DRIPfolio (< 20)

Buy Cialis... I mean: Applying DRIPfolio Methodology to the Stock Screener

June 04, 2009 – Comments (2) | RELATED TICKERS: NCX , RVSB

As an exercise, I thought I would go through and screen stocks for the following traits I think will be important to my DRIPfolio.

And without going into too much detail - afterall, I'm just screening stocks here - these were my parameters.

1) 50% or more below its 12-month high.  A couple months late, but still looking for quality stocks on the cheap, right?  Now, I understand that quality stocks likely rose (along with junk ones), but maybe there are extenuating circumstances why a stock could be down, and this is just an exercise, anyway.

2) Max beta of 0.5 Again, looking for less volatility and less risk.  Please - don't grill me over how poorly I will perform against the market.  The DRIPfolio is aside from my other investments.

3) Minimum dividend yield of 2.5% There was no payout ratio parameter and no dividend history, so I went with a minimum dividend yield, assuming I'd be able to find a company that has a history of increasing dividends.  (And assuming that their dividends aren't being cut this year.)  :P

Out of many, many 1-star CAPS-rated stocks (including a great deal of ETFs), here are two companies I chose to look in to: NCX and RVSB

NCX: Nova Chemicals Corp (3-star CAPS rating) is currently trading at 80% below it's 12-month high, has a beta of  negative 0.01, a 5.6% dividend yield, 7.64% 5-yr dividend growth rate average, and a dividend payout ratio of N/A.  Knowing absolutely nothing about what this company does, aside from its CAPS blip, I would consider this - as far as dividends go - a company to further investigate... But I can see that, due to the recession, their numbers are horrendous, and it doesn't look like they will be turning around any time soon.  Next.  (Didn't I read some TMF writer pushing this company a few months ago?)

RVSB: Riverview Bancorp (5-star CAPS rating) is currently trading at about 65% below it's 12-month high, has a beta of 0.24, an 8.30% dividend yield, 7.32% 5-yr dividend growth rate average, a dividend payout ratio of N/A.  I, not wanting to get into financials just yet because, frankly, I don't understand what's going to happen to all these distressed banks, and having absolutely no knowledge of this bank's future, will pass on this one.  But as far as the dividend numbers go, minus any dividend history, this could hold some potential.

I'd say this was a productive exercise, as a first time using the stock screener and applying some DRIPfolio parameters.  If you can make it through all this rambling, I want to know your opinions on what other factors I could look for, or things you'd change.  Or, hey, maybe I'm totally off base and screwed this whole thing up, in which case I want to know.