When it comes to investing, things can quickly get complicated, or you can choose to keep it simple. One way to simplify investing is by opting for index funds, which have been gaining popularity over the last two decades. However, even index fund investing can become overwhelming when faced with the task of choosing from the multitude of options available.
Enter the Stock Screener: a tool that allows you to set your criteria and preferences to identify stocks, ETFs, or index funds that align with your investment goals. You can go as specific as granular as you want, thus setting the perfect criteria for what index funds, mutual funds or other securities to invest in. Here is a summarized list of things you can search using a stock screener:
- Market Capitalization: Small-cap, mid-cap, or large-cap companies
- Valuation Ratios: P/E, P/B, and Dividend Yield for value and growth investing
- Profitability: Earnings per Share (EPS), Return on Investment (ROE), and Profit Margins
- Financial Health: Debt-to-Equity Ratio and Current Ratio etc.
- Stock Performance: Price Change, 52-Week High/Low.
- Sector and Industry: Technology, healthcare, energy, ESG, etc.
- Technical Indicators: Moving Averages, Moving Average Convergence Divergence (MACD), and Bollinger Bands
- Geographical Focus: Domestic or international markets
- ETF-Specific: Expense Ratio, Tracking Index, and Holdings
- Additional Filters: Analyst Ratings, Insider Transactions, and Institutional Ownership
As you can see, you can tailor your criteria to be as specific and granular as you need. For example, my stock screener often has some of the following criteria:
- Market Cap minimum of $5 billion
- Dividend yield of 5.5 to 6.5 %
- Dividend Payout Ratio: Targeting companies with a payout ratio below 60% to ensure sustainability.
Of course, there may be different screen criteria depending on what you are trying to achieve. For example, your screener for your dividend portfolio would be different from that for your long term growth portfolio and so on. You can even set a specific screener for REITs, since the criteria there would differ from that for an index or regular stock screener. But of course, you can choose to combine them all into one screener.
Stock screeners provide a high degree of customization, allowing investors to filter stocks based on a variety of criteria. This granular level of control enables investors to tailor their search to specific investment strategies and risk tolerances.