Honest, Dr. Graham Brockley, I am not a "bot".

Recently I found an interesting Facebook page devoted to dividend investing: Canadian Dividend Investing. I'd post a link but because of a complaint, I believe, from Dr. Graham Brockley, of Ladysmith Urgent Care in British Columbia, I have been blocked. Why? I think it's because he thinks I am a "bot".

The good doctor is interested in the Frugal Dividend Portfolio created by Norman Rothery and carried by the Globe and Mail. I'm familiar with this portfolio as TD WebBroker reposts it in its News section. The portfolio is the result of a unique screening process devised by Rothery. I gather Dr. Brockley would like to emulate the Rothery screening system. I cannot say for certain as the doctor shut-down our conversation after accusing me of being a "bot".

I liked the direction the doctor was going. I decides to continue my investigation without him. The first thing we must know is how does Rothery structure his screening process? I turned to Andi. Andi is an Ai powered search engine. Andi told me:

 

Norman Rothery constructs his Frugal Dividend portfolio using a multi-step process that focuses on large, stable dividend-paying stocks trading at low valuations.

The process begins with the 300 largest stocks on the Toronto Stock Exchange (TSX) by market capitalization. It then narrows in on the roughly 200 stocks that pay dividends.

From there, it selects the 50 dividend stocks with the lowest volatility over the prior 260 days.

Finally, it picks the 10 stocks with the lowest positive price-to-earnings (P/E) ratios from those 50 low-volatility dividend payers.

The portfolio is typically re-balanced monthly or quarterly. When re-balanced monthly, it has historically replaced about two stocks per month on average.

Rothery's Frugal Dividend approach aims to build a concentrated portfolio of undervalued, stable dividend stocks to deliver market-beating returns over the long run. However, investors should be prepared for volatility.

 

Has his approach worked? Amazingly well if the Ai search engine Andi is correct. According to Andi backtesting has shown the Frugal Dividend portfolio gained an impressive 17.4% annually from 1995-2022, assuming monthly rebalancing. Even with just annual rebalancing, it returned 16.9% per year on average over that period.

A caveat, be aware that while the portfolio has generated strong long-term returns, it can still decline significantly during market downturns. For example, it fell 35% in the 2008 financial crisis and 28% during the 2020 COVID-19 crash.

As of March 2023, the Frugal Dividend portfolio had a median dividend yield of 4.4% and median earnings yield of 12.5%. The latest version of the Frugal Dividend Porfolio that I could find is posted below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Norman Rothery, PhD, CFA, is the founder of StingyInvestor.com. His ideas on investing are published regularly in the Globe and Mail and reposted by TD WebBroker in their News section. Rothery is a man worth following.

If, like the good doctor who inspired this post, you would like to do your own screening for the the perfect income portfolio, there are a number of screening programs available online. Sadly, many only allow limited access to the screening tool unless a payment, often monthly or annually, is made.

Screens available on the Internet

• Stock Rover - Best for fundamental investors, offering robust screening and research features to help investors make informed decisions and find undervalued stocks. According to the information I found, Stock Rover offers the following pricing plans:

• Free Plan: Completely free
• Essentials Plan: $7.99/month or $79.99/year or $139.99/2 years
• Premium Plan: $17.99/month or $179.99/year or $319.99/2 years
• Premium Plus Plan: $27.99/month or $279.99/year or $479.99/2 years

The search results also mention that Research Reports can be bundled with any yearly or 2-year Stock Rover plan for $49.99/year, otherwise they cost $99.99/year.

• Trade Ideas - Best for technical traders, with its AI-powered stock screener "Holly" that uses machine learning to provide stock recommendations. 10 day test period. According to the search results, the cost of using Trade Ideas depends on the subscription plan: Trade Ideas offers both free and paid subscription plans. 

• The free plan provides access to basic stock scanning and screening tools. 
• The paid Premium subscription plan offers more advanced features like backtesting, auto-trading, and access to the AI trading assistant "Holly". 
• The specific pricing details for the Trade Ideas Premium subscription are not provided in the search results. However, it is mentioned that the Premium plan is designed for active, short-term traders and provides access to institutional-grade trading tool.

• Finviz - Best free stock screener, with a user-friendly interface and the ability to filter stocks based on various fundamental and technical criteria.  

• StocksToTrade - Best overall low float stock screener, with a highly customizable desktop app and an algorithm-based chart analysis tool called Oracle. 

• StockFetcher - Best customizable low float stock screener, allowing users to code their own complex filters using a coding-like language.
  

• ChartMill - Most versatile stock screener for low float stocks, offering a combination of technical and fundamental parameters. 

• Yahoo Finance - Offers a free and advanced stock screener with a wide variety of filters, including the ability to screen for sustainable ESG stocks. 

• TradingView - Has a user-friendly stock screener interface, and also offers forex and cryptocurrency screeners.

• StockFetcher - Supports over 125 indicators to build unique stock filters, though the interface may be overwhelming for beginners.

• Fidelity - Brokers often provide their own free stock screeners, which may be a good option if you already have an account with them.