Health Check Your Holdings : Tool

Have you ever wondered if there is a easy way to find out how healthy your holdings are? I've been thinking about a way to do it for a long time. I'm not a full time investor and I don't have time to go through financial reports of 280+ companies. Don't get me wrong here, I go through financials before I buy anything. But that is after pinpointing on a particular counter or two. How about the period before that? If there is a one click way to measure the health and safety of an investment that would be great. In this post I'm going to introduce you a tool, which I've been developing to do that. 

What to check?

This is probably the most difficult part. It is important to figure out a universal set of parameters to measure the health of an investment. As a dividend growth investor, I did that according to the most important criteria of dividend investing. They are listed as follows.

1. P/E : Valuation. You don't want to buy an over valued counter. Check the P/E for valuation.
2. ROE : If they can't make money, they can't pay you. Always check the return on equity.
3. Dividend Yield : At the end of the day, that is what you get. No dividend yield? Then don't buy it.
4. 5 Year Dividend Growth Rate : This is the protection you have against inflation. Inflation proof your investment.
5. 5 Year EPS Growth Rate : Don't speculate. If they don't earn, you don't earn. Check the earnings.
6. 5 Year Average Dividend Yield : Because current yield could fool you. Always check the past.

How to Weight?

There you have six parameters to check. Now it's a question of importance. Is earnings are more important than dividends? Can higher growth rate justify the higher P/E? Does higher return on equity makes an investment safe for share holder? Honestly I don't know the answers. There are lot of parameters to consider. But I know my math very well.
Warning! Spoiler Alert. You can enjoy the Cartoon and skip to next heading :)

I simply used the standard deviation of each distribution to determine the bands  and weighted each band while eliminating the extremes. I have posted the distribution graphs of above parameters on a previous post here @ CSE Scanner. Will not go deep into math here, but following is the basic idea. 

Lets look at ROE for example. There are 107 companies in CSE which have ROE less than 5%. If ROE is lower it is not a good choice for long term investment. So I have given zero rating for those companies. If ROE is in between 5-10 then they are weighted so that they will have a rating of 0-25%. ROE 10-20 is mapped to 25-50%, 20-30 to 50-75% & 30-40 to 75-100%. Companies which have ROE higher than 40 is capped at 100%.  This is done to eliminate the extreme cases such as CTC, NEST, LLUB, etc.

Using the Tool

Download the tool [here].
1. If you can't download, Try Firefox or Chrome browser.
2. This is a macro enabled work book. Once you download check the extension. It should be ".xlsm"
3. Don't use "Open with" option, Download first and then double click to open.
4. You should enable macros from Trust Center settings for it to work.

5. This need data connectivity to work. Did I say that before? This too will fetch real time data from financial times servers. You need to enable data connections from Trust Center.

If you managed to do above and open it, you will get this interface.

Just select the counter you want to check from drop down list in [Cell C2] and click [Fetch Financials] button. It is simple as that. You will get a rating of 0-100% along with other important data of the counter you selected.

Graphical presentation will allow you to identify the strengths and weaknesses of a counter easily. Notice the difference of NDB with respect to LFIN and GLASS. I found this very helpful when ever I ended up in a situation of this or that.

I will be using this tool in future dividend analysis posts and hope you also will find it helpful. Let me know if you have any problems with getting it to work. Also this will be the last post for this year. Wishing you a good year ahead and enjoy the vacation....




Update : 2014/08/03
 Tool was updated to give a prediction of future market price, dividends, etc. based on past 5 years of data. When you click "Fetch Financials" button, you will get an additional table on the bottom left hand side as follows. Content is self explanatory I think. What I mainly look for is the last column(Inv.Recov) which simply answers the question "How long will it take to recover my capital?" 

Also there are couple of things I need to state.

1.  This is a conservative forecast. In reality, chances are high that you recover your capital faster than indicated with dividends being re-invested.
2.  As a safety measure, this will not give a forecast for some counters (due to negative growth or insufficient data)
3.  This was written in good faith. Back testing proved forecasts are reliable, but future can not be predicted with 100% accuracy. User due diligence is always advised.

 

Safety First

Any type of investment carries a risk. Level of risk depends on the type of investment your made. In this article I'm going to rush through the most common risks involved in various investments and what you can do to minimize the those risks.

