Rose’s Income Garden Inflation Fighting Investment Winners

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RIG Goals

RIG has been performing well, value even and a yield of 5.1%, because of the goals set long ago along with diversification, value purchasing, positive earnings and dividend growth. Looking for 9-10% from dividend yield is not easy, but combined with a rising dividend growth rate it is possible to succeed with that for total return. One metric some may or may not know about is the Chowder # which is used for picking great quality dividend paying stocks.

CHOWDER # = 5-year dividend growth rate + dividend yield

The 5-year Dividend Growth Rate/5DGR

It is common to use 5 years of dividend growth = 5yr DGR/ “5DGR” to measure any investment’s dividend raising success. The dividend yield of the S&P 500 or SPY is currently 1.75% which is also near its 5DGR. To beat that current SPY yield by a 50% advantage one would need a 2.6% dividend yield . In many articles, such as this one here explaining the Chowder # rule, a 3% rate is used, which I will use as well here. The dividend raises for 5 years may be found easily at the subscription service I use from Chuck Carnevale called FASTgraphs. Otherwise, one could go to each stock investor website that will list dividends and the raises may be determined using that information there. This is perhaps the most difficult statistic to find, but it is an important and quite valuable one to know.

Dividend Yield

The current yearly dividend divided by the stock price results in its yield. Pretty simple and easy to find and use.

So, add the 5DGR + the dividend yield and you get a # , called here the Chowder #. It is used to determine relative investing strength. This number actually is used primarily for purchases but it can be a measure of continued stock performance year after year.

C# Levels

There are 3 C# levels that cover most all investable stocks. The highest numbers are definitely and primarily based on dividend yield, whereas the lower number and 3rd level number is for certain sector stocks.

#15

When the yield is less than 3% (or currently as previously mentioned 2.6%) this number is primarily used for growth stocks and those with low yield.

#12

This is used when the yield is greater than 3% (right now 2.6%).

#8

The stocks that are found here are in general solid more high yield safe dividend payers that do not rely greatly on price appreciation, but more on a solid dividend yield. Utilities are considered to be a defensive investing sector and definitely get this lower # . The telecoms, some RICs and MLPs are also considered to be in this category, as they are winners for yield, but not in general offering larger dividend raises.

The complete evaluation for all 82 stocks in RIG was published at The Macro Trading Factory service yesterday, but I wish to share with you some of the winners:

#15

2022

5yr

C#

pass

ticker

Company Name

Pr/Sh

D Yld

D GR

C#

(FMC)

FMC Corp

126.57

1.7%

33.2

35

15-Y

(MON)

MasterCard

317.43

0.6%

18.5

19.1

15-Y

#12

Company

Nov 7th

2022

5yr

C#

pass

ticker

Name

Pr/Sh

D Yld

D GR

C#

(BTI)

British American Tobacco

38.73

7.7%

7

14.7

12-Y

(HD)

Home Depot

288.06

2.6%

19.4

22.1

12-Y

#8

Company

Nov 7th

2022

5yr

C#

pass

ticker

Name

Pr/Sh

D Yld

D GR

C#

(MO)

Altria

45.29

8.0%

8.5

16.5

8-Y

(RAG)

Vodafone

11.99

8.3%

0

8.1

8-Y

High yield stocks, of which there are many are also considered winners using the Chowder # method.

Conclusion/Summary

In some cases, one could argue that a C# of 10 might be enough for a pass with meeting inflationary means and not expecting any growth. It should be up to each and every individual to determine their own needs and how to use the actual #. 33 RIG stocks qualified for purchase using this method/criteria for the Chowder #. In addition, 14 high yield stocks passed just for the yield. It is extremely instructive and helpful and due diligence using other methods and especially earnings should be the final measure for determining success.

Happy Investing to All!

Macro Trading Factory is a macro-driven service, run by a team of experienced investment managers.

The service offers two portfolios: “Funds Macro Portfolio” & “Rose’s Income Garden”; both aim to outperform the SPY on a risk-adjusted basis, in a relaxed manner.

Suitable for those who either have little time/knowledge/desire to manage a portfolio on their own, and/or wish to get exposed to the market in a simple, though more risk-oriented (less volatile), way.

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