☕️ Sunday Coffee: How We Choose MaxDividends Stocks - A Deep Dive
In this article, I’ll break down the approach to selecting stocks for MaxDividends Top 10 list and app strategy.
As a father of three with a loving family, stability and a clear outlook on the future are paramount. We need a strategy that keeps us secure even in uncertain times.
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Intro
I'm no longer in my twenties, and the desire to work less is growing. So, I really enjoy seeing notifications about my new dividends coming in.
I’m a systematic person and love certainty, especially when it comes to my savings and finances. I don’t want to work until I’m 65. I want to enjoy life and my hobbies sooner, without stressing about a government-dependent retirement income. I want to control my destiny.
After extensive research, I decided the stock market was the best, most flexible investment avenue. Why? Low entry threshold, freedom of choice, high liquidity, and the ability to align investments with my personal goals.
To secure a sustainable, growing passive income from dividends, several key parameters are crucial:
Predictability of income
Regularity of payments
Growth of payments
Safety and transparency of the investment path
Based on these parameters and my extensive experience in market research and company analysis, I’ve developed essential rules for selecting dividend-paying stocks.
How the MaxDividends Strategy Works: 7 Steps to Predictable Success
1. Daily Market Scan: We scan over 5,000 U.S. stocks daily for companies that meet the high-dividend criteria of MaxDividends.
Every week, twice a week, my team and I conduct extensive market scans. We review about 5,000 companies listed on NYSE and Nasdaq. These are U.S. companies traded publicly. On other days, we update financial data, aggregating all available public reports for subsequent analysis.
Market conditions change daily. Companies rise and fall in value, new financial reports are released, and news emerges. Our task is to find the best opportunities amid these changes.
Manually analyzing such a vast amount of information is impossible for a small team, let alone one person. Even with all necessary tools, it takes 4-5 minutes to study one company's financial report. For 5,000 companies, that's 25,000 minutes or 17 days.
Thus, we created MaxDividends to automate the search and analysis of financial data, quickly identifying top dividend-paying companies.
Once data is gathered and updated, we analyze each company's information. We thoroughly review the public financial reports of the past 12 years to ensure we select strong businesses. Here’s what we prioritize:
2. Sales Growth: Priority is given to companies showing long-term positive sales trends, indicating business growth.
Sales trends are crucial. If sales are declining or stagnant, the business is dying. Any business thrives on sales growth. With growing sales, other issues can be resolved. MaxDividends screener selects companies with historically positive sales trends, indicating a developing business.
3. Profitability Check: We select only companies that have been profitable for the last 10+ years.
Profitability is another critical metric. While startups may initially spend heavily to establish themselves, no company can survive long-term without profitability. We select companies that have been profitable for over 10 years.
This period usually includes two 4-year economic cycles and one 7-year cycle, encompassing significant market events and local crises. Companies that remain profitable through these periods have proven their business model's reliability.
4. Dividend Consistency: Companies must have paid dividends consistently for at least 10 years.
As dividend investors, we seek companies that provide stable, predictable income. MaxDividends ensures companies have consistently paid dividends for 10+ years, increasing payouts over time. This reliability helps us confidently predict future dividends, supporting a growing passive income.
5. Dividend Coverage: We ensure dividends are paid from profit with sufficient surplus.
Stable dividend payments and growth require dividends to be paid from current profits, not past earnings or loans. MaxDividends verifies that dividends are covered by profits, indicating competent management and sound financial planning.
6. Dividend Growth: We focus on companies that increase or keep almost the same level of dividends, with a track record for at least 10+ years.
The next crucial step is ensuring dividend growth. Companies that grow sales and profits should also increase dividends. We select companies that consistently raise or keep stable level of dividends, providing a predictable rise in passive income regardless of market conditions.
7. High BeatMarket Score: Only companies with a strong rating make it into our balanced portfolio of growing dividend-yielding stocks.
Finally, we ensure our selected companies are top performers using the BeatMarket Score. This rating system evaluates companies on 130 criteria, ensuring we invest in the strongest businesses. Companies with high scores are more reliable, grow faster, and manage debt better.
👉 Learn more about BeatMarket Score
After this thorough process, we’re left with about ~100 companies. We sort them by current dividend yield, selecting undervalued stocks with the highest yields.
This forms the Top 10 MaxDividends stocks with ~5%+ dividend yield and base for MaxDividend app strategy, ready to provide a robust and growing passive income.
So, this is the way how we break down the approach to selecting stocks for MaxDividends top 10 list and MaxDividends app strategy.
👉 My High Yield Dividend Growth story. $12,000 monthly for 120 months
MaxDividends Key Concept
At MaxDividends, we focus on a dividend growth strategy. It’s a great fit for investors who want capital appreciation, a decent level of safety, and growing income.
As the name suggests, dividend growth investing is all about finding stocks that pay dividends and can keep growing them over time.
MaxDividends Stocks are Unique
They not only provide income but have a strong track record of increasing that income over the years.
Plus, investing in companies that consistently raise dividends has historically been a solid strategy.
👉 Full list of MaxDividends Stocks
Do you know what is the power of the MaxDividends strategy? It is that even if I stop investing right now, my dividend income will continue to grow. And even a conservative forecast says that in the next 10 years the growth will be 4 times.
MaxDividends Mission
Help & support everyone on the way to build growing passive income, retire early and live off dividends.
Build your own dividend machine with MaxDividends to launch growing passive income, retire early and live off dividends with community like-minded
MaxDividends Community
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MaxDividends Premium: What You’ll Get
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Posts & Podcasts with deep dives into the top dividend stocks we hold. Key points, current statement, perspectives and consensus.
My personal MaxDividends portfolios and short list with all the changes and updates weekly.
Comprehensive tools to help you on the way retire early and live off dividends.
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FAQ
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👉 MaxDividends Roadmap to Early Retirement with Living Off Dividends