Principles are Eternal

"If principles can become dated, they're not principles."

Warren Buffett

Dividend Yield Calculator

How to Use the Calculator:

1. If you are in the 'Home' page, please Click on the post title to enter the 'Post Page' and proceed.
2. Please Wait for the calculator/ excel sheet to load - it may take a minute depending on the speed of your internet connection.
3. Please study the post/ article "What is Dividend Yield?" for proper prior understanding.
4. Please enter your values for 'Current Market Price (CMP)' and 'Dividend Per Share'.
5. Please input your values only in the designated cells (filled with yellow) in the excel sheet. All other cells are protected and are not intended to be altered.
6. To clear the contents of the designated cells please refresh the page.
7. This dividend yield calculator is currency neutral - that is it can be used for any currency.

Warren Buffett on Economi Cycles Video

Duration:	0:2:50
Producer:	Georgetown University
Audience:	Students of Georgetown University
Participants:	1.     Warren Buffett 2.     Briyan Moynihan, CEO, Bank of America
Year:	September 27, 2013
Description:	Noted businessman, investor and philanthropist Warren Buffett joined Bank of America CEO Brian Moynihan in Gaston Hall at Georgetown.

How to Allocate Funds Among Pre-Selected Stocks?

Actual Question:

I like your model of picking the shares. Can you also suggest how to rank among those eight you have shortlisted? If some one has to invest say Rs.5,00,000 - how do they distribute? Thanks in advance.

Answer:

Dear Friend!

The selected eight stocks are as follows:

Answer:

This answer is sort of a sequel to the previous question “What Stocks to Buy when the Market is at its Peak?”. Therefore, those who have have not happened to read the previous article may kindly read the previous post first and then read this present article.

1. The eight stocks had been shortlisted based on following four criteria:
2. Price to Book Value (P2BV) Ratio - must be less than or equal to 1.5
3. Price to Earnings (PE) Ratio - should be less than or equal to 15
4. The Combination/ Product of the first two - shall be less than or equal to 22.5 (1.5*15)
5. Dividend Yield - More than or equal to 4%

Let us apportion the Investible sum of Rs.5,00,000 equally for the four criteria. This translates into Rs.1,25,000 each.

We will allocate the sum of Rs.1,25,000 to all the candidates based on the weights of available market discount (how much less than maximum permitted 1.5).

For example for the first criterion, the stock having the lowest price to book value will attract the maximum allocation. Following table make the process clear:

Price to Book Value (P2BV) Ratio Criterion: 

The same process is repeated for the the ‘PE’ and ‘P2BV*PE’ criteria also and the results are as follows:

Price to Earnings (PE) Ratio Criterion:

P2BV * PE Ratio Criterion:

Dividend Yield Criterion:

Please note that while shortlisting the eight stocks, we had already eliminated non-conforming stock under the first three criteria. Under the fourth and dividend yield criterion it is not fair to eliminate a stocks which otherwise shines on the other three prior criteria. The best you can do is do not allocate any funds to those stocks that whose dividend yield is below 4 or allocate only based on the weight.

Total Allocation:

To conclude, the investible funds are allocated amongst the pre-selected candidates based on the relative merits under the criteria of P2BV Ratio, PE Ratio, P2BV*PE Ratio and Dividend Yield.

Thank you,

With Best Regards

Anand

Equities are Best for People who Can Invest Over Time

"Overwhelmingly, for people that can invest over time, equities are the best place to put their money. Bonds might be the worst place to put their money. They are paying very, very little, and they are denominated in a currency that will decline in value."

Warren Buffett

What Stocks to Buy when the Market is at its Peak?

Dear Friend!

Your question is a very good one, as today the Indian markets are at their record highs. The Sensex is above 30000 and the NIFTY is above 9300. An investor naturally wonders what stocks to buy in India at these levels. Fortunately the key to this riddle lies in the nature of the market itself. The stock market is an imperfect and irrational one. Because of this imperfect market behaviour, a value investor mostly is able to find good opportunities to invest in wonderful stocks at reasonable prices.

Let us see the good stocks that are still available at attractive valuations even when Indian markets are at record highs:

The dividend yields of SJVN, NLC and GE Ship are slightly below the minimum dividend yield expectation but their Price to Book Value Ratios and Price to Earnings Ratios are in the attractive zone.

In conclusion, in the imperfect stock markets an investor usually is in a position to buy good stocks even when the markets are at their peaks.

Thank you,

Best Regards,

Anand