Book Review: The Hidden Power of Rising Dividends

Reviewed by Warren Maxwell

A guide to investing, a primer on thinking outside of the box, and a gorgeous memoir all in one

October 19, 1987, Black Monday, was a turning point for Greg Donaldson’s career. When the stock market tanked without warning, dropping by almost 25 percent in less than a day, he was on the hook to hundreds of people who’d entrusted him with their money as an investment advisor and portfolio manager. 

Donaldson avoided the worst of the sell-off panic and held his client’s assets, but conversations and meetings with longtime clients in the days after Black Monday ushered in a paradigm shift in his investment strategy. 

What does one do when the financial universe seems to be imploding? In the absence of reliable market prices (the volume of trading caused hour-long delays in price updates), how does one accurately value a stock—which is, after all, a portion of an underlying company? And, in a business that lives and dies by fractional percentages of risk and reward, how does one achieve a lucrative, reliable balance? 

“A peculiar sense of unknowing swept over me. I knew only one thing: the crash had revealed that my B.I.G. Trend investment strategy was really a fair-weather investment tool, and now the weather was stormy with a probability of even more storms.”

This is the story of how Donaldson rewrote everything he knew about stock and bond investing when he encountered the enigmatic, untapped potential of slow growth, high dividend yielding companies. Building up his own valuation systems from scratch and bucking the prevailing wisdom of the 80s and 90s, Donaldson develops a method for picking stocks with bond-like security that, nonetheless, frequently outpace the major stock indexes. This is not a get rich quick scheme but rather an intelligent, deeply stimulating approach to understanding the stock market. Suffice to say, that Donaldson’s strategies pay off with dividends.

The language, the flow, the narrative-verging-on-detective style of The Hidden Power of Rising Dividends’ prose lifts it head and shoulders above the average investor’s guidebook. This is more than a system for investing, more than a series of insights into how stocks and bonds work…this is a story. From the very first pages, I was hooked by Donaldson’s charismatic voice, his off-the-cuff honesty and forthright declarations of everything he didn’t know and all the work he put into learning his craft. Passionate writing has its own special feeling, a unique frisson that can’t be avoided or denied. This book has that. 

Entirely apart from the central subject, Donaldson’s dividend investment strategy, it can be read as an organic, urgent work of literary nonfiction, of memoir, of autobiography, of what have you. It truly is that impressive and that gripping. In these pages, we witness Donaldson’s growth from an up and coming financial advisor riding the coattails of Wall Street’s big shots like Peter Lynch to a self-made leader willing to blaze a new path for his investors. In this way, The Hidden Power of Rising Dividends breaks out of the mold of business literature and fashions itself into a bildungsroman that will appeal to all manner of readers.

“I was a small investment manager in a small city in a small state in the middle of a huge country where the investment kings lived in big cities with fast lives, wealth, and riches. Did I have the guts, the faith, to head off into the uncharted territory of becoming primarily a dividend-oriented investment advisor?”

Finally, it must be noted that, quite apart from the narrative quality of Donaldson’s writing, the investment strategies and nitty-gritty descriptions of financial markets in this book are in depth, coherent, and eminently readable. The text offers practical, articulate explanations of the relationship between inflation and interest rates, of the varying types of bonds and the difference between investment strategies. Each of the many characters that converse with Donaldson over the course of his journey expose a different mentality and perspective on investing and, cumulatively, the book captures a huge swath of financial ideas that will allow readers to make more informed choices about how their money is handled. 

Inspiring on many levels, The Hidden Power of Rising Dividends is a rare find—a mesmerizing account of one man navigating the ins and outs of investment strategies. It combines arcane financial ideas with an intimate, memoiristic narrative and literary prose. The result is a book that readers will not want to put down and might even make a few non-investors change their mind about the market.

---

Thank you for reading Warren Maxwell’s book review of The Hidden Power of Rising Dividends by Greg Donaldson! If you liked what you read, please spend some more time with us at the links below.