Screening process

Amateur investors have their own habits in the process of screening stocks. Though probably for most DGI'ers the monthly list of David Fish is a great starting point. You can find the list at this website: http://dripinvesting.org/tools/tools.asp. The Excel-spreadsheet lists almost every (useful) indicator for companies who've paid dividends for at least 5 years (="challengers"), 10 years (="contenders") and 25+ years ("champions"). In this post I will describe some of my thinking in regards to the most recent CCC-list of August 30th.




First, I start by adding filters to the top rows so I can eliminate companies based on certain selection criteria. Next I'll add the following selection criteria:

• Yield >= 2.5% (256 from 472 companies remaining)
• TTM P/E-ratio =< 20 (147 companies remaining)
• Next 5-year-growth >= 0% (118 companies remaining)
• Chowder Rule >= 12% (57 companies remaining)
• 1-year DGR >= 8% (40 companies remaining)
• Debt/equity-ratio <= 1.0 (24 companies remaining)
• Free Cash Flow % payout <= 80% (9 companies remaining)

The list of remaining companies is shown in the table below.

Company	Ticker	Industry	# years
Broadridge Financial Solutions Inc.	BR	Financial Services	7
Meredith Corp.	MDP	Publishing	20
Target Corp.	TGT	Retail-Discount	46
Microsoft Corp.	MSFT	Technology-Software	10
Raytheon Company	RTN	Aerospace/Defense	9
Southside Bancshares	SBSI	Banking	19
Northrop Grumman	NOC	Aerospace/Defense	10
Nippon Telegraph & Telephone	NTT	Telecommunications	11
Travelers Companies	TRV	Insurance	9

Big Save Dividends

Another way for me to use the CCC-list is to crosscheck it with the Big Save Dividends-list of the book "The little book of Big Dividends" by Charles B. Carlson. I export (copy-paste) this list into the CCC-spreadsheet as a separate tab. The next few steps are quite similar to the ones described earlier. First, I start by adding filters to the top rows so I can eliminate companies based on certain selection criteria. Next I'll add the following selection criteria:

• BSD rank overall >= 80 (200 from 975 companies remaining)
• Quadrix rank overall >= 75 (114 companies remaining)
• Cross-check if company is on CCC-list (using VLookup) (35 companies remaining)
• Yield >= 2.5% (2 companies remaining)

The two remaining companies are HP and MSFT. I am not really looking to add technology stocks right now (although MSFT did offer a pretty nice dividend raise last week...). Maybe HP is a nice addition to my portfolio? It has raised its dividends sharply this year, so I might take a closer look next time I have funds available for a purchase!

What do you think about this process? What kind of screening methods do you use?