Eudividend investing system is the tool for income seeking investors with long term time horizon to get deeper knowledge of key principles of dividend investing. It makes easier for investors to construct and run dividend stock portfolio.
We focus on dividend paying companies. If company pays dividends and increases them regularly, there are more chances that it has stable business model and is well run.
As a long term investors we focus on dividend growth because it provides you with increasing income stream and makes stock over time more valuable.
When investing we encourage our clients to follow these main principles
- Consider business cycle and market conditions.
- Diversify by sectors, depending on business cycle.
- Invest in high quality stocks, sector leaders.
- Take account of company’s dividend growth practice.
- Invest regularly, start small.
- Pay attention to the size of company. Majority of companies in your portfolio should be large ones.
After considering business cycle and choosing sectors to invest in, move on to pick individual stocks. Here we use DGP stock valuation system. It helps to analyze company performance over time and consists of three parts.
First we look at the past experience of company.
We investigate business model of company and evaluate how strong it used to be in the past relative to other companies in its industry. We look at company’s history of dividend growth, earnings, sales and other criteria relative to other dividend paying companies in the same sector. We pay most of attention on dividend reliability and growth. Stocks are rated from 10 to 1, where “10” means that company belongs to the best in sector.
Then evaluate current price reasonableness
We do it from dividend perspective. Compare current real dividend yield with long term average real dividend yield. The higher is the current one the more attractive the price of stock becomes.
At the same time we take into account other criteria, like Price to Book Value, Price to Earnings and Price to Sales.
Consider what future growth drivers could be to support company’s dividend
Where company is in its business cycle?
What are its competitive strengths?
What growth kickers could support dividend growth?
Are there prospects of stable, repeating sales in the future?
Current state and possible growth of economy overall and company’s sector should be taken in account.