Dividends and Seeking consistent, solid profits among US big caps

Investing in the stock market, particularly in the last few months hopefully has given you gains and that is part of the reason you invest. Once you have made gains, then you want to ensure that you do not lose money and one of the best methods is to invest in consistently profit large companies which no matter the economic cycle will make profits. When they make profits and pay dividends you have choices what to do with the dividends and that is a good choice.

Which companies to look for, Anthony Menard of Inovestor Asset Management has some ideas: his criteria was:

market cap higher than $10 billion

EPI of 2 or higher, the return on capital divided by the cost of capital

Relative EPI of 0.6 or higher – the ratio uses the return on capital adjusted for its market capitalization divided by the cost of capital

Positive 3 month percentage change in the economic value added (EVA) metric. This metric gives investors a sense of how much value the stock is adding for shareholders and is arrived at by taking the net operating profit after tax and subtracting the cost of capital.

One year sales growth higher than 2% or higher growth than inflation.

Company Mkt Cap EPI Rel 3M EVA 1 Yr Sales ROC P/E Div Recent

US $Bil EPI Grth % Grth % % Yield Price

Clorox 23.990 4.5 0.9 27.6 22.7 25.3 20.0 2.3 190.73

Progressive Corp 57.790 4.4 1.2 98.2 9.3 38.8 10.2 0.4 98.76

AutoZone 32.960 3.7 0.7 10.3 10.9 29.3 19.0 0.0 1495.84

Vertex Pharm 56.780 3.6 0.6 18.0 50.3 28.7 21.3 0.0 219.39

Regeneron Phama 53.840 3.2 0.9 63.4 8.1 23.5 16.5 0.0 502.60

Bio-Rad Lab 18.570 2.7 0.6 30.2 10.1 19.4 4.8 0.0 600.87

Dollar General 51.860 2.6 0.8 12.9 21.6 16.2 20.4 0.8 216.74

General Mills 37.390 2.4 1.3 46.2 11.1 12.1 14.9 3.3 61.30

Target Corp 103.990 2.3 0.6 32.3 19.8 16.7 24.1 1.3 208.55

PerkinElmer 14.920 2.0 0.7 80.5 31.2 16.2 20.5 0.2 133.16

Linking to dividend paying stocks, part of investing is not to lose money, which means try to invest the bulk of your investments in dividend paying companies. There will be growth as stock prices go up, but if the market is sideways you will still be earning dividends. Whether you use the data above, the most important aspect is to do your homework and many platforms offer the data so you do not have to calculate everything, you can. However there should be some ratios you look to for comparison and have an idea of when to ensure your portfolio needs to be managed through diversification. When do you sell? As a dividend investor you tend to hold for a longer period of time, but when do you sell or seek alternatives?

There are more questions than answers, till the next time – to raising questions.

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