Tuesday, September 27, 2016

TTJ Holdings Ltd - Full Year Results Announced

On 26 Sep 2016, TTJ Holdings Ltd announced the latest full year financial results for 2016. Share price has since fallen 15% the next day.

So here is a summary of the financials:
 - Significant increase in revenue and also increase net profit
 - Slight reduction in investment property and fixed asset
 - Was able to maintain cash amount from 2015 to 2016, despite giving an 8 cents dividend in 2016.
 - Slight increase in liabilities but without any bank borrowing!
 - With such rosy financials, the only negative seem to be that dividend was reduced to 1.7 cents.

So how does it fare against the Enhanced Triple S Scorecard with Dividend Scorecard Portion? (Based on the share price $0.395):

The Enhanced Triple S Scorecard continued to pass with flying colours. But the Dividend Scorecard failed.

1 passed. 1 failed. Why?

Dividend Scorecard Portion failed because Price to Book ratio is higher than 0.8. This is expected as this stock was never a net current asset value stock. Share price is higher than Net Current Asset Value because it has already been "discovered". 

However, it was still deem a value stock due to its ability to generate free cash flow and good dividend payout. Current earnings is also high enough to maintain a low Price to Earnings. Therefore, TTJ Holdings Ltd continued to be a good value stock as deemed by Enhanced Triple S Scorecard

So any other issues?

1. Change in Dormitory Size - As stated in previous post, TTJ Holdings Ltd is unable to renew the tenancy for the 5000 beds dormitory. Instead, the company replace it with a 500 beds dormitory. As per past financials, this dormitory business provides about $10 million of net profit. In future, net profit could be impacted very badly.

2. Order Book - As per latest financials, TTJ Holdings Ltd stated it is left with about $48 Million worth of order book that is to be completed in 2017 and 2018! This will be a drastic decline from $136 Million (Revenue in 2016)!

3. 85% shareholding in the hands of "Boss Teo" (Managing Director) - It is known that the Managing Director cum Chairman hold almost 85% of the shareholdings. This means that TTJ Holdings Ltd is "ripe" for privatization.

4. New Business - As per comments, "Going forward, the Group expects the operating environment to be increasingly challenging due to economic uncertainties and generally weaker sentiments in Singapore.  While the Group continues to experience enquiries for a mix of public and private sector projects, the industry has become increasingly competitive. In view of this, the Group will continue to actively pursue projects and also explore new areas of business." This meant that TTJ Holdings Ltd may venture towards other business. As per management's past actions, it only look for high net profit margin. So hopefully this new business venture will be similar and produce high net profit.

In Short  

Firstly, 1.7 cents of dividend against the current share price of $0.395 is still a dividend yield of 4.3%. Therefore, this drop in dividend will not be drastic for me. 

Furthermore, as the stock continues to pass the Enhanced Triple S Scorecard, this will provide some comfort for me if I decided to hold on to the stock.

In any case, my view is that if these negative view continue to drive the share price down to $0.320 to $0.340, I may enter to buy more.

If it rise back to $0.410 to $0.450, I will offload half of my holdings.

If the share price got stuck in between, I will just hold on to my holdings unless I find other opportunities. After all, despite the negativity, this stock still have its positive points.

Current Price: $0.395 as of 27 Sep 2016.

Please do your own due diligence before you invest in this stock.

Do note the author is vested in this stock/company at $0.325.  

For those who are interested to find similar quality value stock that can produce at least 5% dividend yield, you can come to the next Sharing Session with T.U.B! If you are interested to attend, do not hesitate to contact me directly.

Oh... and do remember, please like our Facebook page - T.U.B Investing.

Sunday, September 18, 2016

The Value Portfolio - Recent Actions and Views - Post 10

Yes. I know I stated that I will not be posting about my portfolio anymore.

But I decided its time to just do a short post to update my readers after such a long time.

