March 29, 2018
I am changing both my approach to buying dividend stocks and reporting on them in 2018.
Fundamentals are still important to me as you will see below I am still using key criteria such as EPS, Dividend yield and history, and Debt to Equity Ratio. This year I will compare my picks with a well known ETF that mimics the S&P 500 symbol is SPY.
2018 PORTFOLIO
EPS greater than Dividends.
However, EPS is a bit squishy and ruling out a stock with marginal coverage of dividend by earnings has limited my investment options.
I still cannot buy a stock, no matter how impressive the gains, that has negative earnings or earnings that don't cover the dividend over long periods of time.
Dividend yield is important and will play a role in which stocks I pick but I am not going to demand a specific yield as it limits the universe of stocks from which to pick. Dividend history needs to demonstrate emphasis on returning money to the shareholders through dividends and a history of increasing the dividend during good times. Like yield, I am not going to eliminate a stock just because recent dividend growth may not be great. An example is Walmart symbol WMT. I am long WMT eventhough their most recent dividend increase was only a penny.
A strong balance sheet is so important when you are wondering when the next correction will come. When it does come, you want to make sure you can resist the urge to sell when stocks are low. The way to do that is to be sure your stocks are on solid financial footing. A debt to equity ratio (D/E) of one or less or within industry standard will remain a key criteria I use to pick stocks.
I may also add bonds to this portfolio.
