Introduction: Build a Dividend-Powered Portfolio with EquityScan
This guide will demonstrate how to use EquityScan to identify stocks with attractive dividend yields, potentially creating a stream of passive income for your portfolio. However, it's important to remember that every investor has unique needs and preferences. The screening criteria used in this guide are simply an example – feel free to adjust them to align with your own investment goals and risk tolerance.
Beyond the Numbers: The Importance of Due Diligence
While EquityScan provides powerful screening capabilities to pinpoint high-dividend stocks, it's crucial to go beyond the numbers and conduct thorough due diligence on each potential investment. This includes:
Analyzing the company's financial health: Ensure the company has a sustainable business model and strong cash flow to support its dividend payouts.
Assessing dividend sustainability: Look for a history of consistent or increasing dividends, and evaluate the company's future prospects to gauge the likelihood of continued payouts.
Understanding the company's industry and competitive landscape: Identify potential risks and opportunities that could impact the company's performance and dividend policy.
Let’s get started.
EquityScan Homepage
Filter by Upside Potential
Scan Results for Potential Upside
Filter by Dividend Yield
Tailor your search by Market Cap
Want to focus on large-cap companies For example, I filtered for companies with a market capitalization of at least $50 billion and a dividend yield of 3% or higher. It narrowed the results to 16 companies.
Experiment with different filters to discover opportunities that match your specific investment criteria.
Stock Detailed View
Click on the ‘Stock name’ to get to the stock detail page.
Fundamental Research
Before you invest, do your homework!
Newsflow: Scan for any recent news that could significantly impact the stock's price. For example, natural disasters, regulatory changes, or industry disruptions can create uncertainty and volatility.
Earnings: Always check the next earnings announcement date. It's generally best to avoid investing in a stock within one week of its earnings release, as the results can cause significant price swings.
Fundamentals: Conduct your own research on the company's financial health and future prospects. Review key metrics, analyze their competitive landscape, and assess their long-term growth potential. Go through our stock market investing course to find out how.
Are dividends sustainable? We have had plenty of examples of stocks cutting dividends when profits started dropping. For example AT&T & Intel. Check the payout ratio too.
Technical Research
Access advanced charts and technical analysis tools via TradingView (free account allows for two indicators). If you prefer a different charting platform, feel free to use your own charting platform.
Before you proceed, consider these trend checks:
200-Day Moving Average: Is the stock price currently above its 200-day moving average? If not, the longer-term trend may be downward, so proceed with caution.
Short-Term Downtrend: Is the stock in a short-term downtrend? If so, add it to your watchlist and wait for the downtrend to reverse before considering an entry. This helps avoid catching a falling knife!
Dollar Cost Average/Weighting
Dollar-cost averaging is a smart strategy when entering a new stock position, especially when building a long-term portfolio. By investing a fixed amount of money at regular intervals, you average out your purchase price over time, reducing the risk of buying high and selling low. This approach helps mitigate the impact of market volatility and removes the emotional element of trying to time the market perfectly.
Furthermore, it's wise to limit any single stock position to less than 5% of your overall portfolio. This diversification helps manage "unique risk" – the risk associated with a specific company or industry. If a single holding experiences a significant downturn, its impact on your overall portfolio will be limited. Combining dollar-cost averaging with sensible position sizing promotes steady, long-term growth while mitigating potential downside.
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