A New System For Picking Stocks To Buy For DIY DGI Portfolios

by: Dennis Dugan

Summary

There are many sources which suggest what stocks to buy next, including SA authors and web sites with stock-screening filters.

These sources naturally have biases which don't reflect the biases I have or the values I place on certain stock characteristics, like low valuation and high expected EPS growth.

I have created a stock ranking system which can be used with David Fish's monthly CCC lists and can be modified to reflect any individual SA reader's biases and values.

I propose SA readers take a look at my system and make recommendations to improve it for all SA members.

There are a thousand and more sources suggesting what stocks to buy next, including many talented SA authors. While I do get ideas from SA, I prefer to generate my own ideas from David Fish's monthly CCC lists (CCC). I like CCC because it contains pre-filtered stocks with characteristics I value and prefer, i.e. long dividend growth histories, and there are 742 companies, a large enough list for my purposes. In a previous SA article, I referenced facts, which illustrated that superior investing performance came from buying stocks with:

  1. Low dividend yields and high consistent dividend growth rates,
  2. high dividend growth rates and low payout ratios,
  3. low beta outperforming high beta stocks for investors who aren't traders,
  4. dividend payers/raisers outperforming non-dividend payers over the long term,
  5. value approach (never overpaying), and
  6. high yields and low dividend growth perform relatively better in falling interest rate periods while stocks with high dividend growth do best in rising rate environments (which is likely for at least the next 5 years).

Hundreds of web sites have stock-screening filters to help us identify stocks which meet our individual investment criteria. While this is great, it has at least one weakness which I find unacceptable. That weakness is that a stock which I might otherwise prefer from a holistic point of view could be filtered out by only a single value. For instance, I like and own J&J (NYSE:JNJ) and Pfizer (NYSE:PFE). If I filtered for 10 variables, including a yield greater than 3% and an EPS payout ratio less than 75%, both would not have made the cut because, at the end of July, JNJ's yield was 2.99% and PFE's p/o ratio was about 77%. They may have scored very high on all other 9 of the 10 variables, but missed the cut because of only 1, and then only very slightly.

To remedy this problem, I prefer to make the first cut in a selection process by using a weighted, holistic, scoring system, based on many variables, which reflects relative and absolute values, which align with my personal beliefs, i.e. that high-forecast 5-year EPS growth and low Graham valuation are the 2 most important variables to consider. That's not easy, because I have yet to find a weighted scoring system with variables and values I can modify to reflect my beliefs.

So, I created such a system that can be used with David's CCC lists. By starting with this system, I can quickly scan the results and select the highest scoring 200 or 100 or 50 from which to conduct sorting and filtering by my own criteria and quickly realize if I cut JNJ because of a 0.01% yield deficiency, and go back and correct it. I've been using this new system for a few months, and am very happy with the results and thought I would share it with the SA community, both as a possible important tool to use and also to get input about how to make it better, easier to use and easy for an SA reader to modify to include his/her own categories and scoring methodologies.

Parsimony Investment Research and others have weighted scoring systems based on their own proprietary criteria and weightings, and I like them, overall, and have followed their advice occasionally. But their criteria and weightings don't align well with my favored criteria and weightings, so their results, while good, aren't a true reflection of my sense of the value of a stock to purchase.

Parsimony says:

"We believe that the stocks with the highest Parsimony Ratings are great candidates for your DIY Dividend Portfolio… (and help) determine which stocks to buy and when to buy them."

The picture above is a good illustration of Parsimony's rating system. I took it from a recent SA article.

Another example of a rating system is in David Fish's CCC list. David calls his scoring system the Confidence Factor Scoring System. It is found in column CC of the "All CCC" tab and is explained in the "Notes" tab starting on line 146 or so. It is presented below:

Appendix A - Confidence Factor Scoring System

Listed below are items used to gauge confidence in continuation of dividend-increase streaks, with formulas and point ranges.

