Now that I have your attention, I’ll describe the selection strategy
in detail, give you this year’s list, and explain how you could use
the free Finviz stock screener to run your own list.
Access the Finviz (finviz.com)
homepage and then select “Screener.”
Finviz uses “filters” to specify screening criteria. Select “All” on
the Filters bar to see the available filters. Use the dropdown menu
associated with each filter to select filter values.
Start With Basics
Start by using the Country filter to confine your list to U.S.-based
stocks. Our economy, already the world’s strongest, is likely to
remain so at least through 2017.
Investors typically use market-capitalization, which is the value of
all outstanding shares, to gauge company size. Generally, the higher
the market-cap, the safer the stock. Specify a $300 million minimum
market-cap to rule out the riskiest stocks.
Since, higher than bank dividend yields is the point of this
strategy, use the dividend yield filter and specify “over 3%.”
No Debt is Key
It’s important to minimize the risk of a dividend cut by any of your
stocks while your hold them. Generally, stocks cut payouts when
business slows, and/or debt-servicing costs rise to the point that
they are no longer generating enough cash to pay the dividends.
Most analysts expect higher interest rates, which translate to
higher debt-servicing costs, next year. We’ll avoid that risk by
sticking with no-debt stocks. The debt/equity ratio compares total
debt to shareholders equity (book value). The higher the debt, the
higher the ratio. Use the Debt/Equity filter to specify the lowest
available value, “under 0.1.”
Must Be Profitable
Next, assure that passing stocks are currently profitable by
specifying “positive” for profitability gauge Return on Equity.
Then, require that analysts expect even higher earnings next year by
specifying “over 5%” for “EPS Growth Next Year.”
Check Big Players
Then confirm that the smart money likes our picks by requiring a
minimum 30% for Institutional Ownership and that passing stocks are
rated “buy or better” by stock analysts.
Make the Trend Your Friend
Finally, use the “200-day simple moving average” filter and select
“price above SMA.” Stocks often move in trends and that requirement
pinpoints uptrending stocks.
No Debt - High Dividend List
My screen came up with four stocks. Click
here to see which stocks the screen is turning up today.
• American Software (AMSWA):
Enterprise management software. Dividend yield 4.1%.
• Delek Logistics (DKL): Operates
crude oil pipelines and related services. Organized as a master
limited partnership (MLP). Yield 9.3%.
• Moelis (MC): Only holdover from
last year’s list, offers financial advisory services. Yield 3.8%.
weight loss management and associated products and services. Yield
As always, consider the stocks listed by this or any screen, to be
research candidates, not a buy list. The more you know about your
stocks, the better your results.