Thursday, August 13, 2015

Screening Approaches

This month, I relied heavily on my screen to filter out companies with lower than average PE and higher than average yields with wide moats and excellent credit ratings.

Then, I researched the companies for payout ratios, FCF, valuations etc using my criteria list. I read their quarterly reports etc. Now, I don't assign specific weights to the criteria but if the overall selects are positive, I will normally buy assuming I have cash available.

See my recent buys this month.

This process works for me but I've noticed other people using different screening methods.

Dividend Empire:


Even if we use David Fish's wonderful CCC list, the result of the screen is a function of the criteria list which is derived from the requirements of the investment strategy.

As I've said before, investing is very individualized. If someone tells you otherwise, run away quickly. While we are advocates of DGI investing, our strategies are very different. Our risk profiles are different. Our approaches are different. When we apply our strategies to the screening process, the criterias are different and the results are different.

That's why I like to review the results from our fellow bloggers. Not just to see the companies on the watchlist, but why they ended up in the watchlist. It gives you insights to their original strategies for DGI investing. Then, I see if I need to tweak my strategy slightly or add/modify my set of criterias for screening and review.

This leads to the next topic. I get a lot of questions and emails on my criteria list. While I tried to be as descriptive as possible on my process, I can imagine that this can be a daunting process for beginners.

One thing I've tried before was to show how to build a dividend stock criteria list in google sheets.

However, the example I provided was only an example. As discussed earlier, the criteria list can vary depending on one's strategy and risk profile.

What would be more useful is probably a library of screening criterias that anyone can pick up and implement based on his/her strategy.  I was thinking for a while how to blog this in a meaningful way.

Something for me to think about....

However, unless you have a financial enlightenment moment (FI Monkey reference) and come up with your own personalized strategy, the screen may not be too useful.


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