Compound Income ↑

If you’d like to receive Compound Income Scores & Portfolio in your Google Drive, please choose one of our plans below. Please use the e-mail address associated with your google account to sign up:

Please note this is not an automatic process as it has to be done manually, but we will endeavour to do it as quickly as possible once we receive notification of your request and your payment instructions are set up. 

Once you’ve signed up, look out for an e-mail from us and your chosen service with an invitation to view the Scores file & please do check your junk mail folder too as sometimes these end up there.

I found when researching shares and investigating stocks that came up in screens that I was always looking at the same financial metrics on each individual stock to see if they appealed and if they were likely to help me meet my objectives. As a result of this I set out to create a bespoke Scoring system that would point me towards and highlight the stocks that provided the best mix of characteristic that I am looking for. These characteristics are based on fundamental factors such as value, quality, financial security, dividends and momentum which have been found to help in identify outperforming shares. As I am aiming to grow my capital and income in real terms over time, I therefore look to Compound Quality Growing Income or CQGI, this is the essence of Compound Income.

They are designed as a way to help quickly identifying UK listed equities which are offering good value, with robust operating characteristics and a yield that is well covered, which has been growing consistently and is forecast to grow in the current year with those forecasts ideally supported by positive estimate revisions. These are then presented in a table with scores on each of the underlying metrics. These are then re-ranked to give the Compound Income Score or CI↑ Score with 100 being the best and 0 the worst.

Points to note are that the highest ranked stocks will not necessarily have highest yields given all the other factors being taken into account and evidence presented below that suggests that the 4th quintile of yields rather than the 5th or highest quintile tends to perform better. This is mostly due to the highest yields tending to be less well covered and therefore more vulnerable to being cut with a knock on effect to returns.

However, with the scores being broken down by the different factors including cover and with other valuation metrics like P/E and EBIT/EV being presented, it is quite easy to get a quick feel for a stock and why it scores well. I have also added price momentum, over bought / over sold indicators and dividend growth figures both 5 year historic and one year forecast as well as a suggested sustainable growth rate based on the pay out ratio and average ROCE. Market capitalisation and enterprise value figures are also presented so you can get a feel for the size of the Company and its debt / cash levels at a glance. Finally more recently we have added a Triple Trend Momentum indicator which helps to produce Buy, Hold, Avoid and Sell suggestions on all stocks covered by the Scores, based on their technical & momentum trends.

Personally I find the Scores to be a useful way of identifying interesting candidates for further research and also for quickly identifying if an unfamiliar stock that crops up might be worthy of spending any more time on researching. I therefore use the Scores daily in my personal investing.

You can also use the spreadsheet as a way of sorting or filtering by particular metrics. For example: you could filter the list by top 40% of CI↑ Scores with a yield of at least say 3% and dividend growth of at least 2% to give a reduced list of stocks from which you could pick. That is just a suggestion of course, you can filter and sort on any of the metrics. This gives it more flexibility than a screener which you would have to enter lots of different minimum / maximum values in to cover these data inputs and probably end up with only a handful of stocks in the list and no idea of how they compared with the excluded companies.

I would not however recommend just buying the highest scoring stocks, these should be used as a guide to those stocks which may be worthy or further research and help to steer you away from those that are potentially unattractive. While you can then also use the Triple Trend Momentum indicators as a further guide to those that are being recognized or shunned by the market based on their share price performance in both an absolute and relative sense and if their earnings are at least stable or rising.

The CI↑ Scores therefore give you a quick overview of more than 500 UK listed dividend paying stocks ranging from FTSE 100 down to AIM. I have excluded zero yields from the list although I did relax this for FTSE stocks for the sake of completeness at the larger end of the scale. As mentioned at the start these have been used to produce the Portfolio Performance shown in the table at the top of this page and in the graph on the Portfolio page. If you would like to gain access to the Scores as part of your investing, see full details of the Portfolio and all the transactions then please use one of the links above If you choose to subscribe you will also get a FREE e-book detailing the thinking and academic research behind the Scores.

Dividend Growth Stocks can provide higher returns with lower risk as shown in the chart below based on Data for EAFE (Rest of the Developed World)

Disclaimer

The Scores should not be construed as investment advice or a recommendation to buy or sell any of the shares mentioned. Readers should remember that share based investments can go down as well as up and you should only invest with capital that you can afford to lose. You should also generally get professional advice before investing unless you are happy to do so without.

Compound Income makes no representations as to the accuracy or completeness of any information on the website or found by following any link on the website and will not be liable for any errors, omissions or delays in this information or any losses, injuries or damages arising from its display and use. All information is provided on an as is basis and this is an unregulated service.

Copyright © 2024 Compound Income