I make money selling options and collecting premiums doing so, you can follow my Facebook page to see the trades.

Thanks for stopping by.

AT&T is no brainer. Many of its financial metrics improved since I have looked at it last time, so I am gladly buying.

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]]>I use three criteria:

1) “correction” mode

2) 5 year average dividend yield

3) fair value

In order to buy the stock, all three criteria must be met at the same time.

The stock must be in correction mode. That means 10% below its 52 wk high.

The stock must have current yield above the 5 year average yield.

The stock must trade below my calculated fair value.

I calculate a fair value using:

1) minimum desired annual stock growth rate at 4% or more.

2) analysts consensus future EPS growth

3) forward PE

4) current EPS

5) current dividend yield

6) 3 year average dividend growth

Put all this together I calculate a fair value (PV).

Of course, there are many methods to do that. You can use discounted dividends method, or any other method. That’s why you get tons of different fair values, for example when you look at Graham formula, you get a different number, if you use DFC method you get a different number, etc. but the point is to pick a method and stick to it and use that one only method.

Once those planetary constellations are met, I buy the stock and hold it forever (ideally).

Hope this helps. Thanks for stopping by.

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