The following stocks that are currently in my portfolio (Read here for past updates):
  1. Sin Ghee Huat Corporation Limited
  2. PNE Industries Limited
  3. Chuan Hup Holding Limited
  4. LHT Holdings Limited
  5. TTJ Holdings Limited
  6. Singapore Telecommunications Limited
  7. Suntec Real Estate Inv Trust
  8. Oversea-Chinese Banking Corporation
  9. CH Offshore Ltd
  10. Maxi-Cash Financial Services Corp Ltd
  11. ST Engineering Ltd
  12. Bukit Sembawang Estates Ltd
  13. M1 Limited
  14. Hock Lian Seng Holding Ltd
  15. Ellipsiz Ltd
  16. LTC Corporation Ltd
  17. USP Group Ltd 
  18. OUE Hospitality Trust
  19. Hupsteel Limited
  20. Top Global Ltd
  21. The Development Bank of Singapore Limited
  22. Far East Hospitality Trust
  23. CDW Holding Limited
  24. Captii Limited
  25. Sing Holdings Limited 
Sold:
Accordia Golf Trust
BBR Holding (S) Ltd
Krisenergy Ltd

Bought:
The Development Bank of Singapore Limited
Far East Hospitality Trust
CDW Holding Limited
Captii Limited
Sing Holdings Limited

Due to my aggressive purchases, I am only left with 5% cash. This seems to be bad for me as the market seem to be going on a downtrend. Being a value investor, I may have to sell some of the "In the money" stocks for cash if opportunity arises.

Anyway here is something I have never state before - currently my overall portfolio has gained about 8.7% since April 2011 (Total gain including dividend). Compared this to STI Index falling from 3,194.73 in April 2011 to 2,827.45 in 17 Sep 2016, I guess how I perform will be deem acceptable.

However, moving forward, I expect the gain to stabilized around at most 10+% as I do not expect the economy to suddenly "spring to life".

For those who are interested to find quality value stock that can produce at least 5% dividend yield or to learn about the Enhanced Triple S Scorecard and the Dividend Scorecard Portion, you can come to 3rd Sharing Session with T.U.B! If you are interested to attend, do not hesitate to contact me directly.

Oh... and do remember, please like our Facebook page - T.U.B Investing.

Tuesday, September 13, 2016

The Dividend Series - Lee Metal Group Ltd

This will be the 3rd post for the Dividend Series. This stock is requested by a reader.

Having so many steel companies in my portfolio, I have always tried my best to ignore this stock. So now, I guess its time to test Lee Metal Group Ltd against my Enhanced Triple S Scorecard with Dividend Scorecard Portion.

Profile In Short


Established since 2000, Lee Metal Group Ltd is a distributor and fabricator of steel products as well as a recognized international trader of steel and steel related products in the region. The company employs over 200 employees and has presence in Singapore, Thailand, Malaysia, Australia, and Hong Kong.

Based on the Dividend Scorecard Portion (Based on Present Price of $0.285 and the latest 2nd Quarter 2016 financials):
It PASSsss!

This meant that the stock will be able to continue to produce at least 5% of dividend yield for the next year.

One of the main reason it passes seems to be the fact that Lee Metal Group Ltd passes the Value Stock Score with flying colours.

In Short

As stated previously, I completely ignored this stock because I had too many steel related stocks in my portfolio. In addition, this stock always had high leverage over the last few years and it had always require significant additional purchases to its property, plant and equipment.

High Leverage, esp Bill Payables in 2014 and 2015

High Purchase of Property, Plant and Equipment
Nevertheless, it seems that the company had strengthened its balance sheet and debt level had decreased significantly (Only left about $44 Million as of Q2F16).

However, the only "con" I found in the latest 2nd Quarter Report of 2016 is the lack of direction from the management.

In the comments, it state that "The operating environment for Steel Merchandising remains challenging due to volatility in steel prices and foreign exchange rates. Thus, the Group will continue to reduce business volume for this segment."


This lack of information or direction is an obstacle for me to part with my limited funds as of now, and also due to the significant steel related stocks in my portfolio.

BUT I COULD BE WRONG. After all it passes my Enhanced Triple S Scorecard and the Dividend Scorecard Portion.

Current Price: $0.285 as of 13 Sep 2016.

Please do your own due diligence before you invest in this stock.

