01-08-2015, 08:08 AM
Welcome to the forums, I hope you'll prosper here.
I would like to recommend that you'll delay your first purchase and create a "purchase plan".
Basically create a list of rules that you want the companies you purchase to meet before you consider buying them.
Common rules are:
1. How many years the company increased the dividends (the longer streak the better).
2. How much money do they give as dividends compared to how much they actually earn (if they earn $1 and give $2 then they'll most likely go bankrupt before you get your money worth back).
3. How much debt do they have compared to their real value (Debt on Equity or D/E) - the lower debt the safer the investment.
4. How fast are they increasing the dividends in the long term (giving a single increase of 100% and the rest or 0.1% isn't usually a good investment).
5. Are they increasing dividends faster than they increase the profits? if so than they won't be able to keep it up for long.
6. Is this a small company or a big company that can sustain a lot of pain and still be around to recover when everything settled down?
7. Does the market require a lot of money compared to the company earnings? (price/earnings - P/E) it's common to go for companies with PE that is lower than the SP500 PE (some go for PE below 20 as an arbitrary number too).
After you came up with the set of rules that will help you sleep well at night without selling the stock even if it'll go down by 50% or more than you can take a look at David Fish CCC list.
You can go to his website: http://dripinvesting.org/tools/tools.asp
and download the latest "U.S. Dividend Champions"
This list includes all companies that increased dividends for at least 5 years in a row.
You can filter this list based on your rules (at least most of them should be there already) and then conduct further research on the companies that remained intact.
I added the list of companies you provided to my filtered CCC list and came up with the following:
1. LINE, BP and SDRL are not in the CCC list anymore.
2. EVEP has 9 red flags out of 11 criteria that I look for.
3. XOM has 2 red flags out of 11 criteria - their past 5 year growth is -3.2% and their estimated 5 years growth is 3.38%
4. CVX has a single red flag out of 11 criteria - their past 5 year growth is -1%.
From the list you posted I would consider CVX and XOM (in that order) for further research and then decide.
Another 2 names you didn't mention are COP and HP.
COP currently meets all my 11 criteria (and I already maxed out my position in COP).
HP has 2 red flags - estimated 5 years growth of 1% and past 5 years DEG or 5.3 - I made an option play on HP and if all goes according to plan I should get my shares in 2 weeks.
I would like to recommend that you'll delay your first purchase and create a "purchase plan".
Basically create a list of rules that you want the companies you purchase to meet before you consider buying them.
Common rules are:
1. How many years the company increased the dividends (the longer streak the better).
2. How much money do they give as dividends compared to how much they actually earn (if they earn $1 and give $2 then they'll most likely go bankrupt before you get your money worth back).
3. How much debt do they have compared to their real value (Debt on Equity or D/E) - the lower debt the safer the investment.
4. How fast are they increasing the dividends in the long term (giving a single increase of 100% and the rest or 0.1% isn't usually a good investment).
5. Are they increasing dividends faster than they increase the profits? if so than they won't be able to keep it up for long.
6. Is this a small company or a big company that can sustain a lot of pain and still be around to recover when everything settled down?
7. Does the market require a lot of money compared to the company earnings? (price/earnings - P/E) it's common to go for companies with PE that is lower than the SP500 PE (some go for PE below 20 as an arbitrary number too).
After you came up with the set of rules that will help you sleep well at night without selling the stock even if it'll go down by 50% or more than you can take a look at David Fish CCC list.
You can go to his website: http://dripinvesting.org/tools/tools.asp
and download the latest "U.S. Dividend Champions"
This list includes all companies that increased dividends for at least 5 years in a row.
You can filter this list based on your rules (at least most of them should be there already) and then conduct further research on the companies that remained intact.
I added the list of companies you provided to my filtered CCC list and came up with the following:
1. LINE, BP and SDRL are not in the CCC list anymore.
2. EVEP has 9 red flags out of 11 criteria that I look for.
3. XOM has 2 red flags out of 11 criteria - their past 5 year growth is -3.2% and their estimated 5 years growth is 3.38%
4. CVX has a single red flag out of 11 criteria - their past 5 year growth is -1%.
From the list you posted I would consider CVX and XOM (in that order) for further research and then decide.
Another 2 names you didn't mention are COP and HP.
COP currently meets all my 11 criteria (and I already maxed out my position in COP).
HP has 2 red flags - estimated 5 years growth of 1% and past 5 years DEG or 5.3 - I made an option play on HP and if all goes according to plan I should get my shares in 2 weeks.