A low interest rate environment has helped to fuel a run-up in the prices of dividend-paying stocks.
Equity-income investing is once again fashionable, but some investment advisers have always preached the long-term benefits of investing in dividend-paying stocks. Lowell Miller is known for his disciplined, dividend-focused investment strategies. He founded Miller/Howard Investments Inc. (www.mhinvest.com) in 1984 and manages a number of portfolios constructed of financially strong firms with the ability to pay and consistently raise dividends.
Lowell Miller lays out his strategy in his book “The Single Best Investment: Creating Wealth with Dividend Growth” (Print Project, second edition, 2006). We first featured a screen based upon his approach in a June 2009 AAII Journal First Cut article titled “High Quality + High Yield + High Growth Stocks.” At the time, Miller argued that high-dividend-yielding stocks have performed extremely well after past bear markets, especially bear markets induced by a recession—a prediction that proved to be very accurate. With the run-up in dividend-paying stocks, it is important to have a system in place to keep your emotions in check and have an analytical framework to select and manage your portfolio. In this article, we provide a more detailed examination of the investment approach presented by Lowell Miller in his book.
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