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Computerized Investing > Fourth Quarter 2011

Screening With the Big, Safe Dividend Formula: The Advanced BSD Approach

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by Wayne A. Thorp, CFA

In the Third Quarter 2011 issue of Computerized Investing, we introduced Charles Carlson’s big, safe dividend (BSD) formula (you can access this article here). This approach is intended to “find stocks with above-average appreciation and safe and growing dividends.” In “The Little Book of Big Dividends: A Safe Formula for Guaranteed Returns” (John Wiley & Sons, 2010), Carlson discusses two big, safe dividends formulas; our article in the last issue covered the basic approach, which relies solely on the payout ratio and Horizon Publishing’s proprietary Quadrix Score. Using Carlson’s free website (www.bigsafedividends.com), users can sort the stocks of the S&P 1500 to find promising candidates based on the basic BSD formula.

Carlson’s second formula is the advanced BSD screen, which combines 10 different factors with different weightings into a composite score. In this article, we outline the advanced BSD approach and attempt to create our own composite score and apply it to the universe of stocks using AAII’s fundamental stock screening and research program, Stock Investor Pro.

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