Item

General Formula

Min

Max

Number of Years Dividend Increased

Divided by 10

0.50

5.80

Sequence Number within CCC companies

(500 minus Seq) divided by 100

0.01

9.99

Dividend Reinvestment Plan

No-fee=2 points; Fees=1; No plan=0

0.00

2.00

Stock Purchase Plan

No-fee=2 points; Fees=1; No plan=0

0.00

2.00

Most Recent Increase (percentage)

Increase divided by 2, up to 5 points

0.00

5.00

Payout Ratio (if not over 100% or negative)

(100 minus payout ratio) divided by 10

0.00

10.00

Price/Earnings Ratio (if not over 100% or negative)

(100 minus payout ratio) divided by 10

0.00

10.00

PEG (P/E divided by Growth Rate) Ratio (if numerical)

5 minus PEG (up to 5)

0.00

5.00

Price/Sales Ratio

5 minus P/S (up to 5)

0.00

5.00

Price/Book Value (if numerical)

5 minus P/B (up to 5)

0.00

5.00

This Year EPS Est Percentage Increase vs. TTM EPS

Up to 10% Increase divided by 2

0.00

5.00

Next Year EPS Est Percentage Increase vs. TY EPS Est

Up to 10% Increase divided by 2

0.00

5.00

Est 5-year EPS Percentage Increase

Up to 10% Increase divided by 2

0.00

5.00

Number of Analysts

Number Divided by 10

0.00

4.90

Market Capitalization

Points for one, ten, one hundred billion

0.00

3.00

Dividend Growth Rate 1-year

Up to 10% Increase divided by 2

0.00

5.00

Dividend Growth Rate 3-year (if numeric)

Up to 10% Increase divided by 2

0.00

5.00

Dividend Growth Rate 5-year (if numeric)

Up to 10% Increase divided by 2

0.00

5.00

Dividend Growth Rate 10-year (if numeric)

Up to 10% Increase divided by 2

0.00

5.00

Mean (Simple Average)

Up to 10% Increase divided by 2

0.00

5.00

Total Point Range:

0.51

107.69

David's Confidence Factor's stated purpose is "…to gauge confidence in continuation of dividend-increase streaks…" Since my purpose is to qualitatively rank stocks by categories and relative weightings which I value, and then sort them by highest total score to determine which stocks offer a high enough ranking to justify further filtering and narrowing, before buying, my system will necessarily require different variables and weightings.

To that end, I developed a formula which does represent my values, and which can easily be modified to represent your values. When my formula is added as a column in the CCC list, it enables me to rank the whole CCC list, or the individual Champions, Contenders or Challengers lists, or any sector or industry, and eliminate all but the highest 200, 100 or even 25 ranked companies, as I wish, by categories which I value, and with category and sub-category score variables I assign.

Here is my scoring system:

Major Category

Sub-Category

CCC Column

Maximum Points

Risk

# of years on CCC

D

10

Market Cap

AG

10

EPS Payout Ratio

S

10

Total Risk Points

30

Value

+/- % vs. Graham

T

40

Total Value Points

40

Past Performance

1-year DGR

AL

10

3-year DGR

AM

10

5-year DGR

AN

10

Most recent div. incr.

L

10

Total Past Perf. Points

40

Future Expectations

Est 5-yr EPS Growth

AE

30

Next yr's EPS Growth

AC

10

Total Future Exp. Points

40

Grand Total Max Points

150

By way of explanation, my sub-categories in "RISK" are chosen because a company with more years on the CCC list, a higher market cap and lower payout ratio is less risky than the opposite.

Remember, my purpose is to use a scoring system that assigns values, relative and absolute, that reflects my beliefs, and results in identifying the highest quality stocks for further filtering, to eventually arrive at about 10 stocks on which to do due diligence and make a purchase decision.

Now, this next part is a little geeky. My scoring system is represented by the Excel formula:

=IF(D9>30,"10",IF(D9>20,"8",IF(D9>10,"6",IF(D9>7,"4",IF(D9>5,"2",0)))))

+IF(L9="n/a","0",IF(L9>20,"10",IF(L9>15,"8",IF(L9>10,"6",IF(L9>7,"4",

IF(L9>5,"2",0))))))+IF(S9>100,"0",IF(S9>90,"1",IF(S9>80,"2",IF(S9>70,"3",

IF(S9>60,"4",IF(S9>50,"5",IF(S9>40,"6",IF(S9>30,"7",IF(S9>20,"8",IF(S9>

10,"9",IF(S9>0,"10",0)))))))))))+IF(AND(T9>=-100,T9<=-30),"40",IF(AND

(T9>=-30,T9<=-10),"30",IF(AND(T9>=-10,T9<=0),"20",IF(AND(T9>=0,T9<=15),"15",IF(AND(T9>=15,T9<=30),

"10",IF(AND(T9>=30,T9<=50),"5",IF(AND(T9>=50,T9<=60),"3",0)))))))

