Implementing the Weiss Blue-Chip Screen

June 18, 2016

The philosophy and investment style of Geraldine Weiss was examined by Jaclyn McClellan in the June 2016 issue of the AAII Journal. Here we derive quantitative metrics from Geraldine Weiss’ approach of investing in blue-chip stocks and implement them into a stock screen to arrive at a list of prospective stocks that may warrant further analysis. AAII’s Stock Investor Pro fundamental stock screening and research database program was used to create the Weiss screen.

While investors cannot agree on a single approach to selecting stocks, the desirability of a disciplined and consistent stock selection framework is well accepted among successful investors. A sound approach provides analytical guidance when your emotions may disrupt your thinking or even push you away from making decisions when they are warranted. Weiss applies a relative dividend yield approach to a universe of blue-chip stocks to help determine purchase and sale values. Weiss first constructs a universe of qualified blue-chip companies, then relates their current dividend to the company’s historical norm to decide if the company is buy, hold or sell.

Her approach, as outlined in this article, can be attributed to the book “Dividends Don’t Lie,” (Longman Publishing, 1988) co-authored by Janet Lowe. The methodology outlined in “Dividends Don’t Lie” served as a game plan for Weiss’ investment advisory newsletter, Investment Quality Trends, and is still widely followed today.

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