Today I’ll be giving a quick and easy method to finding great dividend stocks. There are several sites you can use to run these screeners and whichever one you choose will have roughly the same features, but the one I personally use and am most comfortable with is found on TMXMoney.comh
The reason I like TMX is the fact that it’s quick, easy and allows you to save your account and screeners so that doing future searches will only take a matter of a seconds.
So, here are a few quick steps to identifying great dividend stocks and what you should look for when making your final picks on where to place your hard earned money!
STEP 1: Go to TMXMoney.com
STEP 2: At the top of the page you will notice a bar of options – Select: “Investor Tools” and then click “Stock Screener”.
STEP 3: Here’s where your personal taste comes into play, MY personal screener will look something like this:
For an initial screen I’ll use a Market Cap of 1 Billion Dollars so that we can get a good number of fairly large and stable companies. Secondly, a minimum dividend yield I’ll set is 3% as this seems like a realistic/sustainable floor yield. Lastly I’ll sort based on earnings per share (EPS) being above 0, indicating the companies screened are in fact profitable.
STEP 4: You’ll first be prompted with a list of stocks matching your criteria, in this case we have 89 that match. The next step is to quickly look a little deeper into the companies, so to do this we will click on the “Edit Columns” to the right, once that page is available we will make the selections as noted in the screenshot below.
In order to quickly narrow my search down to a handful of stocks I will look at the:
P/E Ratio: Price of share/ Earnings per share, lower numbers are generally better.
Market Cap: Overall “size” of the company in question.
Yield: % you’ll receive on invested capital ie. 5% = invest $100 and receive $5 per year.
Payout Ratio: Dividend paid out per share/ Earnings per share. Typically the lower the better and “safer” that dividend payment will be.
Step 5: Now take note of which companies match all of your criteria of a low’ish P/E ratio, a payout ratio you’re comfortable with and a yield that you find to be sufficient.
My personal comfort zone is:
P/E Ratio: Under 25
Payout Ratio: Definitely under 100%, Usually has to be under 80% for me to consider moving forward.
Yield: Above 4% and below 7.5% is usually the window I like to stay in.
So there you have it, that’s the way I find great dividend stock picks! I hope this is helpful to my fellow independent investors.
If you have any questions, or if any of the above is unclear for you then please feel free to comment below and I’ll be sure to get back to you.
Thanks for reading, now go get some of that passive income through dividend investing!