I have parked my cash in Equities, Unit Trust, Bank FDs, Real Estate and a small amount in gold. Actually real estate was inherited from parents and I keep them as diversified asset. Also technically I haven't invested on gold. I just happened to have some jeweleries (precious metals and gems) without any emotional attachment. 

For a fact I know that equity return do beat everything else. Some times ago I was thinking about selling some of the real estate and invest that money on equity. But I held myself back because it balance my portfolio perfectly. As equity do generate the highest return, it is the most risky one from all options.
Roughly calculated, my distribution is as follows.
-----------------------
1. Equity : 40%
2. Real Estate : 40%
3. Unit Trust : 10%
4. Cash(FD) : 10%
-----------------------
 

A Word About Diversification

Diversification is a must have strategy, but a very relative term. What I mean by relative is you always need a reference frame to talk about diversification. For example, my asset allocation above is diversified in terms of different investment options. But 98% of it is based in Sri Lanka. Any macro economic shock will effect all of them. Therefore in a sense I'm not diversified at all.

Also I have heard some investors say that they have a very diversified portfolio of 30 companies. Apparently all of their wealth is invested on equities and managed by one person. Actually number of counters in a portfolio is not an indication of safety or diversification. I think for a self managed individual investor, about 12-15 counters is the max. A full time investors may be holding as high as 30-40 companies in their portfolio. But that should be backed by the time and resources available to them. As I don't have much time, 5-6 counters is ideal for me.

Equity Investment : Find a Healthy Company

You can put your eggs in lot of baskets to minimize the risk or you can put all your eggs in few baskets and monitor them well. As I said before I don't hold much counters in my portfolio. Therefore how healthy my holdings are a major concern to me. Following is what I mainly look at when assessing the safety of an investment.

1. ROE : Return on equity is a measure of how much company makes with the invested money. I always look for companies which make over 20%. i.e. When Rs.100/= is invested they make it grow to Rs.120/= at the end of financial year.
2. Five Year EPS and Dividend Growth Rate : It is very important to make sure the company is growing at a inflation beating rate. I usually look for a rate over 10%(preferably 15%).
3. Dividend Yield and 5 Year Average DY : Most of the time I ignore anything which yield less than 3%. 5Year average yield of 4% or higher is preferred by me.

  
Rule of 72 will become handy here. Rule of 72 calculate the number of years which will take for the yield to double. You simply divide 72 by the growth rate. i.e If you invest in a company which yield 3% and growing at a rate of 10%, your yield will become 6% in 7.2 years. 

Technically that is not a rule, that is mathematics. Actual calculation is ln(2) x Expected Growth Rate. ln(2) is approximately 0.69 . Number 72 is a rounded value of 69.31xx. 69 is more accurate, but 72 is widely used because 72 can be divided by most numbers and calculation is easy to done in mind. If you want to find the number of years which will take to triple the yield, just use ln(3) i.e 1.098x

Unit Trust : Get Professional Service

Unit trusts are managed by a professional team of fund managers approved by the Securities and Exchange Commission of Sri Lanka (SEC). Fund managers have resources and technical expertise far greater than individual investors. Therefore I think every investor should hold at least one unit trust in their portfolio. A direct advantage I get from unit trusts is, fund manager send a report of their top 10 holdings monthly. I have invested in NDB Growth Fund and Income Fund. This was their October status.

I keep monitoring the changes in their portfolio every month to get an idea of what's happening beyond my radar. This is the changes in growth fund which I have been tracking for a long time.

Counters marked RED are the ones which disappeared from top 10 list following month.
GREENs are the ones which appeared in the list during the reported month.
If you track back the changes and price movements, you will understand how smart the fund manager is.

Another advantage is, Unit Trusts give you the access to Government Bonds and Treasury Bills which are not available for individual investors. Also capital and dividend gains from unit trusts are totally tax free. There are other benefits such as Automatic re-investment plans, Minimum transaction cost etc. Unit Trust Association of Sri Lanka is a great place to learn more about unit trusts. Also you may want to check out NDB Auto Wealth Planner, which is a nice simulator you can use to create customized plans for you risk appetite.
 

Cash at Bank : Shock Proof Your Portfolio

Yes, this will really shock proof your portfolio. Unexpected emergencies such as family health, theft, accidents, natural disasters can drain your wealth very quickly. Selling my holdings in a bear market is my worst nightmare. I usually keep 1 Year worth of my salary as cash at bank. You can choose 4 Months, 6 Months or even 2 Years according to your level of risk. I have 4 grand parents, my wife(hoping to have baby next year) and a brother to look after. Therefore I maintain a 1Year buffer. It is advisable to keep at least 4 Months of family expenses at bank.

