BY JOHN KINGHAM
THE DIVIDEND HUNTER
How I find long-term dividend growth stocks One major difference between investors who focus primarily on dividends and investors who focus primarily on capital gains is their time horizon. Companies that pay dividends usually do so every six months, so a dividend investor who buys into a company will often have to wait several months before their first dividend appears. Capital gains, on the other hand, occur almost every second of the trading day (as do capital losses). So the time horizon for dividend investors should almost always be measured in months and years rather than days or weeks. This fact should have a profound impact on the way dividend investors select which companies to buy. From a personal point of view, when I buy shares it is very likely that I'll be holding onto those shares for several years, and potentially as much as ten years or longer. So I am of course very interested in whether that company is likely to sustain and grow its dividend over that sort of time frame. For me the best way to build up a picture of what a company might achieve over the next ten years is to look back at what it has achieved over the past ten years.
Looking back over the last ten years Thanks to the internet it is very easy these days to get hold of a company's annual reports and financial results for the past ten years. Here are a few of my favourite sources: ShareScope/SharePad (www. sharescope.co.uk): This is where I get most of my data from as it's
very easy to export the numbers to a spreadsheet for further analysis. It's a paid service, but for portfolios north of £30,000 or so I think the benefits can outweigh the costs.
“FOR ME THE BEST WAY TO BUILD UP A PICTURE OF WHAT A COMPANY MIGHT ACHIEVE OVER THE NEXT TEN YEARS IS TO LOOK BACK AT WHAT IT HAS ACHIEVED OVER THE PAST TEN YEARS.” Morningstar Premium (www. morningstar.co.uk): Although I don't use this paid service anymore, I did for a couple of years and it's another easy way to access data going back ten years. You can also read company reviews by Morningstar analysts, which I found helpful
in terms of seeing someone else's point of view. Sharelockholmes (www.sharelockholmes.com): This is a great low-cost way to get ten years of financial data. It's cheap and looks basic, but it does the job nicely. FE Investegate (www.investegate. co.uk): With this free website you can search through all regulatory announcements (including annual and interim results) from a company going back ten years or more. It's a labour-intensive way to get the data, but it's a great way to find out what a company's been up to over the last decade or more. Company investor websites: Most companies today have fairly comprehensive investor websites with links to annual and interim reports going back many years, as well as other documents and presentations. This is where I typically go to build up a picture of what a company does today and how it got there.
20 | ISSUE 21 – DECEMBER 2016 Master Investor is a registered trademark of Master Investor Limited | www.masterinvestor.co.uk