Dear Mr. Berko:

I have read your column for more than 20 years, and I cannot recall even one instance in which you have recommended a stock for a short-term trade. You always talk about dividends, which are slow and boring. Get with it. There are many stocks that have quick, 20 percent to 30 percent appreciation potential. Why don’t you mention them in your column?

I’ve had tremendous success buying 500 or 1,000 shares of a stock on margin and selling three or four weeks later with a five- to 10-point profit. I’ve been profitable every year and have never made less than $100,000 trading the market. Put some excitement in your sleepy column. People are more interested in trading stocks than in holding them for four or five years.

J.D., Fort Walton Beach, Fla.

Dear J.D.:

I think you’re full of … gas (this is a family paper) and I suspect that many folks who have to be around you each day share a similar opinion. I don’t like short-term investors — folks like you who brag about buying 1,000 shares of Cubic Zirconia or Eyronpyrite, then selling them a few weeks later and a few points higher.

Short-term investors inarguably fail over the long term. Oh, they seldom admit their failures and always blame their losses on an outside influence that affected their judgment. But that’s their personality flaw: They won’t take personal responsibility for failure.

We don’t know bupkis about short-term trading, and we don’t want to! We always urge investors to own dividend-growth stocks because that’s where the less-risky megamoney is made. One of the basic tenets of our money management strategy is: “Buy stocks that have a good history of rising dividend growth and allow that dividend growth to generate principal growth.”

To understand the power of dividend growth, consider that the Standard & Poor’s 500 has had an annualized 10.4 percent return since 1926. According to Standard & Poor’s, $10,000 invested in the market 80 years ago (1926) would have been worth $1.1 million without dividends by the end of February 2006. However, thanks in part to the miracle of compounding, that long-term investment of $10,000 would be worth $26.3 million in February with dividends reinvested. J.D., that’s the entire kettle of fish in a molehill.

I don’t expect to convince you, because you really believe you have never made less than $100,000 a year trading stocks. However, there are lots of good folks out there who don’t have your superb delusional capacities, and they must plan wisely for their futures. They want stability and long-term quality for their Individual Retirement Accounts and their other investment accounts. These folks might want to know that there are several no-load mutual funds with portfolios dedicated to dividend-growth issues.

Some of those we like are:

Alpine Dynamic Dividend Fund (ADVDX-$13.11) is a large-cap blend fund with $450 million in assets. Managed by Jill Evans, ADVDX’s primary objective is dividend income, and its secondary objective is appreciation. ADVDX is not ranked by Morningstar and only has a 31-month portfolio record.

T. Rowe Price Dividend Growth (PRDGX-$23.88) is a large-cap blend fund with $800 million under management. Managed by John Huber, this four-star-ranked fund primarily seeks dividend growth, long-term appreciation and current income. Its best one-year return was 31.7 percent, and its worst three-year return was 4.7 percent.

Vanguard Dividend Growth (VDIGX-$13.16) is a large-cap value fund with $1 billion in its portfolio. This four-star-ranked fund, managed by Minerva Butler, had its best one-year performance of 34.1 percent in 1995 and its worst three-year return between 2000 and 2002 of minus 9.75 percent.

Now take a look at two exchange-traded funds that we also like:

PowerShares High Yield Equity Dividend Achievers (PEY-$14.78) seeks to deliver high current income and capital appreciation. PEY owns 50 of the highest-yielding dividend stocks that have at least 10 years of consecutive dividend increases.

iShares Dow Jones Select Index Fund (DVY-$63.56) invests in stocks with positive dividend growth rates over the past five years and payout ratios less than 60 percent.

J.D., this might be dull, undramatic, pedestrian and monotonous investing for a great stock-picker like you. However, most of the folks who read this column believe that losing an opportunity is a much less regrettable alternative than losing money. None of us has your superb skills.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.

© Copley News Service