I have updated a third of my spreadsheet on dividend growth information. See my spreadsheet at dividend growth stocks. I am using the historical high and historical average dividend yield to get my spreadsheet to points out stock that could possibly be cheap at this point.
There are always some stocks to buy because they are priced reasonably. There are always stocks to currently avoid because they are overpriced. Looking at dividend growth stocks that are selling at stock prices that give them a dividend yield above the historical average dividend yield are probably the best bet.
The stocks that are selling at prices that give them a dividend yield above the historical high yield could be good stocks to buy. However, these stocks may be selling so cheap because of current troubles, especially financial troubles and should be treated with caution.
The best buys are probably the ones selling with the dividend yield above the historical average. There is probably nothing wrong with these stocks.
However, you should always investigate a stock before you buy. Sometimes different stocks in certain sectors are just out of favour or the stock market is just in one of its declines. However, a stock may be relatively cheap because it has problems. That is why you should always investigate a stock before buying.
Looking at stock this way is equivalent to a stock filter. A main problem I know of is for the old income trusts. They are generally lowered their dividend yields forever and they will probably never get back to the old dividend yield highs they made as an income trust company.
Also, on some stocks I have a lot more information years in my spreadsheets than for other stocks. So, finding a stock on the list as "cheap" is only the first step in finding a stock to buy. This is the same with any other sort of stock filters that you can use.
The last thing to remember is that I have entering figures into a spreadsheet. I could put them in incorrectly, I can transpose figures and I can misread figures. This is another great reason why you should check a stock out before investing. As this is just a filter, it works better on some stocks than on others.
See my entry on my methodology in establishing the historical dividend yield highs and lows for the stocks that I cover. You might want to look at my original entry on Dividend Growth Stocks.
This will be the first of three entries as it takes too long to update the data on dividend growth stocks in one day, so I will be doing a third of the list each day.
On my other blog I am today writing about Stella-Jones Inc. (TSX-SJ, OTC-STLJF)...continue...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.