Construct a Recession-Proof Portfolio With the ‘I Dream of Dividends’ Technique

Construct a Recession-Proof Portfolio With the ‘I Dream of Dividends’ Technique


  • InvestingPro is a strong platform for conducting complete elementary analyses utilizing a flexible inventory scanner providing various monetary indicators.
  • On this article, we’ll be taught concerning the ‘I Dream of Dividends’ technique, tailor-made to pick corporations with substantial dividends, excessive return on invested capital, and environment friendly capital utilization.
  • This technique employs particular standards comparable to dividend yield, return on invested capital, P/E ratio, and earnings to establish corporations appropriate for buyers throughout financial downturns.

InvestingPro provides a classy platform for conducting complete elementary analyses of corporations worldwide. Amongst its array of capabilities, the inventory scanner stands out, permitting customers to pick corporations utilizing all kinds of monetary indicators.

Moreover, the platform supplies pre-designed methods tailor-made to cater to the varied wants of buyers. One such technique is the “I Dream of Dividends,” designed to establish corporations providing each substantial dividends and a comparatively excessive stage of earnings and return on invested capital.

This specific choice method usually results in the inclusion of sturdy and well-established defensive manufacturers available in the market. These corporations can function invaluable additions to buyers’ portfolios throughout financial downturns, doubtlessly providing alternatives in a market characterised by inventory value reductions.

This is how one can harness the facility of the technique on InvestingPro:

Find the ‘I Dream of Dividends’ technique on InvestingPro/h2

Merely go to the scanner part, then scroll throughout the obtainable methods and choose the ‘I Dream of Dividends’ technique we mentioned on this article.

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What precisely Is the ‘I Dream of Dividends’ technique?/h2

The described “I Dream of Dividends” technique depends on 4 key standards for choosing particular corporations:

  1. Dividend Yield: This elementary indicator targets corporations with a dividend yield starting from 3% to 10%. The dividend yield ratio is calculated by dividing the worth of dividends paid per share by the share value. The next yield is favored because it signifies higher potential income for shareholders, demonstrating the corporate’s dedication to sharing earnings.
  2. Return on Invested Capital (ROIC): Effectivity in producing returns on invested capital is essential. A ROIC criterion of over 10% is utilized to establish corporations able to attaining funding yields greater than the sector common. That is particularly vital for bigger, capital-intensive corporations, notably these within the manufacturing sector.
  3. P/E Ratio: To filter out corporations, this technique makes use of the price-to-earnings (P/E) ratio. It’s meant to exclude corporations with destructive P/E ratios. Whereas a decrease P/E ratio can counsel comparatively engaging share costs, it might additionally point out troubled corporations dealing with downward inventory tendencies. To keep away from overvalued shares, an higher restrict filter primarily based on sector averages can be added.
  4. Earnings: This criterion is used to exclude smaller corporations that won’t have a constant monitor document of long-term dividend funds in comparison with bigger, extra capitalized corporations. Moreover, the length of steady dividend funds by an organization is taken into account. Longer monitor data enhance the chance of dividend funds persevering with sooner or later.

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For potential modifications or extra standards, you might take into account indicators like internet earnings, market capitalization, or price-to-book (P/B) worth. Nevertheless, it is important to strike a steadiness when including standards.

Being overly restrictive can restrict the pool of eligible corporations, so cautious consideration ought to be given to how extra standards could have an effect on the choice course of.

InvestingPro’s crystal clear information presentation to select your winners/h2

As soon as the choice course of is accomplished, the InvestingPro software presents the chosen corporations in a tabular format, itemizing people who meet the established standards throughout the specified geographic area.

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Notably, one standout indicator among the many many obtainable is the “truthful worth.” This metric, decided by a mix of various monetary fashions and analyst suggestions, provides insights into whether or not an organization is overvalued or undervalued, usually with a selected goal value supplied.

Furthermore, to simplify the method and accommodate customers of all ranges, the scanner categorizes the huge quantity of knowledge into six elementary classes, as illustrated under:

This user-friendly breakdown ensures that even novice merchants can readily interact in elementary evaluation, leveraging the capabilities provided by the InvestingPro software.


With InvestingPro , you possibly can conveniently entry a single-page view of full and complete details about completely different corporations multi function place, eliminating the necessity to collect information from a number of sources and saving you effort and time.

Disclaimer: This text is written for informational functions solely; it doesn’t represent a solicitation, provide, recommendation or suggestion to take a position as such and is under no circumstances meant to encourage the acquisition of property. I wish to remind you that any kind of asset, is evaluated from a number of factors of view and is very dangerous and due to this fact, any funding determination and related danger stays with the investor.

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