(12-14-2021, 09:40 PM)mrw11g Wrote: Current Yield is dividends
5 Year Growth is dividends
Dividend Safety is safety.

I don't see how you can combine different meanings into a single equation.  There might be an answer, but that's my first take.

(12-14-2021, 09:21 PM)rnsmth Wrote: I read a fellow tonight on another board who - well, first do folks know what a Chowder number is?  It is now a part of the CCC list. It is the current yield + the 5 yr dividend growth rate.  So, a company that paid 3% current yield and had a 5 year growth rate of 12%  would have a Chowder number of 15.

That takes care of the Current yield and dividend growth part.  

Then he adds the Simply Safe Dividends safety number and comes up with one number to use to compare companies.

So, if the above company had a safety score of 70, its over all score would 85.

It sounds like it has Merit, but I need to take a closer look at it with companies in our portfolios (as a reminder, our portfolios refers to mine and the iWife's.

What do you folks think?

1. Companies are those which should be around for a long time
   
   
2. Companies should pay a dividend. Lately my criteria has been a yield of 2% or above.
   
   
3. Companies should have a history of dividend growth – I use the the late David Fish's DRIP Resource Site spreadsheets, now maintained by Justin Law, to find a list of Dividend Champions, Contenders, and Challengers. My goal is for the 5-year dividend growth rate to be above 6%. My floor level is five consecutive years of growth but right now I favor those with 13 years or more - this means they grew it during the Great Recession. But for companies with fewer years I will often track them longer term. To me there's a big difference between a company that had a dividend growth streak, froze it for 2-3 years during 2007-2010 and then resumed growth vs one that cut.
   
   
4. Companies should be undervalued or fairly valued. For most companies I assign a PE ratio of between 15 and 20 though there are some sector-specific differences and this is one where volatility may have an impact.
   
   
5. Companies should have a good balance sheet – not overly burdened by debt. I use debt to ebitda and compare within sectors. My ideal is a ratio of 1.5 or below but I am not worried at under 2.5. For some sectors such as utilities and pharma, I'm OK with higher.
   
   
6. Companies should have a sound payout ratio, I look for 70% or below over the past few years. 
   
   
7. Companies should have a recent history of revenue growth. My screen uses eps growth because this is what is most widely available but I want to be sure that this is not increasing due to buybacks. I also look at cash flows though usually revenues captures it. I want annualized 5-year growth to be 5% or above.
   
8. Beta - not really a buy metric, more awareness, see below.
   With that in mind, each quarter I run a screen. This is a cursory look at every stock I either own or have on my watch list. The screen includes (with preferred metrics where applicable):

• Yield: To date I have looked for 2% and above with a preference for 3%, this will change for the IRA
  
• Consecutive years raising the dividend based on David Fish's (now Justin Law's) CCC lists - 5 years minimum
  
• 5-yr DGR: Must be positive
  
• 5 yr eps growth: Must be positive
  
• Projected next (reported) full year eps estimate - I somewhat believe analysts up to 12 months out, not further
  
• Debt:ebitda: With a few exceptions (pharma, utes) 3.5 is a red light, 2.5 and below is what I want and ideal is under 1.5
  
• Payout ratio: Below 70%, ideal is 30-60, some exceptions such as utes
  
• Market cap: Large or mid-cap
  
• Beta: I have stopped using this as a buy metric (started out preferring low beta) for the most part, this is more to be aware of a stock's characteristic than anything. High beta may actually be good as the stock is likely to provide good dip-buying opportunities as I build a position going forward. Even with the recent dip I'm up over 300% on WSM.
  

• Revenues and cash flows: I have come across a LOT of companies with, say, a 5-year eps growth of 12% that turns into 3% revenue growth, almost always due to buybacks.
  
• Debt: If I like everything else about a company but the debt:ebitda is higher than I like, say 3, I check to see if there's a reason for the higher debt such as a recent acquisition and - the key - are they paying it down. A ratio of 3 that is dropping by 2 points a year is one thing, increasing means I don't want it.
  
• Business: Do I roughly understand what the company does? I've had companies - this is rare - where I read everything through and decide I don't know exactly what they're doing - not so much what they make/do but if it looks like management has a cogent plan.
  

(12-15-2021, 07:15 AM)fenders53 Wrote: Cemanuel.  

This is an exceptional screen process.  I strongly agree with your flexibility in #3.  I'd love to own all aristocrats or better and some have done just that but that is too limiting for long periods of time due to valuation and other misses in your criteria.  Finding a few of the future dividend stars can be lucrative.  AAPL or MSFT may be the next generation's income stock at retirement.  

I'll check out your blog post when I have time.