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The Defensive Value Investor by John Kingham

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Chapter 2. Consistent Growth

“The stock of a growing company, if purchasable at a suitable price, is obviously preferable to others.”

Benjamin Graham

A company that consistently makes a profit and consistently pays a dividend is a good partial definition of a defensive company, but there are other things to look for too. Thanks to inflation, unless a company can grow its earnings and dividends over time then in real terms the value of its economic output will fall. This means that in addition to consistent profits and dividend payments, I always look for consistent growth.

Growth can be broken down into two components – quality and speed – and I will look at both of these in turn in this chapter.

Measuring long-term growth quality

One simple ...

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