The Single Best Investment

Lowell Miller ran a money management firm and wrote this as an argument for dividend growth investing, meaning buying high-quality companies with above-average dividend yields that raise those dividends consistently.

His formula is stated as high quality plus high current yield plus high growth of yield. Quality means a business with durable competitive position, conservative finances and a long record; high current yield means meaningfully above the market average, which he treats as a valuation discipline; and dividend growth means a company raising its payment consistently, which he argues both compounds the income and drives the share price, since a rising dividend pulls the price up to maintain a market-consistent yield.

Miller's arguments include that dividends impose discipline on management, since cash paid out cannot be misallocated; that dividend-paying companies are self-selecting for the qualities investors want, because a company committing to a payment must have confidence in its cash generation; that the compounding of a rising income stream produces returns that do not depend on selling; and that the investor's psychology is easier to manage when returns arrive as cash rather than as price appreciation. The book is written for individual investors and is repetitive. Its arguments are not novel and the historical evidence on dividend strategies is more mixed than Miller allows, particularly regarding the tax treatment for taxable investors and the periods when dividend payers underperformed substantially.