Do note the author is not vested in this stock/company.

For those who are interested to find similar quality value stock that can produce at least 5% dividend yield, you can come to 3rd Sharing Session with T.U.B! If you are interested to attend, do not hesitate to contact me directly.

Oh... and do remember, please like our Facebook page - T.U.B Investing.

Monday, September 12, 2016

The Dividend Series - Nam Lee Pressed Metal Industries Ltd

This will be the 2nd post of the Dividend Series. Read the previous write up here.

The 2nd usual suspect is... Nam Lee Pressed Metal Industries Ltd! It is another stock that is generally known to give out regularly dividend. But will it pass my Dividend Scorecard Portion of the Enhanced Triple S Scorecard?

Profile In Short


Nam Lee Pressed Metal Industries Ltd is a one-stop specialist offering complete service in the designing, manufacturing and supplying of metal products and solutions for diverse industries in building, shipping container and infrastructure etc. It is currently one of Singapore’s leading providers of fabricated metal products and cutting edge metal solutions.

The company also manufacture aluminium frames for container refrigeration units and is the only world-wide third party supplier of aluminium frames for container refrigeration units to a reputable multi-national corporation (some say Carrier..?) which is the world leader in container refrigeration.

Based on the Dividend Scorecard Portion (Based on Present Price of $0.370 and the latest 3rd Quarter 2016 financials):


It FAILS... Why?

1. Similarly to Powermatic Data System Ltd, the Value Stock Score is less than 6. This is due to the test by the Enhanced Triple S Scorecard. At its current price, the stock does not seem to be a value stock that is able to produce a score higher than 6 points. Thus, it fail this criteria.

2. Again similar to Powermatic Data System Ltd, Dividend Yield for the last 2 years, based on the current price, is less than 5% . Thus, it fail this criteria too.

So how?

To determine at which price the stock will pass as a Value Stock that is able to produce 5% of Dividend Yield for the next year. We reduce the share price to determine the price to enter if we want at least 5% of dividend yield next year.

The final result is $0.295.

A special note is Nam Lee Pressed Metal Industries Ltd passed the Enhanced Triple S Scorecard at $0.305. Thus, do note your objective prior to purchasing the stock. 

Based on the Dividend Scorecard Portion (Based on Present Price of $0.295 and the latest 3rd Quarter 2016 financials):


In Short

The conclusion will be similar to the one I had with Powermatic Data System Ltd. 

Nam Lee Pressed Metal Industries Ltd had already been "discovered" as a value stock and the recent 1 year price rise has resulted in it failing the Enhanced Triple S Scorecard as well as the Dividend Scorecard Portion.

To achieve a 5% dividend yield, you may need the share price to fall till $0.295.

For those already holding the stock, especially 1 or 2 years back, I congratulate you on finding a gem. For those that are intending to enter into this stock, please wait. After all, patience is a virtue.


Current Price: $0.370 as of 12Sep 2016.

Please do your own due diligence before you invest in this stock.

Do note the author is not vested in this stock/company.

For those who are interested to find similar quality value stock that can produce at least 5% dividend yield, you can come to 3rd Sharing Session with T.U.B! If you are interested to attend, do not hesitate to contact me directly.

Oh... and do remember, please like our Facebook page - T.U.B Investing.

Saturday, September 10, 2016

Subscribe for Enhanced Triple S Scorecard

This will be a short post.
After distributing the Triple S Scorecard for such a long time, I guess its time to pass the readers the Enhanced Triple S Scorecard instead.

Previously, I only provided participants, who attended the Sharing Sessions with T.U.B, a copy of Enhanced Triple S Scorecard. But now, I will release it to everyone who request and subscribe for it.

Nevertheless, it will only be the Enhanced Triple S Scorecard without the Dividend Scorecard Portion.

Furthermore, if you wish to know more about the Enhanced Triple S Scorecard or even the Enhanced Triple S Scorecard with Dividend Scorecard Portion, do sign up for the Sharing Session with T.U.B.

