An interesting aspect of Joel Greenblatt's Magic Formula Investing (MFI) strategy is that its precepts can be applied to a variety of other stock strategies and focuses. For example, if you like to invest in small caps, MFI can be used to find good, undervalued businesses in a sector that is under-followed by professional equity analysts. If you are looking to invest in foreign markets, MFI can be applied to stocks in foreign exchanges, and so forth.
We can also go the other way, and apply additional criteria to stocks in the official MFI universe. In theory, doing this starts us with a list of good, undervalued companies, weeding out a lot of junk from the beginning. This article will focus on combing through the three screens covered by MagicDiligence (top 50 over $50 million and $1 billion, top 30 over $3 billion), looking for MFI stocks with relatively safe dividend yields above 3.5%, providing ongoing income for investors.
Source: The Street
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