From time to time, I’ve been asked for recommendations for practical resources for value investors or dividend growth investors. This newsletter issue will provide an overview of some resources for you to consider. These are websites, stock screeners, and books to look into if you don’t currently use them.
If dividend growth investing or value investing are going to be useful strategies, they need to be efficient and practical. It makes little sense to duplicate work that is already available, so we try to make use of knowledge that already exists whenever possible. If you haven’t done so already, it’s smart to make a list of resources that you can regularly check to scan for new investments or to get multiple opinions on any specific investment that you’re interested in. Most readers likely have sources that they use, so if there are any on this list that you’re not familiar with, you might want to check them out.
The spread of the internet from the mid-1990’s and onwards has considerably empowered individual investors. Electronic financial statements, free and paid investing research, and websites that consolidate quantitative information or show calculated metrics (like P/E ratio, P/B ratio, etc.) are all ways to significantly reduce the amount of time it takes to find and research stocks. Here are some of the websites I find particularly useful:
Seeking Alpha is a huge social media site for investors. It consists of many article contributors including myself and many reader comments, and it’s a consolidated source of investing information. You can type in a ticker symbol and search for all recent commentary on any given investment, or you can scan the dividend section for new articles, or you can follow the articles of a specific contributor that you like.
This site is my primary source for quantitative information. For free, you can get access to five years worth of financial statements on any company, and you can look at the “key ratios” section which is one of the best ten-year snapshots you can possibly have of a company. I often compare company 10-k forms with the information on Morningstar when I’m doing research for an article, and Morningstar’s information is almost always very accurate when compared to the non-restated financial statements of a company. They also have premium newsletters, and a general premium subscription that gives you access to their analyst-researched qualitative information on a large number of companies and access to their premium stock screener.
Some of the largest financial sites are great for research such as Google Finance, Yahoo Finance, and CNN Money. I find the Google Finance one to have the best interactive screen and the clearest showing of dividends over a long period of time. With Google Finance, you can list the stocks in your portfolio there, and you’ll get a stream of news on just those companies. So I use this for my “quick portfolio check”- I can check in a minute or two for information on stock movements for what all of my companies had that day (I generally only scan for big movements that might indicate a problem or a buyout or something), and I can scan the news stream for anything notable.
There are a variety of blogs, including here at Dividend Monk, that provide free investing commentary, research, or resources. If you find a writer that you think provides good information and has a similar investing philosophy to yourself, then their site can be a great resource. The Dividend Investing and Value Network (DIV-Net) is a network of many investing blogs that you can look into.
The tools in your brokerage account should be helpful, although different brokerages will have different types of information. I use Charles Schwab as my primary account and I find their tools to be quite helpful.
When you’ve found a company that’s interesting, make sure to look at their website. There will usually be information on their different company segments, investor fact sheets, investor presentations, annual reports, and SEC filings.
Stock screeners are a useful resource for investors, because they allow you to narrow down your stock search to companies that meet certain criteria. Each stock screener has a different level of detail or a different set of criteria, so for example you could search for companies of a certain size, with a certain five-year dividend growth rate, with a specific maximum payout ratio, etc.
My favorite: Morningstar Stock Screener
The Morningstar stock screener is one of the best in my opinion. You can use a huge number of criteria to find very specific companies, and you can save your screens in your profile for repeat use. Plus, Morningstar uses a one-to-five star stock rating system that I think is excellent, because it uses old-school value principles and takes into account a company’s “moat”. So you can incorporate Morningstar star ratings into your screen, and look for stocks that meet your criteria and that are 4 or 5 star stocks and therefore are rated by Morningstar as being undervalued. The only downside for this screen is that it’s part of the premium Morningstar membership.
Another great one: CNBC Stock Screener
If you want a free stock screener, there are some great ones out there. I think the CNBC one is the best, personally. It’s very easy to use, it has a long list of criteria, and specifically the various dividend criteria you can use are better than some of the other screeners out there.
Motley Fool Stock Screener
This isn’t my favorite, but it’s pretty good overall. Like the Morningstar screen, you can incorporate the Motley Fool one-to-five star ratings into your search.
Google Finance Stock Screener
This one is fairly good in my view, but I’d personally use the premium Morningstar one or the free CNBC one over this one.
Yahoo Finance Stock Screener
Still useful, but not one of my favorites.
Take a look at some of these screeners if you currently do not use them or want to ‘shop around’ for one that might be a better match for you than the one you’re using. Although some screeners have more detail available or seem more efficient to use, it’s hard to really say that some are objectively better than others. Instead, it’s all about finding one you like that serves your needs.
There are a variety of good investing books out there. When I did a survey on this site that included a question about how many books readers have read, the ones that replied generally read anywhere between 3 and 100 books, with many reading in the 6-12 range. Here are some recommendations:
The Ultimate Dividend Playbook: Income, Insight and Independence for Today’s Investor
This is the first book I recommended on the site. It was written by Josh Peters, the editor of the DividendInvestor newsletter at Morningstar. It’s one of the longer books on this list, since it has several appendices at the end that go into detail about specific types of stocks or specific concepts. The book covers general dividend investing and also focuses on banks, utilities, MLPs, and REITs.
The Dividend Toolkit: How to Efficiently Analyze Dividend Stocks
This is the one I wrote that’s available for download on this site. It’s a 200-page book that talks about investing theory and then focuses on a specific set of things to check for a stock in order to perform a fairly detailed analysis of the major things in a rather short period of time. Sales of the book have been good so far since it was launched in August. It puts more emphasis on valuation methods like Discounted Cash Flow and the Dividend Discount Model than many other books do, and it uniquely includes a spreadsheet tool that allows you to quickly use the valuation methods that are described in detail in the book. Reviews from several other sites can be found here.
The Intelligent Investor: The Definitive Book on Value Investing.
This is the classic value investing text written by Benjamin Graham. Some things are a bit dated by now, but this is a permanent classic. Every long term investor should probably read this at some point.
Dividend Growth: Freedom Through Passive Income Canadian Edition
Another blogger that runs the Dividend Guy website published this e-book. It comes in a U.S. version and a Canadian version, which I think is particularly smart because a lot of investing books are written by Americans and include American examples, but he’s a Canadian and uses Canadian companies as examples in the Canadian version.
Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School
There are a million personal finance books out there, but this is one of my favorites. Andrew Hallam became a financially free millionaire in his 30’s on an English teacher’s salary through a combination of reasonable frugality and smart investing. He has experience with long-term value investing, but his primary investing strategy at this point is low-cost, low-maintenance index investing to get great returns over time. The book provides concise arguments for selecting index funds over mutual funds if you go that route, and also talks about personal finance. I agree with him that most schools have inadequate or non-existent lessons about personal money management, so I’d recommend this book as a great gift for younger people, or people that invest in mutual funds, or practically anyone that just wants a great read about how to easily build wealth.
There are stock lists like the DJIA, or the ‘Dividend Aristocrats’. One of the bests lists in my view is David Fish’s ‘Dividend Champions‘ list. Each month he provides updated information on the hundreds of companies that pay growing dividends, so that you can be aware of the specific universe of stocks that pay growing dividends each year.
I’ve been on a partial vacation from Dividend Monk over the last month during the holidays, so posting has been on the lighter side. Here are the articles of the last month:
Income Focus: COP and PSX
Kinder Morgan Energy Partners: Still Poised for Good Returns
Kinder Morgan Inc. Analysis
Automatic Data Processing: A Strong Position
Costco Dividend Stock Analysis