A great thing to do is, spread your emergency cash in to small blocks and open one FD per month. We hold 1x 1Month, 3x 3Months, 6x 6Months, 12x 12Months FDs. If you do this, you will find about 4 FDs are expiring and renewing in every month. In case of an emergency, you can choose which one is best to close considering the amount required and maturity level. If you think maintaining so much FDs a headache, I do that even without leaving my room. I don't know about other banks, but with Sampath bank it is just a mouse click.

You can select the period, renewal option, interest payable period(Monthly, Quarterly, etc) and which account to credit the interest(if you select no automatic renewal). It is so easy and my life would have been very different without Sampath Bank. Let me know if other banks offer this facility.
 

Other Assets : Beware of Non Revenue Generating Assets

I'm not a gold fan and I hate to hold assets which are not generating any revenue. Remember the house you live in and your car is not an investment. In fact they will drain your wealth as you need to maintain those. If you are holding a farm land, an apartment or a vehicle which can be rented, that will be a real investment. Be very serious when you are buying a non revenue generating asset. Think about the lifetime cost and your opportunity cost before going shopping.

This post is long, but it summarize the entire content of my blog. Let me know if you have anything to add or something you don't like in the content. I wish you merry X'mas, be Safe and enjoy the vacation!

Cheers...

Dividend Analysis : LB FINANCE PLC(LFIN.N0000)

If you have not being following my blog from the beginning, this is a continuation of series of articles which I'm searching for undervalued dividend paying counters in CSE. I started the search after Scanning The Market for potential companies using CSE Screener. I looked at NDB and GLAS before. This time I'm looking at LFIN.

A Word of Caution

First I need to confess that I'm doing this based on one assumption. That is, "My initial screening revealed most under valued yet financially strong dividend paying shares in CSE". I have set my screening criteria in a way, so that I don't have to dig deep in to the financials. That make everything simple and I highly appreciate the simplicity in decision making process. 

I may be missing a hidden value of a company by not analyzing deeply. But the important thing is, it is safer to invest on something which I can understand in 30 minutes rather than a day. On the other hand there may be hidden risks too. But Cheaper valuation and higher dividend yield should protect me from those risks. That is why you find my posts are not that lengthy or full of numbers. I try to keep it short and sweet by being more graphical, so that a non financial person could digest the content in 10 minutes.

 

LB FINANCE PLC(LFIN.N0000)

I looked at the last annual report of LFIN. There is a special section I look at in any annual report. That is the ten year summary or decade at a glance. For my disappointment some of the information I wanted was not there. EPS was there but dividends per share(DPS) and average market price wasn't there. After going through the CSE data base and meddling with DFN data sniffer for a while (will share this tool in a separate post), I managed to gather the data I was looking for.

They only started paying dividends in 2008 and for the last 6 years they have been doing that consistently. I like consistent dividend paying companies. And their earnings also seems to be following the same trend.

Payout ratio is 27%. Earnings were flat for the last 2 years, but dividends were increased by 30%. That massive dividend increase make LFIN more attractive to me. Also have to mention that LFIN is trading near 3 year low now.

This is a simulation of annualised gain with dividend investing and YOY trading.

Light Blue line indicate the YOY loss or gain

Dark Blue line is the annualized gain with dividend being re-invested

Red line is the annualized gain without dividend being re-invested

 
Interesting to note:

• In 2010 LFIN price hiked from Rs. 30 to 170 in seven months. But there wasn't a crash as one would expect after such a massive hike.

• They paid a Rs.5/= dividend when EPS was little more than Rs.7/= in 2010. Now EPS is Rs.24/= and the pay Rs.6.5/= dividend.

• From the financials, Debt/Equity ratio of 9.4 is bit disturbing to me. With compared to NDB(1.5) and NTB(1.9) which sowed up in my initial screening, this is a highly leveraged company.

 

Conclusion

With dropping interest rates and expected economical recovery in 2014, I'm going to keep LFIN in my watch list. Exposure to gold loans and expensive debenture issues might effect future earnings. I like to wait till 2013 annual report comes out before jumping in. In the mean time, I will keep looking at other companies. UAL is next in my mind. Keep reading till then.

Cheers...

