Thursday, May 18, 2006

My Yield Screen

I guess many of us would like to take this period of so called bear mkt to add some stocks that we cannot buy because of their valuation.

I would like to proceed with caution, knowing that many of what i have chosen in the past turned out to be lamers.

My screens for yield stocks has been naive at times. The yield stocks that i used to choose were stocks that give high dividend, but low promises of growth. That is normally what people expect from yield stocks, but as i come to realise, you can't really afford to have a full portfolio of stocks that pays out 100% of their dividends. By giving a full payout, growth might be compromised. The stocks that i should choose is a balanced between the 2.

Therefore i gather there are few things primarily that i should consider:

  1. Economics of business/Branding

  2. Operating cash flow nature

  3. Cash position relative to total assets

  4. Debt outlook / Gearing

  5. Free Cashflow Yield / Conservative free cashflow yield

  6. Improving dividend

  7. Maintaining and improving profit margin

  8. ROE

  9. Interest coverage

  10. Dividend Payout ratio

  11. Past dividend history

  12. PE / NTA > share price

I will initiate my position:

  1. RSI < 30

  2. MCAD < 0

  3. After Ex Div

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