+IF(AC9="n/a","0",IF(AC9>20,"10",IF(AC9>15,"8",IF(AC9>10,"6",

IF(AC9>7,"4",IF(AC9>5,"2",0))))))+IF(AE9="n/a","0",IF(AE9>30,"30",

IF(AE9<=30,AE9)))+IF(AG9>100000,"10",IF(AG9>50000,"8",

IF(AG9>20000,"6",IF(AG9>5000,"4",IF(AG9>1000,"2",IF(AG9>500,"1",

IF(AG9<=500,"-4")))))))+IF(AL9="n/a","0",IF(AL9>20,"5",

IF(AL9>15,"4",IF(AL9>10,"3",

IF(AL9>5,"2",0)))))+IF(AM9="n/a","0",IF(AM9>20,"5",IF(AM9>15,"4",

IF(AM9>10,"3",IF(AM9>5,"2",0)))))+IF(AN9="n/a","0",IF(AN9>20,"5",

IF(AN9>15,"4",IF(AN9>10,"3",IF(AN9>5,"2",0)))))

That's a mouthful, I know. I believe most SA readers, with a little practice, can cut and paste this formula into a newly created column in CCC and use it to create a ranked list of companies that represents high quality and are good candidates for adding to their portfolios. If you are a little facile with Excel, you can substitute your own vales for mine, in the formula, to create a very personal list of high-quality companies from which to further filter to arrive at a very short list to consider buying.

To use my formula, follow these instructions. I believe it's possible to simplify the instructions if someone with more Excel experience than I write them, especially in steps 6-8. To that end, I wholeheartedly request comment and recommendations. Note from author - during the first few days after the article was published many people had trouble copying and pasting the formula from the article into cell AP9 in the Excel spreadsheet. So the instructions have been modified to reflect a solution developed by Bunny2010. An alternative to following the instructions is to go here.

At that web address you will find the formula in the All CCC tab, column AP, with the companies listed in column AP by score, highest to lowest.

  1. Go to and download the Excel spreadsheet version of the U.S. Dividend Champions. Enable editing.
  2. Go to the "ALL CCC" tab, highlight rows 7 and 8, right click and press insert. It's important, for the formula to work, that row 9 is the first row with company-specific information. Note, you can limit the work to using either the Champions, Contenders, Challengers or ALL CCC tabs, or any sector or any industry... I like to use the ALL CCC list.
  3. Scroll down and do the same for rows 743 and 744. I don't know why, but sorting and filtering always works better if there are a few rows separating the companies from the headings at the top and total averages at the bottom. I think David's lists have a capability to be sorted and filtered without creating the separating spaces I've suggested in steps 2 and 3 here, I just don't know how.
  4. Highlight column AP by clicking on "AP", then right click the top of column AP and click insert; thus creating a new and blank column AP. It's important that this created column be right of column AN, the last column used in the formula.
  5. Open a new browser, copy the formula and paste it into the browser window at the top where you see the URL line. Right click, "Select all" and copy the formula into cell AP9.
  6. The value 47 should appear in cell AP9, which is the formula's score for 1st Source Corp. (NASDAQ:SRCE).
  7. Highlight cell AP9, then right click and copy.
  8. Now you want to paste the formula in cells AP10 down to AP742 by placing the cursor in cell AP10, and while holding down the left click button, scroll down to cell AP742, thus highlighting the entire column of company information.
  9. With the column highlighted, right click and press paste to place the formula in all the AP column cells. Different values will appear in all AP cells. You may want to highlight column AP and format cell numbers to 0 decimals.
  10. Now you want to sort from largest to smallest by right-clicking any cell in column AP, selecting sort, and then select sort largest to smallest, and left click. Companies are now sorted from highest to lowest score.
  11. You can now delete all but the highest 200, 100, 50 or however many you want. I suggest these 100 or 50 are highly desirable candidates on which to further filter and conduct due diligence.

The 10 highest- and lowest-scoring companies in the ALL CCC tab are:

Company

Ticker

No.

Div.

MR%

EPS%

+/-% vs.

TTM

Est 5-yr

Dugan

Name

Symbol

Industry

Yrs

Yield

Inc.