First Step of Investing : Saving

Saving is the first step of investing and it is the back bone of all investors. You can't invest if you don't have money. There is no free meal in this world. It is very important to understand that you can't make something out of nothing. People talk about Credits and Margins, I just laugh at them. It is simply not going to work and you must do it in the hard way. That is cutting corners and learning to live below your mean.

A Life Lesson

As I have said before, most professionals I know live from pay check to pay check. I was no different about 6 years ago. My wife is just starting her professional carrier as a charted accountant. 6 years ago I received the same paycheck as her and my annual saving was a minus figure. Just one year after my graduation I had about 5 Credit cards and all were fully utilized. That is how I ended up with a minus figure. Now looking back and comparing what I did in those days, It is amazing to see how my wife manage her day-today expenses with half of her salary. She don't use any credit cards, she cook at home and we don't have a vehicle yet.

After our wedding, we had some cash left in hand. Yeah.. She organized an amazing wedding(definitely worth a separate post). We banked that money and since then we have been opening one FD a month. We started with 1x One month FD, then 3x Three month FD and so on... Now we are in to 12x One year FD's and interest income is already close to her monthly expenses. That is the sweet retirement she is looking at. This armada of FD's is our primary safety net. Even if we loose our jobs, we don't have to sell our holdings to survive.

Importance of Starting Early

"The best time to start investing is yesterday and second best time is today"
Above statement says how important it is to start investing early. It is a exponential process and any delay will get exaggerated in the long run. Some want to be billionaires over night and some have stupid excuses against starting. To start you don't need to be big, but you have to be consistent. This is a growth forecast if you save Rs.1000/= per month @ 12% rate for 40 years.

Points to note:
1)In just 7 years, interest income will be higher than your annual investment.
2)In 40 years your will have saved over 10 Million, but if you delayed your start by 5 years you will have only 5 Million.

If you think 40 years is a lot of time, Here are some ways to boost your growth.
・ If you manage to find 15% rate it will take only 34 years to achieve 10M mark
・ If you start with a 100,000 and contribute 24,000 per year, It will take only 27 years
・ If you increase your monthly contribution to 5,000 it will take 22 years
・ If you manage to save 10,000 a month it is just 18 years

Other Factors to Consider

You should always keep inflation checked. Banks FDs are not really a way to beat inflation. But it is a must to start and keep on investing. Parking excessive amount of cash at bank is not advised. Currently bank rates are going down in Sri Lanka. I'm also searching for value counters to add my portfolio. You may want to see my dividend analysis on [NDB] and [GLAS]. I'm going to look at LFIN soon. Till then keep saving...

Self Performance Evaluation Tool

I said I will share the tools which I have developed over the time here. On a previous post I shared [CSE Stock Screener]. This is another tool to track your investments and benchmark the performance against Fixed Incomes.

Background

First coded in late 2010. At the earlier stage of my investment carrier, I had some problems with tracking my investments and evaluating the performance. At the early stage of any investors life, There are couple of common questions. What are you really doing? Is it worth the risk? What is the actual gain? Can I beat FD rates? This program is my attempt to answer that question in a quantitatively manner.

Introduction

In this excel sheet you have to enter your monthly investment amount, Annual dividends received, Current PF Value, Account Balance(i.e Cash), Withdrawals as well as Fixed Income Rate which you expect to beat(Yellow Cells). Currently it support from 2005 onward (Let me know if you wish to extend the time frame). 

Once you click on "BenchmarkMe" button, it will calculate the fixed income gain as if you had banked the cash. It will treat your monthly investments as a renewing one month fixed deposits. Most importantly, this will calculate the annualized % gain of your portfolio.

Why Benchmark?

It is very important understand what you have been doing over the years. I found that most investors don't keep a track of their monthly investments, dividends and withdrawals. Eventually they end up on thinking that they have earned a lot of money, but in reality they may not have beaten even AAA rated bank FD's. Mainly this is because of the illusion of visible portfolio value increase over the time. The question we fail to ask is "At what rate?" Remember inflation is very high in Sri Lanka, portfolio value may be increasing while actual buying power is decreasing.

