Comparing Different Dividend Paying Stocks
The services of Seeking Alpha help me do a reasonable comparison of various stocks and ETFs we own in little time. On Friday I sold some of my McDonald’s shares (MCD) so that I could buy more of three other companies. I sold some MCD because I think the shares are a bit over-priced now, and I have already locked in the dividend for the shares I sold. I also wanted some cash to buy other investments without decreasing our cash holdings below 4% of our total holdings.
About Dividend Grades
According to the information on Seeking Alpha, the methodology for the Quant Dividend Grades is based on comparisons within a sector. Therefore, in my buys and sells, it isn’t totally fair to compare MCD, CAH, CSCO and XEL. Nevertheless, so that you can see the ratings, I captured them for the following image. Here is the full text from the SA information on the four Quant Dividend Grades: “Seeking Alpha’s Quant Dividend Grades provide an instant characterization of each stock’s dividend strength or weakness compared to its relative sector. Dividend Safety measures profitability and leverage metrics. The Yield Grade measures historical and consensus estimated yield. Dividend Growth measures historical and estimated growth rates. Dividend Consistency measures how consistently the company has paid a dividend and raised its dividend. In combination, the Dividend Grades help investors assess if the dividend is safe and if income will be stable, increase, or decrease.
Seeking Alpha Ratings Summary
SA also provides a stock Ratings Summary. This is a score that measures the bullish or bearish sentiment of SA Authors, Wall Street brokers and the SA Quant Rating. Therefore, I don’t just look at the Dividend Grades, I also consider the Ratings Summary. In the case of MCD, CAH, CSCO, and XEL, there are no red flags in the SA Ratings Summary.
Seeking Alpha Factor Grades
Finally, SA also provides Factor Grades. These grades focus on the stock’s characteristics related to Value, Growth, Profitability, Momentum (how fast or slow the stock’s price is rising) and, Revisions. Revisions is a measure of earnings revisions. If earnings estimates are revised up, that is a positive indicator.
How to Decide?
In the end, I am working to increase my dividends with minimal work or management of my investment portfolio. Therefore, I don’t want to buy train-wreck investments. I also want to buy investments that have rational yield, payout ratios, dividend growth and dividend growth history.
I now hold 300 shares of CAH, 500 shares of CSCO, 650 shares of XEL, and 100 shares of MCD.