Payout

Graham

P/E

Growth

Scoring

System

Reinsurance Group of America, Inc.

(NYSE:RGA)

Insurance

7

1.53

12.12

15.27

(36.2)

9.96

22.8

102

Canadian Natural Resources, Ltd.

(NYSE:CNQ)

Oil & Gas

14

3.29

70.64

37.65

(22.2)

11.45

16.5

101

Lincoln National Corp.

(NYSE:LNC)

Insurance

5

1.42

25.00

14.31

(36.9)

10.08

8.9

93

Andersons, Inc. (The)

(NASDAQ:ANDE)

Agriculture

13

1.50

27.27

17.61

(15.2)

11.73

11.2

84

Legg Mason, Inc.

(NYSE:LM)

Financial Services

5

1.62

25.00

38.65

8.4

23.84

24.5

82

Chevron Corp.

(NYSE:CVX)

Oil & Gas

27

4.84

7.00

46.83

(32.5)

9.68

(4.5)

81

Magna International, Inc.

(NYSE:MGA)

Auto Parts

6

1.62

15.79

12.85

(4.2)

7.94

13.1

80

Maiden Holdings, Ltd.

(NASDAQ:MHLD)

Insurance

7

3.14

18.18

36.11

(19.8)

11.49

12.0

80

KeyCorp

(NYSE:KEY)

Banking

5

2.02

15.38

29.13

(12.0)

14.41

9.7

80

Valero Energy Corp.

(NYSE:VLO)

Oil & Gas

5

2.44

45.45

21.92

(19.6)

8.99

12.1

79

CSI Compressco LP

(NASDAQ:CCLP)

MLP-Oil & Gas Services

5

13.13

1.01

540.54

32.5

41.16

n/a

13

William Penn Bancorp Inc.

(OTCPK:WMPN)

Banking

5

1.13

3.85

38.03

45.0

33.80

n/a

13

York Water Company

(NASDAQ:YORW)

Utility-Water

18

2.80

4.47

64.30

62.5

22.95

4.9

13

Home Properties, Inc.

(NYSE:HME)

REIT-Residential

5

4.12

4.11

135.11

93.1

32.76

5.8

10

NACCO Industries

(NYSE:NC)

Machinery/Consumer

30

2.07

1.94

n/a

n/a

n/a

n/a

9

Utah Medical Products, Inc.

(NASDAQ:UTMD)

Medical Devices

11

1.87

2.00

34.00

61.2

18.22

n/a

9

Bowl America Class A

(NYSEMKT:BWL.A)

Recreation

43

4.55

3.03

242.86

154.4

53.36

n/a

6

Preferred Apartment Communities

(NYSEMKT:APTS)

REIT-Residential

5

6.35

2.86

n/a

n/a

n/a

n/a

4

MOCON, Inc.

(NASDAQ:MOCO)

Scientific Instruments

12

2.77

4.76

151.72

161.9

54.72

n/a

2

Wi-Lan, Inc.

(WILN)

Telecomm Equipment

5

7.72

4.03

1620.63

210.1

210.00

n/a

1

Note from my scoring system above, the Max Total Points is 150.

Personally, after running the system and identifying the top 100 companies from the ALL CCC tab, I would sort and filter for market cap greater than $1B, then estimated 5-year EPS growth greater than 10%, then relative Graham less than 60, and yield greater than 2.5%. This gives the below list of 11 companies, displayed by relative Graham score, with great investment characteristics for long-term dividend growth investors:

Company

Ticker

No.

Div.

MR%

EPS%

+/-% vs.

TTM

Est 5-yr

Dugan

Name

Symbol

Industry

Yrs

Yield

Inc.

Payout

Graham

P/E

Growth

Scoring

System

Textainer Group Holdings, Ltd.

(NYSE:TGH)

Transportation

8

8.30

2.17

65.05

(38.9)

7.84

12.0

69

Helmerich & Payne, Inc.

(NYSE:HP)

Oil & Gas

42

4.76

10.00

42.24

(30.1)

8.87

n/a

79

Canadian Natural Resources, Ltd.

CNQ

Oil & Gas

14

3.29

70.64

37.65

(22.2)

11.45

16.5

101

Horace Mann Educators Corp.

(NYSE:HMN)

Insurance

6

2.84

8.70

38.31

(20.6)

13.50

12.7

76

Maiden Holdings Ltd.

