What is the dividend?

The dividend is a compensation to shareholders. The dividend is a profit sharing in the company. Shareholders are compensated in cash, which can be seen as a type of salary, as an investment in the respective company always involves a certain willingness to take risks.

The dividend yield indicates how much percent of the stock price is paid out as a dividend to the shareholders. This can be calculated quite easily by dividing the dividend by the stock price.

Often a high dividend yield tempts people to buy the stock, but it's important to consider the overall picture. Not every company with a high dividend yield is a quality company. Additionally, the dividend growth rate, payout ratio, and history should also match.

Dividend Turbo Strategy Explained

Buy and sell based on dividend yield. With the Dividend Turbo strategy, it is possible to determine buying or selling signals based on the dividend yield, which also allows for quickly determining whether a dividend stock is undervalued or overvalued.

This strategy considers the historical time series and determines whether the current dividend yield is high or low, resulting in a clear signal to buy or sell a dividend turbo stock.

In our Dividend Turbo Tool, the fair value of the dividend is constantly displayed based on the historical dividend yield at the current time.

Based on the Fair Value of the dividend, it can be seen at a glance whether a stock is over or undervalued at the current price.

Be cautious when dealing with seemingly good dividend yield.

High return does not necessarily mean quality company. This strategy is not applicable to all companies with supposedly high dividend yields, as non-quality companies often experience fluctuations and other unpredictable cuts in dividends.

Filter quality companies

Continuity is considered a quality feature when it comes to dividends. Quality stocks can be filtered by looking at the dividend ladder. This shows the increase in dividends over the years. There should be a continuous growth here to qualify the stock for the dividend turbo strategy.

Often in times of crisis, there are dividend cuts for companies that cannot afford to pay out to shareholders, for example, because they have high levels of debt. This is noticeable through declines in the dividend ladder.

In addition, one should also always pay attention to forecasts. Our tool already displays announced dividend cuts. Often these are already announced several months in advance by management. Here the strategy can also be misleading, as there is a false signal.

Example Undervalued Stock Johnson & Johnson :

Example Overvalued Stock Microsoft :

Compatibility with Buy & Hold Strategy

Entry point. Many investors are looking for a suitable entry point in solid quality companies with a good dividend yield. This is often difficult to determine fundamentally. This is where the Dividend Turbo strategy comes into play. With this strategy, one can determine very well whether a Dividend Turbo stock is undervalued or overvalued.

So if you are following the classic Buy & Hold strategy and have analyzed the company fundamentally, you can use our tool perfectly to find the best possible entry in terms of dividends.