Overvaluation Can Severely Crimp Income for Dividend Growth Investors

In my most recent article titled The 'Magnificent Seven' Dividend Growth Stocks Overlooked by the Stock Market, there were two comments by readers that struck a nerve. To be clear, neither comment disturbed or offended me. Instead, they motivated me to go even deeper into the concept of the importance of valuation than I have in the past. The first comment was made by David Van Knapp, the number one opinion leader under the category Income Investing Strategies, and therefore, a highly regarded author on Seeking Alpha. In his comment he called me, and I quote, "Mr. Valuation." I took this as a great compliment, because I believe that valuation is one of the most important principles of investing, yet often overlooked and even ignored by many investors. The second comment was made by a regular reader of my work, and prolific Seeking Alpha commentor who goes by the handle “chowder”. Regarding my article, “chowder” made the following observations and comments: "I want to comment on a statement you made. My comment is not a criticism of one's investing style. It is simply a philosophy I go by and thought I would share it, for those who may be interested. You said… >>> even though I have always admired these great companies, which I now dub the “Magnificent Seven,” I have rarely owned them because the markets have normally overpriced them. <<< In my opinion, value investing is often confused with buying stocks cheaply." Then later “chowder” added these additional remarks and clarifications, and it was this part that really inspired me to write this article. Without meaning to, I'm sure, “chowder” through his words, attempted to devaluate what I consider to be the monumentally important, and even perhaps vital, concept of valuation.... Read more