Learning how to research stocks is an important part of becoming a successful dividend growth investor. While I am still learning myself, I wanted to share some of the resources I currently use when looking into possible new additions to my portfolio. If you have any other sites or resources that you use and would like to share please feel free to leave a comment below.
Seeking Alpha-This is usually where I find new ideas to invest in. If a writer presents a compelling case for a dividend growth stock I then look at other resources to research it further. One of the great things about SA is being able to sign up for daily e-mails for different categories of articles such as “Dividends and Income.” You can also make up a portfolio on the site and receive e-mails to new articles on those stocks and real-time stock news alerts on your holdings. These alerts include things such as earnings announcements, dividend announcements, and other key news related to your stocks.
Morningstar-Morningstar is great for gathering raw numbers on a company. Under the Key Ratios tab when looking at a stock quote you can view the 10 year history of important metrics such as earnings and free cash flow per share, dividends, gross and net profit margins, and share counts. Under the Valuation Tab you can find the current Price to Earnings ratio (P/E), yield, and the 5 year averages for these. If you want access to the 10 year average for this metric and others on the site you’ll need to buy a premium subscription. Personally, I think a 5 year history is sufficient. You can find longer histories by looking at other resources like past company annual reports for example, if you need access to this data.
Dividend Champions, Contenders, and Challengers List (CCC)-The CCC list is maintained by David Fish at the Drip Investing Resource Center who also writes for Seeking Alpha. Champions refer to companies who have been increasing their dividends for at least 25 years, contenders for 10-24 years, and challengers for 5-9 years. A list of “near-challengers,” those with 4 year histories of dividend growth, and “frozen angels,” stocks that have frozen their dividend for 1 year within the last 5 before resuming annual increases is also included. Besides the stocks, the list includes a wide variety of data that you can use to research including dividend growth rates, payout ratios, and the like. These comprehensive lists can be downloaded into either an excel or PDF format. I prefer to download the excel version each month so that way I can easily edit it and remove stocks from the list that do not meet my investment criteria.
Yahoo Finance-I primarily use Yahoo Finance to look at dividend histories if I want to look beyond the last ten years provided by Morningstar. YF lists all previous dividend payouts under the historical prices section, adjusted for stock splits. This site also provides a summary of a company’s operations and links to their company websites. The Key Statistics page is also helpful if you want a quick snapshot of a company’s finances and stock information. Consolidated financial statements (annual and quarterly) are also included for usually the last three years.
Company Websites-Looking at the investor relations section of a company’s website can be very helpful when researching potential stocks for your portfolio. Realty Income (O) for example has one of the best sites for investors that I’ve run across. A good one will usually have readily accessible data for key items such as recent earnings announcements and dividend information.
Annual Reports-Annual reports or 10-K’s are required by the Securities and Exchange Commission for all publicly traded companies. These usually start with a letter to the shareholder from the company’s CEO. Warren Buffet’s annual letters to Berkshire Hathaway shareholders are great reading for anyone into investing, regardless of whether you own Berkshire stock or not. Besides letters, they also include complete financial statements with explanations, forward looking statements, and review current business risks. Annual reports can be found in the investor relations portion of any publicly traded company’s website. If you are a current investor of a company, these should be mailed or e-mailed to you every year from your broker. If you’re not a current shareholder these can be downloaded under the Investor Relations portion of a publicly traded company’s website.
Earnings Conference Calls-I usually access the transcripts to these through Seeking Alpha. They can usually be found fairly easily on company’s websites as well. While conference calls focus on quarterly performance and outlooks, they can still be a good source of information for upcoming company developments and are a good source to keep up on current business trends.
Other Dividend Growth Investing Blogs-A lot of personal finance bloggers that invest in dividend growth stocks also publish dividend stock analysis. Like Seeking Alpha I often use these as starting points to further research stocks. For a full list of the blogs I follow please check out my blog roll.