Dividends4Life: Review of The Little Book of Big Dividends

Charles Carlson is the CEO of Horizon Investment Services, an investment advisory business, and Horizon Publishing, a publisher of investment newsletters. Horizon's flagship publication, Dow Theory Forecasts, is one of the longest-standing investment newsletters in the US. In his enjoyable 2010 book, "Little Book of Big Dividends", he outlines a quantitative system for income-hungry investors looking to construct a portfolio that generates big, safe dividends easily through his BSD (Big, Safe Dividends) formula.

In the book, Carlson discusses two approaches - the basic BSD formula and the Advanced BSD version. We focus in this article on the Advanced BSD version. This is because, other than the payout ratio, the basic formula relies entirely on what he calls the Quadrix® ranking system. Quadrix is a somewhat "black box"-ey quantitative scoring system which ranks stocks based on more than 100 different variables across six categories, including Momentum (e.g. growth in earnings, cash flow, and sales), Quality (e.g. return on equity amp; return on assets), Value, financial strength, earnings estimates amp; relative stock price performance. The idea with Quadrix is to focus on stocks that score in the upper quartile (75 and above out of 100).

Source: Business Insider

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