My Dividend Growth Investing Buying Process

My Dividend Growth Investing Buying Process

Technical Analyst Says Volatility Is Here, Here Are the Factors Driving StocksTechnical Analyst Says Volatility Is Here, Here Are the Factors Driving Stocks 0 seconds of 2 minutes, 45 secondsVolume 0%Press shift question mark to access a list of keyboard shortcutsKeyboard ShortcutsEnabledDisabledPlay/PauseSPACEIncrease Volume↑Decrease Volume↓Seek Forward→Seek Backward←Captions On/OffcFullscreen/Exit FullscreenfMute/UnmutemSeek %0-900:0002:4502:45 When I ask my members what their #1 investing struggle is, there are usually two answers right off the top:

#1 What and when to buy shares.

#2 What and when to sell shares!

After a crazy 2020, the market has now reached new highs each month in 2021. The same question keeps coming: Should I invest at the all-time high?

I want to dedicate this newsletter to my buy process. It is not perfect, but it is clear and detailed, and hopefully helps to minimize errors. I think this is the most important part. Without clarity and focus, one can become confused and either err or get stuck in paralysis by analysis. Note: Interested in getting periodic e-mail notifications when articles are published here? Drop your e-mail in the box below!

Have you ever noticed that most of the difficult challenges in life come with very simple solutions?

You want to lose weight? Eat less and focus on healthy foods, and train more.

You want to build a business? Identify a problem and offer a solution.

You want to retire stress-free? Pay yourself first and invest systematically.

You want to travel the world in your 30’s? Buy a RV, quit your job and start your adventure!

Those goals are all considered “difficult” to achieve because they require you to follow a simple methodology for a long, long time! Consistency is the factor most people ignore when going after a specific goal.

You must always eat healthy food and workout 4 days a week.

You must work relentlessly to improve your solution and spread your message.

Paying yourself or going on vacation and fancy yourself with some cool clothes?

All right, my last example was just a crazy tip! Yet it was simple and still difficult to achieve!

Investing is no different. To succeed, you must follow a simple solution. The clearer and more detailed your methodology is, the easier it is to stick to it and avoid mistakes. Here is how I screen the market and make my decisions. Let us start with the dividend triangle

If you have been following me for a while, you know that I am a big fan of what I call the Dividend Triangle. This simple focus on three metrics will reduce your search time rapidly and help you target companies with robust financials. I start all my searches with a look at companies showing strong revenue growth, earnings growth, and dividend growth over the past 5 years. The detailed explanation is found in our recession-proof workbook I invite you to read and re-read if necessary.

I use the DSR stock screener to find those great companies and it will take you just a few minutes.

In a few simple clicks, you can set the filters and begin hunting for the best stocks: Minimum Pro Rating 3 Minimum Dividend Safety Score 3 Minimum 5yr EPS 1% Minimum 5yr revenue 1% Minimum 5yr dividend 1% By selecting only companies showing positive numbers in the 5yr Rev growth, 5yr EPS growth and 5yr Div. growth columns, you will find those companies with a positive dividend triangle.This methodology covers all “regular companies”, but not REITs and other businesses that use non-conventional metrics instead of EPS. We will address those types of companies later in this letter.As of June 2021, these simple filters would bring down the dividend universe to 228 candidates for your portfolio. You can slash this list by 64% by selecting only companies with a Pro rating of 4.You can then, select the “columns” button and add as many financial metrics as you want. While the stock screener is limited for the number of metrics it can show on your screen, you can export the file as “csv”, which is an excel spreadsheet.You will be able to search through several metrics and identify the cream of the crop for each sector and each market. Priority to dividend growth, not yield Now that you have narrowed the number of stocks to consider, it is time to trim that list further. Throughout the years, most of my best stock picks have been found amongst the strongest dividend growers. When you think about it, it […]

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