I ko am realty & investment inc discussed before my criteria for screening dividend stocks. The screen narrows down the list of companies to look into more detail, to a more manageable level.
In addition, it makes you focus on a set of companies with minimum set of earnings and dividend growth characteristics which are cheaper. However, it is very important to avoid being short-sighted in regards to stock screens. This is due to the fact that data could not be fed correctly, or it might be misrepresented in the database you are using. For example, some companies usually record one-time adjustments to earnings. E ratio and dividend payout ratios scream avoid.
In reality, if a one-time adjustment should be taken out, it would usually show that the stock might be a good opportunity. This is why simply relying on a stock screen to find ideas is not sufficient. This is also why astute dividend investors should research every prospective buy candidate one at a time. I also try to read the annual report, and quarterly press releases from the company. There is usually a lot of information, but not all of it can be actionable. I usually try to understand the company’s business while reading reports.
However, the thing I am most interested in is trying to determine if there are catalysts for growth in earnings. Only a company that manages to grow earnings per share over time, will be able to afford to increase distributions for its loyal shareholders. Companies can grow earnings by selling more products, creating new products and services, expanding in new markets, increasing prices, cutting costs, squeezing out inefficiencies, buying back stock, acquiring competitors to name just a few ways. Sometimes, companies can manage to grow earnings per share through a combination of all of the above. I usually like to see companies which offer a product or service which is unique, and results in repeatable sales to consumers. I also look for companies that have strong brand names for products or services, which are pursued by a fan base of loyal customers.
Therefore, if a store does not offer Coke, customers are likely to go to another store to purchase their daily fix. Where to search for investment opportunities? When to buy dividend paying stocks? As part of my screening process, I look at the list of dividend champions every month. I have been doing this for a decade.
As part of my monitoring process , I review the list of dividend increases every week. I find myself with some extra cash on hand, I end up spending it. Are you ready for the next bear market? It is not a secret that stock prices have been rising for 8 – 9 years in a row now. When to sell your dividend stocks?
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