Best dividend stocks: Geraldine Weiss’ mantra for investing success: Stay with high dividend-paying stocks


There are numerous analysts and consultants within the investing world, however there are a couple of legends who’ve distinct qualities and affect, which separates them from different common Joes. The knowledge that these legends share generally is a guiding gentle for younger traders who need to obtain success within the investing world. One such legend is Geraldine Weiss.

Geraldine Weiss, generally known as the ‘blue chip stocks guru’ is the founding father of the advisory e-newsletter, Investment Quality Trends. She can also be a co-author of two books.

The story behind the legend
Weiss was born in San Francisco in 1926 and studied enterprise and economics on the University of California, Berkeley within the Forties. She acquired fascinated by the funding world within the early Nineteen Sixties and determined to be taught as a lot as potential about investing.

Weiss took the primary plunge within the inventory market in 1962, however could not discover any appropriate job as no brokerage agency was prepared to think about her for the place of a dealer because of the rampant sexism prevalent at the moment.

She then determined to arrange her personal funding e-newsletter referred to as Investment Quarterly Trends (IQT) in 1966 and have become the primary lady to publish a extensively distributed inventory market e-newsletter. This method, she broke the glass ceiling and efficiently entered the solely male-dominated area of monetary markets.

She signed her newsletters as “G. Weiss ” to cover the truth that it was a lady who was operating such a well-liked e-newsletter as she did not need a backlash from the male-dominated funding world. Within a pair years, she had a loyal readership who made first rate income by following her funding recommendation.

Weiss remained concerned with IQT’s total technique even after her retirement in 2002. Weiss’ evaluation of blue chip stocks was all the time spot on and her funding model introduced constant success.

As an analyst, Geraldine’s work and interviews have been revealed in illustrious finance publications and have been appreciated by the who’s who of the funding world.

Also generally known as the “Dividend Detector”, Weiss researched and located one of the best blue chip stocks that promised nice dividends as she believed that dividends have been the last word driver of shareholding and linked stocks to company income.

Weiss additionally co-authored two funding bestsellers, “Dividends Don’t Lie” and “The Dividend Connection.”

She additionally repeatedly participated in funding seminars, conferences and workshops all through the world and has shared her knowledge with many younger traders.

Why must you put money into firms paying constant dividends?
Often known as the “Grand Dame of Dividends”, Geraldine Weiss believes one of the simplest ways to attain funding success is to again solidly-performing firms who persistently pay dividends.

“[Paying dividends] is perhaps the most sacred of all corporate financial components, and the measure of value we hold in the highest regard,” she wrote in her ebook “Dividends Don’t Lie”.

Weiss is of the view {that a} common payout to shareholders is one of the best indicator of the monetary well being of an organization, even higher that an earnings determine, as a result of it’s too straightforward to control earnings figures in monetary statements.

“A clever accountant can make earnings appear good or not so good, depending on the season or the objective. There can be no subterfuge about a cash dividend. It is either paid or it is not paid,” she says.

Weiss feels investing in firms that pay high dividends additionally ensures that traders don’t have to attend till they promote shares to obtain an earnings from them.

Weiss is of the view that traders ought to take pleasure in common buying and selling and never simply have a buy-and-hold strategy in direction of investing.

Weiss advises traders to maintain a tab on the dividend ranges and share costs of dividend-paying firms and repeatedly modify their portfolios to make sure they embrace solely those paying traditionally high dividends for a share value that undervalues them.

“Folks who ignore the importance of dividends in making stock market selections are not investors. They are speculators,” she mentioned.

Weiss is of the view that dividends might be thought-about as “real money” and are a trademark of a bluechip inventory.

Weiss feels traders ought to look for bluechip firms which have a robust steadiness sheet as these firms shouldn’t have hassle paying dividends sooner or later.

According to Weiss, traders ought to have a comparatively concentrated portfolio they usually should not maintain greater than 10-20 stocks.

Weiss’s funding strategy
Explaining her funding strategy, she says that she focuses on dividend yield, which is the annual dividend per share divided by the share value. She makes use of particular standards to shortlist and assess stocks together with collating 25 to 30 years of month-to-month inventory value information to seek out excessive highs in dividend yield to find out if they’re a cut price purchase (undervalued inventory value) or excessive lows in dividend yield and priced too high (overvalued inventory value).

Weiss encourages traders to take a look at some primary worth measures to substantiate valuations derived from the dividend yield strategy, together with:

  • A P/E a number of that’s traditionally low for that individual inventory and different comparable stocks, and that’s under the market a number of.
  • A price-to-book ratio that’s no larger than 1.3; the nearer it’s to 1, the higher.

Weiss is of the view that as all shares undergo cycles of undervaluation and overvaluation, traders needs to be trying to make the most of these cycles.

They can purchase shares when they’re undervalued and promote them when they’re overvalued.

“Never is there a better time to buy a stock than when a basically sound company, for whatever reason, temporarily falls out of favour with the investment community. When bad things happen to good companies, it must be viewed as a buying opportunity rather than a bailout,” she says.

Weiss says, she shortlists firms that meet six “blue chip” standards:

  1. The dividend will need to have been raised 5 occasions previously 12 years
  2. Have an “A” credit standing from S&P
  3. At least 5 million shares should be excellent
  4. It will need to have not less than 80 institutional traders
  5. A complete of 25 uninterrupted years of dividend payouts
  6. Earnings enhancements will need to have been recorded in not less than seven of the previous 12 years

Weiss’ 7 investing guidelines
Weiss got here up with seven guidelines of investing from her years of expertise within the investing world, which has helped traders of all ages every so often to make higher funding selections.

Here are the seven guidelines listed by her:

  1. Stock should be undervalued as measured by its dividend yield on a historic foundation
  2. It should be a progress inventory that has raised dividends at a compound annual fee of not less than 10% over the previous 12 years
  3. It should be a inventory that sells for two occasions its ebook worth, or much less
  4. It will need to have a price-to-earnings ratio of 20 or much less
  5. It will need to have a dividend payout ratio of round 50% to make sure dividend security plus room for progress
  6. The firm’s debt should be 50% or much less of its market worth
  7. It should meet a complete of six “blue chip” standards

The secret to profitable investing
Weiss’s funding strategy has all the time given desire to secure slightly than spectacular returns and he or she believes that there is no such thing as a actual secret to turning into a profitable investor.

She is of the view that for worth traders to achieve success, they will need to have persistence and self-discipline and will keep away from concern and greed.

“Successful investing in the stock market is not brain surgery. Anyone can be a successful investor. The secret is no secret. It is simply that you confine your selections to blue chip stocks, you buy them when they are undervalued and you sell them when they become overvalued. This is the well-lit path of the enlightened investor,” she says.

Weiss’s funding model was usually referred to by merchants as being “too bearish”, however between 2000 and 2016, the inventory portfolio advisable yearly by IQT outperformed each the S&P 500 and Buffett’s Berkshire Hathaway.

Kelley Wright, who succeeded Weiss at IQT has all the time been in awe of the investing genius and believes that Weiss has again and again proved that “Wall Street is no match for mom’s common sense and experience.”

(Disclaimer: This article relies on Geraldine Weiss’s ebook “Dividends Don’t Lie”)

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