Dividend Stock Research – Managing The List

Money Tips NewsletterYou have asked for my template and I answered with my template. In my Technical Screening post, I have highlighted what I look at and will review the specifics as it apples to my template.

Remember, the goal is to use technicals from the company, which are standard across all companies generally, and assess the potential entry point. Building the list is an entirely different process and I suggest you look at my other post on Dividend Stock Research – Managing The List for building your list.

Managing The List Template

The money is in the list, so you need to manage it well. If you are not prepared, you may make an emotional decision with your transactions and we all know they have a 50% chance of success.

Building your list will allow you to stay objective hopefully – here is my template.

Dividend Metrics Template

I have pre-populated it with some companies that you are probably familiar with. They are not companies you have to keep in your list but it gives you an idea of how I use it. Most of the fields are pre-populated courtesy of Google Finance.

  1. The field highlighted in blue-gray is all that you need to change, all other fields are calculated
  2. Row 14 – The weighting in the overall value metrics. They are all equal.
  3. Row 16 – The ratios for calculation; you can change those to match your interest

Value Metrics – Technical Screening

The numbers are nice to have to compare with other companies side by side. However, the value metric I calculate is the indicator I look at to find stocks that could be worth initiating a position. The data populated by Google Finance are self explanatory; what I will cover is the formula I use for deriving the value metric.

Market Cap Multiplier: Based on the size of the company, a multiplier is used to modify the weight of the value metric. The reason is that I prefer a blue chip over a small cap even if the other values are equal and this value will give weight to the  larger company.

Debt Value: A value generated based on the liability-to-equity ratio. This value is really new and it was enlightening to find out where many companies stood.

Range Value: This value is generated from the current stock price based on where it is in the 52 week range. A great company out of favor will rank high here.

P/E Value: The value generate from the P/E is based on a value you can pick. If you only want to look at stocks under 10, use that number. It’s really up to you to pick the number that works. An improvement would be to use a value per sector if you want to go further.

Yield Value: This value is generated based on a range. It’s up to you to pick the range that you are confortable with.

Payout Value: Same as yield, the value is generated based on the range. A payout of 0% is not really good since it doesn’t pay a dividend. So you need a lower bound range and you need to pick an upper bound. This is another value that could use an upper bound based on sector.

Value Metric: I normalize this formula: Market Cap Multiplier * (Debt Value + Range Value + P/E Value + Yield Value + Payout Value)

I have not assigned any value for dividend increases. I have considered this and I might do it at some point.

Dividend Stock Research Series

Readers: I’d love to hear what you have to say and leave a rating on the template 🙂

Image courtesy of FreeDigitalPhotos.net

3 Responses to "Dividend Stock Research – Managing The List"

  1. Good one and not too much different from my spreadsheet, excepted that I valuate also cash flow, eps, and dividend increase other time.
    It’s good that you take Debt in account, I do that since the start and that’s an important point to take in consideration.

    Jeff & Poor rating: A+ 😀

  2. Amazing. Thank you. I came over to the “dark side” of dividend investing because of the idiot millionaire, who got me started thinking that this was a valuable long-term goal.

    Since then I’ve done a tremendous amount of reading, but what with math not being my strong suit, having someone do all the hard work of building a template and allowing us to use it? THANK YOU.

    (Plus, I subscribe to your blog anyways, and appreciate your insights).

    Keep posting, and I’ll keep reading (and hopefully make wise, long-term investing choices.


Post Comment