Quote:
Originally Posted by GregWeld
I think you're doing the math incorrectly!! Or at least I hope you are!
The dividend should only be calculated on YOUR COST basis. To do this --- divide the ANNUAL dividend paid - by your cost per share....
DON'T look at what it's paying currently on the price it's trading at today. What should really be happening is that your dividend PERCENTAGE should increase as they raise the payout - and your cost stays the same (unless you're adding to the shares at which time you need to calculate your new cost basis).
Does this make sense?
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Now that is something I hadn't considered. Assuming even a moderate increase in the share price and a static dividend, the dividend calculated at your cost basis could be quite high! I suppose the company could reduce their dividend to compensate and keep the payout flat.
With that in mind, I guess the screening tactic is to look for a stock with an increasing price and either a static or increasing dividend.