Tracking The DARPA Portfolio: Dividends And Reasonable Price Appreciation Stocks One Month In
Seeking AlphaDividend StrategyTracking The DARPA Portfolio: Dividends And Reasonable Price Appreciation Stocks One Month InOct. 13, 2020 3:48 PM ET|| Includes: AMGN, AMP, BLK, HSY, TROW, VFIAX, VTSAXby: Psycho AnalystPsycho Analyst Long Only, Value, Growth At Reasonable Price, healthcareSummaryLast month, I defined 15 high-quality "DARPA" stocks that provide both dividends And reasonable price appreciation.
These stocks were sorted by whether or not they appeared overvalued.
This article reviews how both the undervalued and overvalued DARPA stocks fared this month.
Like many other retirees, I am tempted by the collapse of interest rates to turn to dividend-paying stocks to supply income I used to get from CDs and money market funds. But I am well aware that stock prices can sink very suddenly and stay low for a decade or more, especially when valuations become stretched, as they seem to be now.
That means that when hunting for dividend-paying stocks, I want to look at more than just the size of the dividend and the company's track record for growing its dividend. I want to invest in companies that are not going to surprise me with dramatic, cyclical losses, unsustainable debt loads, or disappearing customers. Obviously, there is no way to accurately identify such companies since we can only review past history. But past history can help us eliminate companies whose earnings have a history of being cyclical or that have fluctuated dramatically, and reviewing credit ratings can also weed out companies likely to run into significant financial trouble in the short term.
With these thoughts in mind, last month, I used FAST Graphs to screen both the large-cap S&P 500 and the mid-cap S&P 400 looking for high-quality stocks that paid a dividend of at least 2%, which had a record of a decade or more of steady earnings growth. Details of the criteria I used, including how fair value was calculated, can be found in the article where I introduced this... Read more