbook.
The Intelligent Investor
The Intelligent Investor is written by Benjamin Graham and is probably THE resource for value investing and dividend investing. Benjamin Graham is the father of value investing and he taught Warren Buffett what he knows.
Benjamin Graham was so influential for Warren Buffett that he named his son Howard Graham Buffett.
It is not an easy read by any means and I have read it a few times but admittedly have trouble understanding all of it (and trying not to fall asleep reading certain chapters), but this is the book that talks about the concept of Mr. Market and his mood swings.
I would definitely recommend this book if you are interested in dividend investing or value investing.
Security Analysis by Benjamin Graham and David Dodd is over 700 pages. It is even more difficult to read than The Intelligent Investor.
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In this book on value investing, you will learn about how to look for intrinsic value of a stock, how to look at book value, and how to evaluate the margin of safety. Also in Security Analysis, Benjamin Graham and David Dodd emphasize on the irrationality of investors (because it is human nature- humans are irrational, our lizard brain takes over a lot of the time).
Security Analysis is a good reference book and goes over how to evaluate balance sheets and income statements.
Here is genymoney.ca’s book review on Security Analysis.
THE DHANDHO INVESTOR: THE LOW-RISK VALUE METHOD TO HIGH RETURNS
This is more of a lesser known book, but The Dhando Investor: The Low-Risk Value Method to High Returns by Mohnish Pabrai is a must read.
Who is Mohnish Pabrai? Mohnish Pabrai is one of the world’s most respected value investors. He started off with $30,000 in his 401(k), liquidated his investments in that and created his own IT consulting firm in 1991. He then sold it less than 10 years later for $20 million. After being bitten by the value investing bug in his 30’s and studying Warren Buffett and Charlie Munger’s investing style, he created his own Pabrai Funds.
He has an estimated minimum $100 million net worth and lives in Southern California, where he shares videos of his road bike rides on Twitter.
My husband saw him washing his hands in the bathroom at The Daily Journal Annual General Meeting a few years back, which was pretty cool.
The Dhando Investor was written in 2007. Dhandho is a Gujarati word that means “endeavors that create wealth”.
He acknowledges that investing in the stock market is similar to going into the casino. Nothing is without risk.
However, the key to value investing is to make good bets, infrequent bets, that have large upside and very little downside. “Heads I win, tails, I don’t lose much”.
Here is my review for The Dhando Investor.
Best Dividend Investing Books for Beginners Recap
These dividend investing books will help you build a great foundation for dividend investing. Sure will inevitably be regrets and investing mistakes that you will make in your dividend investing journey.
There will be losers in your portfolio that you wish you had sold earlier (yes, weeding but for your dividend garden), but with these books, hopefully you can take the emotion out of investing and look at businesses for their intrinsic value to invest wisely.
In summary, the best dividend investing books for beginners are:
- The Single Best Investment by Lowell Miller
- The Ultimate Dividend Playbook by Josh Peters
- The Intelligent Investor
- Security Analysis
- The Dhando Investor: The Low-Risk Value Method to High Returns
If you’re interested in personal finance as well, here are some Canadian personal finance books I think are a must read, that will definitely pique your interest in money.
However, if you’re more of a blog reader rather than a book reader, here are some Canadian dividend investing blogs that will be worth a read.
Finally, if you’re interested in tracking your dividend yields, and you don’t have a spreadsheet yet, feel free to download this template (free) and here’s how to use a dividend tracker spreadsheet.
If you’re more of a hybrid investor or more of an index investor, another book to read that might change the way you invest (e.g. switch to indexing) is A Wealth of Common Sense by Ben Carlson.
If you’re interested in learning about he journey towards value investing, I highly recommend The Education of a Value Investor by Guy Spier.
You may also be interested in:
Do you have a dividend investing book that you think really helped you on your dividend investing journey?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.