Stock Screening Education
Screening for Growth & IncomeScreening for Growth & Income Stocks
Growth & Income investing is sometimes seen as the "buy and hold" form of investing. Typically, investors in this investing style hold larger cap, or blue chip, stocks for a year or longer. Those stocks must pay a dividend- in order to achieve the income component of the strategy.
Historically, for growth & income investing, investors would screen for stocks with some earnings growth and, of course, income in the form of a dividend.
Growth & income investors might also like to screen for companies that are seeing earnings strength and sales growth and that have a larger market cap, as large cap companies are more likely to pay consistent dividends than smaller cap companies. Return on equity, or ROE, can also be a good screening tool for growth and income companies.
An investor can use several criteria to create their own personal screener that fits their own investment needs.
How To Use
The criteria can be narrowed by using the options found in the Zacks Custom Screener. Many of the criteria are listed in the "popular items" category seen in the snapshot below.
Improving Your Growth & Income Screening Results
The Custom Screener has plenty of excellent tools that can assist investors in identifying winning stocks. However, investors can use the more advanced capabilities of the Research Wizard screening program to further narrow their approach by choosing among 650 traits. More importantly, investors can then back test any given strategy to gauge its historical performance in different market environments.
For example, Research Wizard has the capability to target the ten stocks with the highest dividend and 3 to 5 year estimated earnings growth but which is also trading at a low valuation. The growth and income criteria can also be applied to examine earnings surprises alongside, for instance, return on equity. Investors can backtest this strategy over a preferred timetable of several weeks to several years.
The Custom Screener and the Research Wizard both provide powerful tools that allow the investor to wade through over 8,000 stocks to identify those stocks that fit into a growth and income investing strategy.