For those who are interested to findquality value stock that can produce at least 5% dividend yield, you can come to my 3rd Sharing Session with T.U.B! I will only be sharing my Enhanced Triple S Scorecard with Dividend Scorecard Portion with participants of the Sharing Session. If you are interested to attend the 3rd Sharing Session with T.U.B., do not hesitate to contact me directly.

Oh... and do remember, please like our Facebook page - T.U.B Investing.

Thursday, September 8, 2016

The Dividend Series - Powermatic Data System Ltd

I am starting a string of new posts deem as the Dividend Series. In this series, I will test some of the "usual suspects", that deem to produce 5% of dividend yield annually, against my Dividend Scorecard Portion.

Do note that these stocks are, in my opinion, "popular value stocks". There are already significant information in the internet on them. Thus, my post will be more focus on how the stock fare against my Dividend Scorecard Portion.

Read about the previous post of the Dividend Scorecard Portion as per the links below:
The Search For Dividend Stocks

The Dividend Scorecard - An Extension of Enhanced Triple S Scorecard - Part 1

The Dividend Scorecard - An Extension of Enhanced Triple S Scorecard - Part 2

So the 1st suspect is.... Powermatic Data System Ltd!

Profile in Short


Powermatic Data Systems Limited core business is to manufacture, market, and distribute wireless connectivity products and computer peripherals.

This is a stock that is heavily promoted on the internet as a value stock. One of the main reason is due to its investment properties that it holds. The properties listed in the financials are stated at book value, but its fair market value is actually almost 2 times its book value!

Based on the Dividend Scorecard Portion (Based on Present Price of $1.010):


It FAILS... Why?

1. The Value Stock Score is less than 6. This is due to the test by the Enhanced Triple S Scorecard. At its current price, the stock does not seem to be undervalued enough to score higher than 6 points. Thus, it fail this criteria.

2. Dividend Yield for the last 2 years, based on the current price, is less than 5% and further testing of price to book ratio is above 0.8. Thus, it fail this criteria too.

So how?

The power of Enhanced Triple S Scorecard and the Dividend Scorecard Portion is that you can adjust the share price to check AT WHAT SHARE PRICE WILL THE DIVIDEND SCORECARD PORTION PASS.

Therefore, I adjust the share price to 0.880... and the result has passed!

Based on the Dividend Scorecard Portion (Based on Present Price of $0.880):


In Short 

For those that didn't know, Enhanced Triple S Scorecard test whether a stock can be deem as a value stock, and the Dividend Scorecard Portion test whether at the current price will the stock be able to provide a dividend yield of 5%.
Thus, at $1.010, the share price is too high to be deem, to be able to provide a dividend yield of 5% for 2017. Only at $0.880, it will be deem good enough to provide a dividend yield of 5%.

But this does not meant that Powermatic Data System Ltd is a bad stock. 


I had watched it rise from $0.550 to the current share price. If it wasn't good, it will not have rise. For me, I didn't buy it because I deem that it was too "popular" at that time. It was just biased on my part. If not, I will have another great stock in my portfolio. 

Maybe I just wait till the share price drop to 0.880...


Current Price: $1.010 as of 08 Sep 2016.

Please do your own due diligence before you invest in this stock.

Do note the author is not vested in this stock/company.

For those who are interested to find similar quality value stock that can produce at least 5% dividend yield, you can come to my 3rd Sharing Session with T.U.B! I will only be sharing my Enhanced Triple S Scorecard with Dividend Scorecard Portion with participants of the Sharing Session. If you are interested to attend the 3rd Sharing Session with T.U.B., do not hesitate to contact me directly.

Oh... and do remember, please like our Facebook page - T.U.B Investing.

Tuesday, September 6, 2016

The Dividend Scorecard - An Extension of Enhanced Triple S Scorecard - Part 2

This is the follow up on the write up of the Search for Dividend Stocks and the write up on Part 1 of Dividend Scorecard Portion.




For this post, I will be explaining about how the Dividend Scorecard Portion was tested.

From a list of stocks that produces 5% dividend yield from 2012 to 2016, I only choose a small sample of 4 stocks that I believe will continue to TRY to produce a high dividend yield of 5% even up to this day.