Year 2013 is a hell of a year for Debenture Issues and there are couple of more to come. Some of them went as high as 16.5% and we saw a lot of folks go after them. I think this insanely high rates are stressing our entire financial system. I could not count more than 6 financial institutions which have ROE over 20%. How do they planing to pay 16% if they can't make more than that? NDB have ROE of 42%, You may have a look at my dividend analysis on [NDB here]. This is a good area for further research, but for this post I'm going to stick with the topic. I bench mark myself with 20% rate. I have been able to maintain an annualized gain of 23% over the years. Therefor debentures are not that attractive for me.
So go ahead and give your self a try. Let me know if you have any problems.

Download

Download the tool [here].
Note :
1) You should enable Macros from Excel Trust Center for this to work.
2) Clicking on clear button will clear all data(obviously). If you want to Re-calculate after a small change, just click on "BenchmarkMe" button again.
3) Make sure your system date is correct. Macro reads current date from system date.
If it is incorrect, You may not get the correct results

Cheers...

Dividend Analysis : PIRAMAL GLASS CEYLON PLC(GLAS.N0000)

From a initial [Scan] of CSE I'm looking for a good dividend paying counter to add my portfolio. Earlier I looked at [NDB], but I'm not completely satisfied about the results. Then I picked GLASS because it has the highest five year dividend growth rate(84%) and EPS growth rate(74%).

My History With GLAS

I've had glass in my PF before. So that I know about the company a bit. About two years ago I made this post at Sri Lanka Equity Forum. If you do not about it yet, I seriously suggest you get registered there. It's a good place to get general information and opinions.

Followings are the points I made about two years ago.
  1. Expiration of BOI tax free period of 5 years in Dec. 2012
  2. Rising energy cost.
  3. Rising cost of Soda Ash

Now  2 years(actually 21 months) have passed by and GLAS price have come down from 6.00 to 4.20(LKR). That's a 36% price drop and I think current price reflect the points I raised above. As GLAS came high in our search, I think it is better to revisit the above points.
  1. Company now pays 10% income tax (for 2013 & 2014). After 2014 they have to pay 20%.
  2. Furnace oil price rose by 80% during 2012 and electricity by 20% from April 2013.
  3. Soda Ash price has come down by 25%(Approx.) 

That's about the history and a bit of future. Now lets look at the dividends.
 

GLAS Dividends

This is the dividend history to GLAS from 2006(7 years).
  

As you can see, they had problems in 2009 and 2010. And they had a dividend cut in 2010 & 2012. A company not increasing the dividends at a inflation beating rate is a concern for me. A complete cut is a nightmare. I seriously consider selling when a company cut or freeze dividends.

Anyway now we are at the end of 2013. Price have fallen to reflect the business challenges. It is nice to see how a dividend investor would have performed during past 7 years. Here is a simulation of gain/loss of glass from 2006.

Light Blue line indicate the YOY loss or gain
Dark Blue line is the annualized gain with dividend being re-invested
Red line is the annualized gain without dividend being re-invested

 
There are two interesting points to note in the graph.
1. Reinvesting dividends will always minimize the loss and maximise the profit.

This is something I always say in this blog. Dividends do protect the investor in multiple ways.

2. Some times it is better to sell and book the profit.
There is no harm in selling some of your holdings and realizing the profit if you are not sure about the future. As a rule of thumb, If you can get 5 years worth of dividend income within 6 months it is better to sell and book the profit.
 

Conclusion

Trading at 52 week low, I think GLASS is bit under valued now. However immediate future may pose some risk. For a long term investor this could be an oppetunity to collect some. This is a well established and essential business. Business may be slowing down a bit.  Margins may get shrink a bit. But people are going to use GLAS products for the forseable future. I'm going to keep GLAS in my watch list. I will take my time to analyse few more counter before making a move. 

I'm going to look at LFIN next. If you have your favourite in the list, comment below so that I can have a look at it.
 

Cheers...

Why Dividends Are Important

When making a investment decision, Dividend Yield is the fist thing I look at. I consider many other factors, but I never invest on non dividend paying companies. This is why dividends are so important to me.

1. A Guarantee Of Safety

Generally companies which pay dividends are well established and managed professionally.
A company can not pay dividends (and keep on increasing it for years) if their core business is at risk. Financials can be manipulated but dividends are not. If they don't have cash, then they can't pay you. Once they pay it, it is cash in your pocket and it is yours to spend.
 

Dividends are the best feedback I can get from a company. Look at the companies like LLUB, NEST, CTC, GLAS, etc. They have been doing something right for decades. If you are holding a dividend paying stock, there is a team of professionals working tirelessly for you. They will worry about the economy, government policy, inflation, war or even zombi attacks for you. When I receive a dividend check, it is not just a check. It's a Certificate of Safety.

