Aug 242012
 

When Matt from Dividend Monk asked me to review his new E-book, I eagerly agreed and told him I’d whip up a post when I finished reading it. My normal experience with investment E-books is to read through the 10 or 40 pages and be grateful I never paid for the heap of regurgitated information. My eyes widened when I saw the 1/200 pages in the adobe acrobat menu and I believe an “oh my” popped out of my mouth. Matt writes amazing material so I knew I would be in for a treat!

Hello, Mr. elephant

I know what you’re thinking so let’s address the elephant in the room. The cost of the Dividend Toolkit is $16.00 and is available through PayPal here. Before you jump to conclusions here me out; this is not your average investing E-book! I’ve never read an E-book filled with such detailed and genuine information in my life. Whether you are just starting out or you think you know everything there is about dividend investing, The Dividend Toolkit will take you through the basics as well as advanced chapters on finding the right companies to invest in and create a dependable flow of passive income.

Shop smart, shop Monk mart!

Matt’s own unique approach to analyzing a company is broken down step-by-step in easy to understand instructions. He shows you exactly what you need to look for on every financial statement allowing for quick, yet thorough, analysis of any potential dividend stock. It’s the same process he uses for every stock analysis on his website and newsletter. In case you missed it, you can sign up for free to his monthly newsletter on his website Dividend Monk. I’ve learned a lot from Matt over the years and I hold him in high esteem in the world of investing blogs.

Personal finance and psychology

Matt explains how personal finance is as much about psychology as it is about the numbers. He also explains that people who dabble with the stock market may win sometimes, but overall they will never truly succeed in building long term wealth. Those who take the time to make good investment decisions and add investment capital over the long term will grow their passive income streams, allowing them financial independence.

 Easy to use valuation sheet

Included in the Dividend Toolkit is an excel spreadsheet with four tools that help you efficiently determine the range of values for any stock or company. The discounted cash flow (DCF) and the dividend discount model (DDM) are the two methods used to determine the fair value of a stock. Thanks to the examples and straightforward instructions, even a dummy like me was able to use the spreadsheet tools with ease.

All meat, no filler

I can’t stress enough the quality and detail that went into the Dividend Toolkit. Most E-books contain funny illustrations and added hi-jinks to increase the page numbers. I can attest that there are no page fillers in Matt’s book. It’s chock-full of useful information as well as colorful yet informative diagrams and charts that help you to learn Matt’s stock analysis process in a timely manner.

I personally feel more confident with my investments after reading the Dividend Toolkit and I highly recommend it to anyone whether they are just starting out or have been investing for some time. You’re going to spend at least $20 on other investing books that keep telling you the same thing over and over, so why not try The Dividend Toolkit and learn something new?  I give this book 5/5 loonies. Try it! The Dividend Toolkit

 

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 Posted by on August 24, 2012

  9 Responses to “Book Review: The Dividend Toolkit”

  1. I appreciate the review, Steve.

    You write in a very engaging way, so that even something as straightforward as a book review is a very interesting and entertaining read.

    The length of the book was an interesting aspect to consider. Length in a book is usually good, but in a PDF format, people generally don’t want to read hundreds of pages. So I had to focus actually on how to NOT make it too long- the process was more like carving and reducing rather than expanding and lengthening. Making it modular helps the readability too.

    Thanks again for the book review.

    • Anytime Matt! I was trying to give a well rounded review without giving too much away. I enjoyed the book so much that I would really like to read the extended version!

  2. Going to order the book as soon as I get home, on vacation right now, but a quick question, what exactly is the discount rate? Googled it but didn’t really get an answer

    Thanks

    • Hi Trader Rob,

      The discount rate, roughly speaking, should be the target rate of return you seek on the investment. It’s the rate you use to translate future cash flow into what they’re worth to you today.

      The Dividend Discount Model article you found there is an example of it.

      Another one is this article, which goes a bit more into the theory of discounting:
      http://dividendmonk.com/stock-valuation-methods/

      This article came from the book, actually. I had the book in draft form for a long time, but wanted to give exposure to some of the material earlier, so there are a few articles like that one that draw material from earlier drafts of the book. The book’s central section goes into detail about the theory and application of discounted cash flow analysis and the dividend discount model, but the DDM article you found and this stock valuation method article provide a concise summary.

  3. Hey Matt

    Very interesting, that’s a great way of determining a fair price for a divivend stock. Just wondering does it apply as well for companies that don’t raise thier dividends or cut thier dividends. Long term you want companies who raise thier dividends but companies that don’t can be worth buying as long as you don’t over pay

    Rob

    • The Dividend Discount Model (DDM) uses the same math and concept as standard Discounted Cash Flow Analysis (DCFA).

      DCFA works for any company with profits or expected future profits. The company-wide free cash flows are treated as the cash flows, and they’re used to value the whole company.

      DDM uses the same concept, but the dividends are treated as the cash flows, and they’re used to value an individual share of the stock. Technically, it works for any company that pays out a meaningful portion of its earnings in dividends, even if the dividends are staying flat or shrinking (although those things will have an impact on the valuation of the stock as determined by the model, of course).

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