I worked my way back to each stock’s 2014 financials – which will test whether the Dividend Scorecard Portion will have CORRECTLY PREDICTED that the particular stock will continue to produce a dividend yield of 5% in 2015.

1. Second Chance Properties Ltd

The company retail ready-made traditional Malay apparel through its 44 First Lady stores – three in Singapore and 41 in Malaysia. It also sells gold and jewellery through its Golden Chance Goldsmith store.

It also currently holds 57 properties – 56 in Singapore and one in Malaysia from which it obtains rental income. The company is also engaged in the business of securities investment.

How did its 2014 financials fare in the Dividend Scorecard Portion?
 


As per the screenshot above, the stock fail the Dividend Scorecard Portion. This meant that the Dividend Scorecard Portion has FAILED to predict the stock will continue to produce 5% dividend yield in 2015!

2. Design Studio Group Ltd


The company is engaged in the provision of interior fitting-out services to residential property projects, hospitality and commercial projects, and distribution of furniture products of reputable overseas brands..

How did its 2014 financials fare in the Dividend Scorecard Portion?
 

As per the screenshot above, the stock pass the Dividend Scorecard Portion. This meant that the Dividend Scorecard Portion has CORRECTLY predict the stock will continue to produce 5% dividend yield in 2015!

3. Telechoice International Ltd

The company operates in telecommunication industry and is a subsidiary of STT Communications Ltd. Its distributes prepaid cards; and manages concept stores and StarHub Platinum shops.

Its also offers enterprise IT infrastructure services, business solutions and integration services and many of the IT services for the consumer and enterprise markets.

Finally, it also designs, builds, and manages telecommunication networks; and provides a suite of products and solutions to address the network infrastructure needs of fixed and mobile operators.

How did its 2014 financials fare in the Dividend Scorecard Portion?

 

As per the screenshot above, the stock fail the Dividend Scorecard Portion. This meant that the Dividend Scorecard Portion has FAILED to predict the stock will continue to produce 5% dividend yield in 2015 again!

4. UMS Holdings Ltd


The company is a high precision manufacturer with a long history in Singapore. It manufactures high precision semiconductor components as well as other equipment for the electronic, machine tools, aerospace, and oil & gas industries.

How did its 2014 financials fare in the Dividend Scorecard Portion? 



As per the screenshot above, the stock pass the Dividend Scorecard Portion. This meant that the Dividend Scorecard Portion has CORRECTLY predict the stock will continue to produce 5% dividend yield in 2015!

THE SCORE is 2 vs 2 – It just passed! Then it’s not as good as it’s supposed to be? – To determine further if this Dividend Scorecard Portion is “good”, other than just predicting a 1-dimension factor of whether the stock is able to produce 5% dividend yield, I believe we should also look at the secondary factor which is the SHARE PRICE!

Therefore let's review the share price of Second Chance Properties Ltd and Telechoice International Ltd.

1. Second Chance Properties Ltd

If you look at the graph, you can see that the stock had peaked during its 2014 to 2015 period. Then it has been going downhill after that.

Even with the high dividend yield, people who bought during the peak in 2014 ma still have yet to breakeven!

Thus, I deem as Dividend Scorecard Portion making the CORRECT decision!

2. Telechoice International Ltd


As per the stock's graph, it seems that the current share price is definitely higher than the share price between 2014 to 2015. However, there seem to be a dip in share prices at the end of 2015.

In order to gain from this stock, you must be able to endure through the down prices during the end of 2015.

Nevertheless, it seems that Dividend Scorecard Portion FAILED to really predict correctly here.

To summarize, the Dividend Scorecard Portion of the Enhanced Triple S Scorecard predicted correctly 3 out of 4 times.

Although the Dividend Scorecard Portion did not predict all the decision correctly, but I believe it is a competent add-on to the Enhanced Triple S Scorecard.

This can be further proved by the revelation of the share prices for Design Studio Group Ltd and UMS Holdings Ltd:

Design Studio Group Ltd - Share prices has been rising since 2014.