2. Beating The Inflation

Investors must keep a close eye on the inflation. Inflation eat up the wealth without you being noticed. However dividend investors can protect their income against inflation by carefully selecting companies which increase dividend at a rate higher than the inflation.
If you are going to retire one day(we all will) and live off the dividend income,
then you have to make sure your dividend check get bigger in every year.

Sri Lanka is a high inflation(10%) country. I always look for companies with a track record of increasing dividends at a rate higher than 10%. This is where [Share Screener] becomes a great asset to me. There are 32 companies which have 5 year dividend growth rate of 30% or more. All of them may not suitable for dividend investors. But there a plenty of opportunities to explore. I do share my dividend analysis here. make sure to subscribe or visit this page frequently to get the updates.

3. Passive Income Generation

This is the ultimate goal of dividend investing. Idea is to collect enough dividend paying shares over the time, to a level where annual dividend received is higher than your annual salary. Imagine what it would be like if you can live off the dividend without touching capital investment. You will never run out of money and one day you can hand over your entire wealth to your grand kids.

I hate to wake up and go to office every morning. I hate rush hour traffic. My dream day will begin when I quit my job and start living off the dividend income. Dividend investors do plan for retirement 10-20 years ahead of time. My parents worked till their 60's to get a pension which became worthless in less than 5 years due to inflation. I'm not going to do the same mistake.  I will go on to details of my retirement plan in a separate post.

4. Magic Of Compounding

Albert Einstein is a true genius. He said, "Compounding Interest is the Greatest Force in the Universe. He who understand it, earns it and he who doesn't, pays it". Dividend investors can reinvest their dividends and earn more from reinvested dividends. Over the years compounding will have a staggering effect on your portfolio.

Actually my favorite part of investing is re-investing the dividends. LLUB is a perfect example for Compounding effect. They pay dividend quarterly. I buy 100+ new shares in every quarter by reinvesting the dividends. If you do the match, my actual dividend yield is considerably higher than the indicated yield. Compounding is a nice topic to discuss and I'm going to make a separate post on this in the future.

5. It Teach Financial Discipline

Perhaps this it the most important part of dividend investing. Dividends will teach you the time value of money. It will prevent you from over trading. You will not do any stupid mistakes. Noise in the market will not effect your decisions. You will have more time to read and think than clicking the mouse. Eventually you will learn to live below your means and save for the future.

I learned that buying new stuff and posting on Facebook will not help in me a long time ago. For many, first thing on the list is a new vehicle after getting first salary. Then maybe a housing loan which you will pay for next 20-30 years. Add a insanely expensive wedding to that and your financial future will be sealed for ever. Most professionals I know lives from pay check to pay check. There is no retirement plan in the horizon, let alone an early retirement. Dividend investors will never fall in to traps like this. That alone is enough for me to invest on dividend paying companies.

Colombo Stock Exchange Share Screener

On a [previous note] I wrote about the share screener 

which I use to scan the entire market for possible dividend investment opportunities.
Today I'm going to share the tool and give you a brief introduction.
 

Introduction

A share screener is a valuble and time saving tool which allows user to scan the market
for a given set of parameters. There are many online screeners including google and yahoo.
Unfortunately I could not find any screener which supports Colombo Stock Exchange(CSE).
I wrote this in March-2013 and being using since then. This is coded in VB macro and
I use a macro enabled excel work book for better representation of results.
Hopefully this will save a lot of time for you.
 

Screening Parameters

You can scan the market for any of the following combinations
1. P/E Ratio
2. Return On Equity (ROE)
3. Current Dividend Yield
4. Five Year Dividend Growth Rate
5. Five Year EPS Growth Rate
6. Five Year Average Dividend Yield

 
All you have to do is select the preferred Minimum and Maximum values(Yellow Cells)
and click on "SCREEN" button.

For example if you want to search for all companies which have,
1)P/E less than 10
2)ROE greater than 20%
3)Current DY greater than 3%
4)Five year dividend growth rate greater than 10%
5)Five year EPS growth rate greater than 10%
6)Five year average dividend yield greater than 3%
Following will be your inputs and screen results.
 

