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My Stock Picking Approach Simplified
By Valuestocks.sg  •  November 4, 2012


In this post, I will share the criteria for my stock selection. My approach has served me very well so far (touch wood), giving me double-digit annualised returns.

Most, if not all, of the stocks in my portfolio exhibit the following characteristics:
  • entry prices near 52 week low
  • dividend yield of at least 3%
  • dividend payout ratio* between 25% to 75%
  • dividend history of last 5 years uninterrupted payouts
  • conservatively financed (debt-to-equity ratio less than 50%)
  • total shareholders' equity prior to dividends show year on year increase of 5% or more


*formula is dividends divided by earnings. I am of the view a payout ratio not more than 75% is a comfortable range. Anything more I would worry if the business is leaving enough for growth, or if the current dividend levels are sustainable. Too little, I believe there is a potential misalignment of shareholder and management interests. 

I ......
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By Valuestocks.sg
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