THE 2013 EDITION IS COMING!

I have begun work on the 2013 edition of Top 40 Dividend Growth Stocks.

Actually, I have been working on it all year. As soon as the 2012 edition was published, I began collecting information for possible inclusion in the next edition. I maintain an ongoing file of items, including excerpts from my articles on Seeking Alpha, my comments there, and extracts from other sources that I find interesting or useful. I keep this file building all year, adding to it as time goes on. I make a "final search" for additional new material in October. I recently completed that updating operation. I have >150 pages of potential new stuff!

Also throughout the year, I collect ongoing information about not only the current Top 40 stocks, but also other likely candidates. This is my sixth year in writing this eBook, and I have learned that many of the same stocks turn up as legitimate candidates year in and year out, even if they do not make it into the Top 40. Then in October, I do an independent search for other candidates to add to the "starting universe" of potential Top 40 stocks.

This year's starting universe included more than 450 stocks. I have already culled that list by applying some simple basic requirements:

• Yield must be at least 3.0%. For utilities, yield must be at least 4.0%. For banks I use 3.8% and for MLPs 6.0%. (The latter requirements are there, because there are so many utilities, banks, and MLPs in the initial universe. Might as well eliminate the lower-yielding ones right from the beginning.)
• Stocks that are significantly overvalued (as shown by Morningstar or their P/E ratio) have been deleted.

The application of those basic tests brought the candidate list under 85. Then I added back some of those I had just eliminated, because I want to take a closer look. Among those added back were any members of 2012's Top 40 that failed the initial tests. The remaining group of candidates, which I call the Semi-Finalists, number 94. I will put those through rigorous testing and winnowing right up until a day or two before publication of the 2013 edition.

This morning, I turned my attention to updating the text. This will take most of the rest of the year. The 150 pages of potential new material exceeds last year's size of the entire eBook! I need to integrate it wherever possible, eliminate duplicate information, and create new sections (or even a new chapter) to incoporate the new information. Every year, the text gets tighter and tighter, yet contains more information than the year before. The text will probably grow by several pages; that has been the pattern from the beginning.

I am aiming for publication around mid-January, 2013. Waiting until January allows me to incorporate full-year 2012 data for the stocks. As soon as the new edition is available, I will announce it in this newsletter first.

Regards,
Dave