Friday, January 28, 2011

My 8 guidelines for selecting dividend stocks

The 8 pointers:

1. Steady dividend payout over the years, possibly a good 3-5 years record
2. If possible, steady, quarterly payout per calender year
3. Does not pursue overly aggressive growth and not in a volatile business
4. Yield "locked in" to the price purchased - at least 7% and more
4. Reits - DPU (Distribution Per Unit) to increase on quarterly basis (minus rights issue)
5. Robust management whom takes into the interests of shareholders for dividend payout
6. Where possible, double digit free cash flow (FCF) is the icing on the cake
7. Dividend pay off - cash flow from ops/retained earnings and not from past year/borrowings
8. Substantial shareholders/fund houses/management buy up the shares - add business confidence

* Above is just my personal framework for choosing dividend yielding shares
* Objective is to increase my monthly passive income
* As of now, dividends add up to about 99% of my monthly passive income

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