Financial Investor’s Strategy To Stop Losing Money!
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I’m sharing my strategy for Investing and if followed will present a great opportunity to collect income and grow your wealth safely.
Financial Investor’s Questions To Ask Yourself:
Question 1: Is The Company Recession-Proof?
- Did the company Grow, Freeze, Decrease, or Discontinue dividend payments during the last recession.
Question 2: Is Company Expanding & Expecting Growth Because of X, Y, Z.
- Company is working offensively on creating new products & services and has shown growth year over year.
Question 3: Will Those Products or Services Offered, Be Needed In 1-5+ Years?
- DIS v.s SIX, one has a variety of products, services, etc v.s one that solely has theme parks and filed for bankruptcy in 2009 after 2.5 Bn in debt.
Question 4: Industry Barriers, Does It Have A Strong Moat (Easy For Another Company To Create The Product/Service) and Does It Have A STRONG brand name?
- Does the company have a niche that is not hard to enter for example a major airline?
Question 5: Has Company Within The Last Year Go Initial public offering (IPO)?
- IPO’s can have strong numbers on release, but waiting until the company has had at least 1 year+ of earnings history and management history can make all the difference.
Financial Investor Strategy:
Rule #1: Stock Must Pay A Dividend, Is There A Buying Opportunity When Yield Higher Then It’s 1 Yr Avg.
- Dividend Stocks are defensive stocks by nature and prevents the stock price from falling much during bearish markets.
- A low P/E ratio suggests the company is trading below its value, making it cheap.
Rule #3: Low Payout Ratio Under 60%, Unless A REIT.
- The payout ratio is the percent of earnings needed to support the dividend. With a 50% payout and Below, a company’s earnings could fall by half and still cover the dividend.
Rule #4: History Of Growing Dividend 5 Years Minimum, Dividend Growth of at least 5% or Higher Per Year.
- Consistent dividend almost always indicates a healthy business. The company is generating cash and wants to say “Thank You” to shareholders.
Rule #5: Strong Balance Sheet 3 Yr Increase In (Revenue, Net Income, Free Cash Flow).
- Increasing Revenue, Increasing Net Income, Steady Free Cash Flow are all important for long term investing.
Rule #6: Optional – If Possible Stocks Trading For A Price-To-Book (P/B) Ratio Lower Than 3.
- A low P/B value suggests the company is undervalued, and you could be getting into a great company at a discount.
Rule #7: Optional – If Possible Stocks Trading For A Price-To-Sales (P/S) Ratio Lower Than 3.
- Well-established businesses with reliable sales can command a higher ratio than 3. In the private markets companies often get bought and sold at prices between 1 and 2 times sales.
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I am not a Financial Adviser or Tax Professional the information provided is my opinion for entertainment and fun. This is just me a Financial Investor trying to help others make their money work for them.