Deciding Which Stocks To Buy: Dividend Growth Investing Criteria

Deciding Which Door to Choose 2

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A question I often get asked is how do I decide what stocks to buy? The answer isn’t a simple one, but I’ll do my best to break it down. My process involves reviewing various companies and setting target prices. My dividend growth investing criteria is broken into two parts. First I complete a dividend stock analysis to determine if it is a company worth owning. What makes a company worth owning? Well I’m a long term investor so I’m looking for companies with a competitive advantage that have a history of increasing their dividends and earnings. I also want reasonable debt levels and a sustainable dividend among other things.

If after I’ve completed a dividend stock analysis and I decide that I’d like to own the company I perform various valuation tests to come up with a reasonably cheap target price. Then I wait… and wait. My target prices are usually based on various measures that in the past would have resulted in opportunities to buy shares in 2 or

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