Want a dividend stock screener? As you might guess, Stock Investor Pro (SI Pro) is the only screener with a pre-built screen for the Weiss strategy. It creates a version of the Blue Chip universe (the documentation explains their rationale) which is dynamic. That is, for any time period you run the screen, it creates the universe at that time.
It also includes a pre-built factor for average high dividend yield.
There are, in fact, two pre-built dividend stock screeners in SI Pro. Only the Weiss implementation is discussed here.
You can check the historical performance of both strategies at AAII.
For the week ending Jan 20,2017, the SI Pro screen passed the following companies:
If you need to pick 3 companies from the results based on yield, you would choose TXN, RS and OXM. If you were to pick 3 companies based on the closeness of the current yield to the high 7 year average, you would create a custom field as Yield/7YrHighAvg and pick the 3 with the highest numbers. In this example it would be the same 3 companies.
Any companies you choose would need to be added to your dividend yield portfolio.
If you preferred using a custom list like Dividend Champions instead of the dynamic list, SI Pro allows you to upload a custom list (as a portfolio) and run a screen against the portfolio. In this case, you would remove any unwanted (or unnecessary) rules from the standard screen and save it by name as a custom screen.
You can also create custom fields and rules or switch to other criteria.
On Feb 18, 2017, only one of the 3 stocks (OXM) passed the pre-built screen. Both TXN and OXM increased in price, but TXN increased enough that the yield was no longer within 90% of the high average dividend. Do you really want to sell dividend stocks increasing in price before they get to the low average dividend?
A basic decision is whether to simply buy (or hold) only positions that currently pass your screen, or to hold a position until it meets a target or deteriorates. In the first case, you are done except for running the screen on a pre-determined schedule to update your positions.
If you follow the SI Pro approach used to create the performance curve, you will just hold the positions that pass the screen each month (or on the frequency you determine). Note that this means you will be holding a variable number of positions each time. The average number of companies passing the Weiss screen is 11; but as you can see above, it may be 3 it may be 5.
This is why you should consider a sell (or hold) screen. Otherwise, you will only hold companies that continually pass the buy screen.
When to sell is at least as important as buying. The simple solution is to create a custom sell screen. Running the buy screen again only tells you what to buy, not what to sell. If your goal is to buy value and wait until it matures, knowing what to buy will not tell you if the value has collapsed or if your stock is growing.
Reasons to sell such as
can all be implemented in SI Pro as a custom screen. Notice that a sell rule should only be in place if there is a corresponding buy rule. For example, you should not have a sell rule if earnings drop unless you have a buy rule that earnings did not drop.
All you need to do is run the custom screen against your portfolio of current holdings. Any company passing the sell screen is sold. Easy.
Then you run the buy screen looking for replacements. If nothing is sold and you have reached the desired portfolio size, there is no need to look for something to buy unless you are only going to hold companies that pass the buy screen right now.
The key is to run the sell screen before the buy screen. And run the sell screen on a regular basis.
The role of the universe in a sell screen can get a little messy. You may need a sell screen associated with just the universe to determine if one of your holdings is no longer in the universe.
For a universe sell screen, you would sell the company if it is no longer in the universe (custom or dynamic). In the above example, RS was dropped from the universe because the EPS went from 4.210 to 4.208. In other words it did not increase. Is a decrease of 0.002 per share a reason to be dropped from the universe? You need to decide.
Based on the research of Gray and Vogel as reported by Mebane Faber (see Bibliography), the obvious choice for a variation is buyback yield - the effect of changes in net shares outstanding.
Buyback yield is not directly available as a criteria, but it can be created as a custom formula or you could just examine the changes in shares outstanding.
Another possible variation is using multi-factor ranking. Perhaps dividend yield and the ratio of dividend yield to average high 7 year yield. Multi-factor ranking is not possible within Stock Investor Pro, but all the necessary fields can be exported to use in a spreadsheet.
If you already subscribe to Stock Investor Pro you already have access to two pre-built dividend stock screener variations and a screen-able portfolio.
You may only need to build a sell screen, and you can certainly implement variations with the rich set of criteria offered in the AAII product.
The only negative with this product as a dividend stock screener is the lack of weighting and multi-factor ranking.
Dividend Stock Screener > SI Pro
Faber, Mebane. Shareholder Yield: A Better Approach to Dividend Investing (2013). Focus - using net share buybacks (buyback yield) and debt reduction in addition to dividends paid to determine the yield. Shareholder and buyback yield can improve the performance of any dividend based strategy.
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