Results

As you can see above, there are 10 counters which matches your search criteria.
We dividend investors do not jump in and buy just for the greediness of dividend income.
There are many things to consider and this tool will list a lot of other data
to help you in the decision making process. Hoping to make a separate post on this.
In the meantime you can have a look at my "Dividend Analysis on NDB Bank PLC"

Also it is worth to look at the distribution charts of Screening Parameters.
This will give you the big picture of Colombo Stock Exchange.
Graphs are on "Distribution Charts" sheet.

 

You will be amazed to find out that there are,
・58 counters with five year EPS growth of more than 30%
・51 counters with ROE higher than 20%
・37 counters which are trading P/E below 5
・36 counters which yielded over 5% dividend
・33 counters which paid over 4% dividend for last 5 years
・32 counters with five year dividend growth of more than 30%

You can see to the enormous growth potential CSE offers for
inteligent, value seeking, longterm dividend growers.
I'm pretty sure Dividend Investing will be the next big thing in Sri Lanka.

Download

Download the tool here
--------------------------------------------------
 Update : Above link was updated on 2014/07/21
--------------------------------------------------
Note : You should enable Macro and Data Connection from Excel Trust Center for this to work.
Make sure you subscribed to mailing list and check this page regularly for updates.
I'm still adding more functions to this and there will be a DB update at least once a month.

A Look At The Dividends (NDB Bank)

On my previous post Value Hunting I scanned the market for following conditions.

1. P/E between 1 and 10

2. Return on equity is higher than 20%

3. Current dividend yield is over 4%  
4. Dividend growth rate of last 5 years is higher than 10%
5. EPS growth of last 5 years is higher than

 Now it is time to have a inside look at the results.

 

In this post I have pickedup NDB because it has the lowest P/E, Highest ROE and Highest DY

NDB.N0000

 Just by looking at the results, NDB seems to be very attractive. 
For the reference, let's look at the current yields of several investments vehicles and Inflation.
1. Commercial banks saving rate 4.5%
2. Inflation November 5.6%
3. Commercial banks fixed deposit rate 10%
4. T-Bills/Bonds 11%

Inflation beating dividend yield was very pleasing to me. So I looked at the last annual report wondering why NDB is trading so cheap. And aha... They have had a very unusual gain last year. Over 300% increase in Other Operating Income. I don't want to dig in to that. They are probably not going to repeat the same performance in this year or next year. This is exactly why dividend investors should look at the history of more than 5 years.
 
Here is the dividend history of NDB for last 10 years.

It is dosen't look bad for me. But the astronomical performance of last year distort reality a bit. To be honest, I like the continuous divined payment histry. The most important factor for me is the consistent dividend payment. I will write a separate post explaining why I like dividends so much. For the time being, here's a simulation if I had bought and hold NDB for last 10 years.

Light Blue line indicate the YOY loss or gain
Dark Blue line is the annualized gain with dividend being re-invested
Red line is the annualized gain without dividend being re-invested

Conclusion

Remember that we are looking to buy something which is worth holding for the life time.
There is no point of being hurry to jump in right now. Market is lot older than you and it is going to live longer than you. I learned something in this effort and I hold my next move for the time being . Next time I'm going to have a look at GLASS. Let's descide on NDB after that.

Cheers...

Value Hunting

As my profile says I'm a dividend investor, I thought of starting my first post with some research on fundamentally strong yet undervalued shares in CSE. 

■SCREENING

I did a screening of all 288 companies listed in CSE to find,

1. P/E between 1 and 10

2. Return on equity is higher than 20%

3. Current dividend yield is over 4%

4. Dividend growth rate of last 5 years is higher than 10%

5. EPS growth of last 5 years is higher than

 Later on I will share this screening tool with you. It allows you to scan the entire market with your preferred fundamentals. This is a real time saver for me. Also I will explain why I select above criteria for initial screening in a separate post.  For the time being just enjoy the results!
 

Counters with Attractive Valuation

As you can see, I found 9 counters which fits my search criteria. That doesn't mean rest of the 279 counters are not worth looking. But these are the most undervalued for the time being.

■Can I jump and BUY now?

Unfortunate the answer is a Big NO! Value investing is not that easy. You have to dig in to financials and search more. I will pick some of the above counters and check whether it is OK to BUY in a separate post. 

I did not made this post just to point the readers in some direction. Actually this is the way I make my purchase decisions. Within next couple of weeks I do hope to BUY one of the above counters. As always I'm keen to learn what you think which I should buy. Leave your comment here and let me know what you think.