KISS stocks

The long term investment return is the sum of dividend yield and yield growth. For SP500 index, the current yield is 2% and the historical yield growth is 5%. If you invest in companies that have higher yield and/or yield growth, your long term returns will beat SP500.

Keeping it simple, a KISS stock has the following characteristics:

1. KISS stock is a large company. Small companies are not simple to analyze and dividends are not necessarily predictable. The market cap should be above $2B, preferably above $10B.

2. KISS stock has the dividend yield above the SP500 yield. Otherwise, why bother as we could get the mediocre yield by simply buying the index.

3. KISS stock should have the long term (5-10 year) earnings and dividend growth rates near the market averages (around 5-6%). Growth stocks will eventually became average stocks. As it is difficult to predict when this happens, it is safer to choose higher current dividend yield over yield growth.

Stock screeners are handy for initial screening. The simple screening above will result in a handful of stocks for further analysis. Pretty simple!

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