• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
My Money Design

My Money Design

Designing Financial Freedom

  • Start Here
    • Start a Blog
    • What Is Passive Income?
    • Passive Income Ideas
    • My eBooks
  • Categories
    • Retirement
    • Savings & Budgeting
    • Stocks & Investing
    • Philosophy & Motivation
    • Travel Rewards
    • Money Books
    • Mortgage & Refinance
    • Insurance & Estate Planning
    • Credit
    • Taxes
    • Career
    • Blogging
  • About
    • Contact Us
    • Advertise
    • Privacy Policy

Browsing for Stocks – January 2012

January 23, 2012 by MMD Leave a Comment
Some of the links included in this article are from our advertisers. Please read our Disclosure for more info.



Stocks, dividends, Apple, Mattel, Chevron, Aflac, Olin Corp, Applied Materials, AT&T, CNN Money, BigSafeDividends, Charles B. Carlson, The Little Book of Big Dividends, The Big Secret for the Small Investor, Joel Greenblatt, Value Weighted Index, Return on Assets, ROA, Dividend Yield, PE Ratio, Earnings GrowthIt’s a new year and I’m optimistic that new opportunities are out there. In keeping with that enthusiasm, I’d like to add a few more individual stocks to my portfolio.

Traditionally, I stick with mutual funds to stay diversified, keep my costs down, and avoid the turbulence of the market. However, last year I had a great time with Apple (AAPL) (up 26% from my initial purchase) and I’m hoping I can use the same care and attention to pick another winner.

Going After Dividends

As part of my ongoing initiative to add passive income streams, I’ve decided that my next set of stocks should be dividend stocks. There are a lot of reasons why to look at dividend stocks for my next purchase:

• They pay dividends! Although dividends are never guaranteed, there is the potential to earn a small amount of money just for holding the stock. So on top of the potential capital gains, I could easily earn another 2 to 4%.

• The fact that the company can even pay a dividend indicates some financial strength. Picking a healthy company is important!

• Dividend stocks generally outperform non-dividend stocks in the long run. For a long-term investor like me, this is a hard trend to ignore.

• Dividend income is generally taxed lower than standard income. As part of a tax-advantaged strategy, I would want to add as much dividend income as possible.

My Picking Strategy

1. Check BigSafeDividends. To begin, there is a great website that screens dividend stocks for free called bigsafedividends.com. It is ran by Charles B. Carlson and was mentioned in his book “The Little Book of Big Dividends” (click here to read my review of this book). On this site, he ranks and scores dividend stocks based on a number of factors. Whether or not you agree with his scoring method, the site serves as a great way to pre-screen potential dividend stock candidates.

After browsing through the top performers, here is my list of potentials:

Stocks, dividends, Apple, Mattel, Chevron, Aflac, Olin Corp, Applied Materials, AT&T, CNN Money, BigSafeDividends, Charles B. Carlson, The Little Book of Big Dividends, The Big Secret for the Small Investor, Joel Greenblatt, Value Weighted Index, Return on Assets, ROA, Dividend Yield, PE Ratio, Earnings Growth

Yes, you got me. I slid Apple in there. I did it because I wanted to compare these stocks to some of the metrics of Apple. Plus, there are rumors that Apple may finally pay out dividends this year.

2. Pulling Metrics From CNN Money. CNN Money is my favorite for screening stocks and learning more about them. For each one you type in, they have all the stats you’d ever need, the company’s financial statements, and even a forecast from surveyed analysts.

The metrics we’ll be considering will include dividend yield, PE ratio, and growth forecasts.

3. Using the “Big Secret” Strategy. In the book “The Big Secret for the Small Investor”, author Joel Greenblatt presents his case for picking stocks based on a metric called the “Value Weighted Index” which compares a company’s earnings to their assets (also called Return on Assets or ROA) (click here to read my review of this book). This figure demonstrates the company’s efficiency at generating income regardless of their size. It was one of the metrics that lead me to pick Apple.

The two pieces of information needed to calculate this can be found on CNN Money and are easily calculated.

Analysis

Putting it all together, here are the results:

Stocks, dividends, Apple, Mattel, Chevron, Aflac, Olin Corp, Applied Materials, AT&T, CNN Money, BigSafeDividends, Charles B. Carlson, The Little Book of Big Dividends, The Big Secret for the Small Investor, Joel Greenblatt, Value Weighted Index, Return on Assets, ROA, Dividend Yield, PE Ratio, Earnings Growth

• ROA: No one comes close to Apple. Mattel, Chevron, and Applied Materials are the runners up. Aflac and Olin Corp look pretty sad.

• Dividend Yield: Apple is the loser here because they do not have a dividend. AT&T looks the most attractive, but use caution. Sometimes a large dividend is used to attract investors where other metrics fail.

• PE Ratio: None of these companies are outrageous. 20 or less was a score I was expecting to see. Chevron looks to be a bargain.

• Growth: Both the short-term and long-term outlook is pretty good for Apple, Mattel, Chevron, Aflac, and Olin Corp. Applied Materials and AT&T may have some short-term issues. I’ve often hear the quote “If a company isn’t growing, it’s dying”.

Conclusions

My picks are Mattel, Chevron, and Apple. Mattel and Chevron are in the 3% dividend range that I am looking for and pass my other metric criteria. Even though Apple hasn’t paid dividends yet, it has the potential to start doing so in addition to being a great performing stock for another year.

Will you be purchasing any new stocks this year? What criteria do you judge them against? Please feel free to share.

 

Photo credit: Microsoft Clip Art

 

Related Posts:

1) Which is Better – Paying Off Your Mortgage or Investing the Money? – Part 2

2) Which is Better – Paying Off Your Mortgage or Investing the Money? – Part 1

3) Trying Out “The Big Secret” Stock Picking Strategy

Filed Under: Stocks & Investing Tagged With: Aflac, Apple, Applied Materials, AT&T, BigSafeDividends, Charles B. Carlson, Chevron, CNN Money, Dividend Yield, dividends, Earnings Growth, Joel Greenblatt, Mattel, Olin Corp, PE Ratio, Return on Assets, ROA, Stocks & Investing, The Big Secret for the Small Investor, The Little Book of Big Dividends, Value Weighted Index

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Primary Sidebar

  • Email
  • Facebook
  • Pinterest
  • Twitter

More Great Posts!

Footer

Recent Posts

  • How to Manage Your Debt and Reduce Financial Stress
  • How to Invest During a Recession and Actually Make More Money
  • What’s the Best Way to Retire Early? By Doing This One Important Thing
  • How to Stop Worrying About Money – 5 Effective Strategies for Better Money Habits
  • How to Turn Cloudy Pool Water From Green to Blue

Search

Archives

My Money Design is for entertainment and reference purposes only. The information presented is the opinion of the author only and should not be interpreted as specific advice or recommendations towards your financial situation. Always consult with a true professional before making any financial decisions.

Affiliate Disclaimer: My Money Design may be compensated for our personal opinions, reviews, and affiliate relationships with some of the featured products and services. Google Adsense and Amazon Associates are examples of such relationships. Such content, advertising space or posts may not always be identified as paid or sponsored content. All offers or claims are subject to change without notice and should be verified with the manufacturer, provider or party in question.

Copyright © 2011–2023 MyMoneyDesign.com · All Rights Reserved · Powered by WordPress

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.