A new list that I am concentrating right now is the S&P 1500 dividend achievers. These are companies that have increased their annual dividend payments for at least 10 consecutive years.
I created custom watch lists in Yahoo! Finance in order to summarize the two groups of dividend achievers by a variety of criteria such as Symbol, Yield, P/E , Div/Shr, Last Price,EPS (ttm) ,PEG Ratio ,Dividend Payout. What I did was first exclude any stocks which had a dividend payout ratio of more than 50%. That gives me some reasonable assurance that the company is less likely to cut its dividends.
I also look at P/E ratios, since I do not want to overpay for a company. Anything with a P/E of over 20 is out of my watchlist.
I also check the PEG ratio but just to find stocks which might be expensive in terms of their growth prospects.
A third criteria that I look for is a dividend yield of at least 2%, which is a little bit over than the current yield of 2.00% that SPY is rewarding its shareholders.
The last but not least criteria that I screen for is the 5 dividend growth ratio. I am looking for an average annual dividend growth of at least 5% over the past 5 years. I didn't include the dividend growth rate in this screen though.
The reason why I selected dividend growth in the end is because I want to decrease to a minimum the rush to buy a stock that simply increased its dividend for whatever reason, whose fundamentals cannot support any significant further increases in the dividend payments.
I would continue screening for potential stocks to add to my buy watchlist on a monthly basis. I might add or remove stocks from my watchlist depending on how undervalued/overvalued I perceive them to be. If I stock in which I have a position drops off my buy watchlist, I would keep holding it, but I won’t be adding to that position until the technical’s and the fundamentals match my criteria.
Based off of this screen, here is my stock lists that I follow (you could also open it in google documents here).
This article appeared in Carnival of Personal Finance #150 , hosted by Lazy Man.
Relevant Articles:
- Dividend Growth Stocks Watchlist
- Five Year Dividend Growth Rates for the High-Yield Dividend Aristocrats
- My Current Watchlist
- Diversification and portfolio allocation
Tuesday, April 22, 2008
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An interesting screen.
ReplyDeleteBest Wishes,
Dividends4Life