 

UMS Holdings Ltd  - Share prices seem to have dropped from the peak in 2014. But if you dig deeper, the drop in the share prices was due to a bonus issue of 1 for every 4 shares. Thus, if you stay vested till today, you will have definitely gain for this stock.




In Short

Finally, as stated, I believe this is a competent add-on to the Enhanced Triple S Scorecard and it has offer another aspect of a value stock to the user. If the stock is deem as "not a value stock", user can still buy it as a dividend stock with limited downside. 

On top of that, if the stock passes the Enhanced Triple S Scorecard and the Dividend Scorecard Portion, this will mean that the user will be buying a value stock that gives out high dividend! 

What's there not to be happy about!?


For the next few posts, I will be writing about individual posts on "usual suspects" that provides high dividend as previously requested by readers, B and eeming.

For those who are interested to find out more about Enhanced Triple S Scorecard and its Dividend Scorecard Portion, you can come to my 3rd Sharing Session with T.U.B! I will be sharing how to use and input data into my Enhanced Triple S Scorecard and its Dividend Scorecard Portion with the participants of the 3rd Sharing Session. In addition, only participants of the 3rd Sharing Session will have the Enhanced Triple S Scorecard with the Dividend Scorecard Portion. If you are interested to attend, do not hesitate to contact me directly.

Oh... and do remember, please like our Facebook page - T.U.B Investing.

Sunday, September 4, 2016

The Dividend Scorecard Portion - An Extension of Enhanced Triple S Scorecard - Part 1


The search for Dividend Stocks has been completed and the scorecard had been created.


To emphasize again, I am not talking about REITs or STI-linked Blue Chips, when I suggested about Dividend Stocks.

This is a search for the pennies or the ignored stocks (including the less famous and popular Blue Chips) that has the ability to give out at least 5% dividend yield in the following year.

In addition, rather than having an individual new scorecard, I have created it as an Add-On portion to the Enhanced Triple S Scorecard.

The following information will elaborate about the mindset behind the Dividend Scorecard Portion:

1. Reasons for the Removal of REITs and Stocks within the STI from my research.

In my view, REITs are quite straightforward. Due to their business model, I will look at their dividend yield, net asset value, current share price, WALE and their debt to equity ratio before I purchase the REIT at that point in time. Any more criteria will be nit-picking in my opinion.

On the other hand, stocks within the STI index are too volatile as there are too many big players vested in them. Any change in business model, strategy, net profit or dividend will cause big swings in the share price. With a hold and wait attitude, it will be best not to use these stocks as a target for this portion of the scorecard.

2. Any Stocks that Pass the Criteria will most probably be able to produce a Dividend Yield of 5% for the Following Year.

The point is to emphasize that a stock that passed this Dividend Scorecard Portion will have guarantee a higher probability to produce a dividend yield of 5% the next year, if you purchase it at that time and hold it till the next year.

Furthermore, the timeline for this strategy is only for 1 year. Investors must go back and analyse the data of the stock again after 1 year as information will have change then.

3. Dividend Yield = Interest Rate on the Fixed Deposit.

When creating this Dividend Scorecard Portion, my view is to deem the dividend yield similar to the interest rate of a fixed deposit.

“You buy, you hold, you wait for 1 year and hopefully get your dividend of 5%”. Thus, you ignore any volatility in between this 1 year of holding period.

On the other hand, if there is any major change fundamentally, it is important to go back and look at the financials of the stock again.

4. Reduction of Dividend is a Last Resort.

A major assumption while creating this Dividend Scorecard Portion is that a stock will not purposely reduce its dividend, unless something major occurs.

Even when the share price falls or economy turns bad, the stock will try to maintain its dividend amount or dividend payout.

5. The link between Share Price and Dividend

Increasing dividend may unnecessary increase the share price significantly. Decreasing dividend may unnecessary decrease the share price drastically.

Therefore, it is important to note that we are looking for a stock whose share price has not risen too much if there is an increase in dividend, as well as, a stock whose share price has not fallen too drastically due to a reduction in dividend.

How was the research done?

I started by looking for stocks that constantly gave out dividend yield of at least 5% from 2012 to 2016.

This data is not absolutely correct as it is tagged back to the current share price. Stocks such as Noble, which has been giving out dividend on a yearly basis, is deem to have produced 5% dividend yield every year. Experienced investor will know that this is wrong as Noble’s historical dividend yield is less than 2%. This happens is because of Noble’s significant drop in share price.

Nevertheless, these data still gave me a view of how stocks maintain their dividend yield and also which ratios are deemed to be important.

Therefore, coupled with my understanding of the financials, I came out with the following criteria for this Dividend Scorecard portion for the Enhanced Triple S Scorecard:

1. Value Stock Score has to be 7 or higher

In order for a stock to maintain dividend yield of 5%, the company may engage in negative actions such as increasing debt to provide the money for dividend or recognizing future income or significantly high non-cash item to facilitate earnings. These actions may cause the share price to drop more than the dividend amount.

Thus, with Value Stock Score from the Enhanced Triple S Scorecard portion having a score of at least 7, it will provide some comfort that the stock will not have any drastic fall in share price for that year that may offset the dividend yield that one will receive.

2. Free Cash Flow should be positive for the last 2 years

From my research, it seems that stocks that produce dividend yield of 5%, from 2012 to 2016, has been able to attain a positive net cash from operating activities on a yearly basis.

Therefore, since I only intend to hold this dividend stock for 1 year, I decided to look at only the last 2 years of Free Cash Flow for this criteria.

3. Dividend Yield for the last 2 years must be higher than 5%

With assumption that a stock will not reduce its dividend unnecessary, dividend yield is deem to be maintained at a minimum of 5%.

However, in the event that dividend yield increased from “less than 5%” to “5% or more” in the 2nd year, 2 other factors will be taken into account - The Price to Book Ratio and the Price to Earnings Ratio.

In order to pass this criteria, Price to Book Ratio must be below 0.8 and Price to Earnings Ratio must be below 14.

4. Current Ratio has to be more than or equal to 2

If a stock has to give out its cash as dividend, it must first be able to support its short term obligations with excess. If it does not have the ability to fulfill its short term obligations and have excess in return, then it will not have the ability to find cash and pay out dividend too.

5. Quick Ratio is more than or equal to 1.

Similarly, this ratio is looking at the stock ability to fulfill its short term obligations. However, it is looking from the point of view of solely using its cash.

A stock that need to pay out a high amount of cash as dividend, must have a high amount of cash FIRST.

At the end of the day, both current ratio and quick ratio is to provide the investors with some comfort that the company is able to continue its operations (without any drop in quality and standard) after providing the dividend.

In Short

For a stock to pass this Dividend Scorecard portion, it must pass all criteria. However, if one of the criteria fails but the stock maintains a dividend of more than 5% for 2 years, the Dividend Scorecard portion will still pass.

Do note that cash is the focus here and it has to be significantly high. A stock must have high cash amount to be able to give out high dividend.

However, this Dividend Scorecard is also not solely focus on Dividend Yield. It also protected the stock from any downside using the other 4 criteria.
A note of advice for all the “Yield Chaser” out there, a stock has to be fundamentally strong in order to continuously provide a high dividend yield. If you are solely chasing after the dividend yield of the stock, any significant drop in share price will have offset the gain in terms of dividend.

That's all for this post.

I will update the next post on the 4 stocks (which seems to have produce a dividend yield of 5% from 2012 to 2016) that I use to test the Dividend Scorecard Portion, as well as how some of the common "culprits" score in the Dividend Scorecard Portion.

For those who are interested to find out more about Enhanced Triple S Scorecard and its Dividend Scorecard Portion, you can come to my 3rd Sharing Session with T.U.B! I will be sharing how to use and input data into my Enhanced Triple S Scorecard and its Dividend Scorecard Portion with the participants of the 3rd Sharing Session. In addition, only participants of the 3rd Sharing Session will have the Enhanced Triple S Scorecard with the Dividend Scorecard Portion. If you are interested to attend, do not hesitate to contact me directly.

Oh... and do remember, please like our Facebook page - T.U.B Investing