MHLD

Insurance

7

3.14

18.18

36.11

(19.8)

11.49

12.0

80

FBL Financial Group, Inc.

(NYSE:FFG)

Banking

5

2.81

14.29

36.20

(19.2)

12.90

10.0

74

Chatham Lodging Trust

(NYSE:CLDT)

REIT-Hotel/Motel

6

4.44

25.00

45.80

(19.0)

10.31

14.3

78

Macerich Company

(NYSE:MAC)

REIT-Retail

5

3.28

4.84

26.00

(11.0)

7.92

10.8

72

Principal Financial Group, Inc.

PFG

Financial Services

7

2.74

5.56

36.80

(3.2)

13.44

11.0

65

LaSalle Hotel Properties

(NYSE:LHO)

REIT-Hotel/Motel

6

5.41

20.00

109.76

18.6

20.29

17.1

64

Cummins, Inc.

(NYSE:CMI)

Machinery

10

3.01

25.00

41.80

37.0

13.88

11.2

63

Because of the low MR increases, I might eliminate TGH and MAC right off the bat; and maybe HP because of the "n/a" in est 5-year EPS growth.

Another option might be to pick the top 200 and use a minimum market cap of, say, $10B, instead of $1B, if you want to confine your buy list results to large companies. Yet another possibility is to run the scoring system for only a single sector or industry. Or, confine the scoring system to only the Champions list. The possibilities are endless.

In the table below, I sorted the ALL CCC tab, 742 companies, by market cap, and eliminated all below $20B, leaving about 170 companies. Then I ran the scoring formula, and eliminated all but the highest scoring 100 companies. Then I filtered and eliminated those with an estimated 5-year EPS growth less than 8%, relative Graham number greater than 60 (lower is better here) and yield less than 2.3%. 19 companies made the cut. They are displayed by estimated 5-year EPS growth rate %, highest to lowest:

Company

Ticker

No.

Div.

MR%

EPS%

+/-% vs.

TTM

Est 5-yr

MktCap

DGR

DGR

DGR

Name

Symbol

Industry

Yrs

Yield

Inc.

Payout

Graham

P/E

Growth

($Mil)

1-yr

3-yr

5-yr

Canadian Natural Resources Ltd.

CNQ

Oil & Gas

14

3.29

70.64

37.65

(22.2)

11.45

16.5

26,681

70.6

32.0

33.8

Applied Materials, Inc.

(NASDAQ:AMAT)

Technology-Hardware

5

2.30

11.11

38.83

38.5

16.85

13.0

21,381

2.6

8.9

10.8

Caterpillar, Inc.

(NYSE:CAT)

Industrial Equipment

22

3.92

10.00

52.83

28.9

13.49

12.5

47,469

11.1

13.0

9.1

Valero Energy Corp.

VLO

Oil & Gas

5

2.44

45.45

21.92

(19.6)

8.99

12.1

33,365

26.1

56.4

13.9

Raytheon Company

(NYSE:RTN)

Aerospace/Defense

11

2.46

10.74

38.90

56.0

15.83

12.0

33,114

10.0

12.4

14.3

Cummins, Inc.

CMI

Machinery

10

3.01

25.00

41.80

37.0

13.88

11.2

23,485

24.9

28.5

32.0

BlackRock, Inc.

(NYSE:BLK)

Financial Services

6

2.59

12.95

43.97

24.3

16.96

11.2

55,365

14.9

12.0

19.9

WPP plc

(WPPGY)

Advertising

5

2.53

26.43

46.52

45.5

18.39

10.9

29,923

26.4

23.7

18.4

United Technologies

(NYSE:UTX)

Conglomerate

22

2.55

8.47

36.73

36.2

14.39

10.5

89,296

7.5

8.2

8.9

Marathon Petroleum Corp.

(NYSE:MPC)

Oil&Gas

5

2.34

28.00

22.34

5.6

9.54

9.8

29,701

19.5

59.9

n/a

Wells Fargo & Co.

(NYSE:WFC)

Banking

5

2.59

7.14

36.50

5.5

14.08

9.7

297,985

17.4

41.2

22.5

ACE Limited

(NYSE:ACE)

Insurance

23

2.46

3.08

30.11

(18.9)

12.22

9.6

35,523

28.0

23.5

17.4

Johnson Controls, Inc.

(NYSE:JCI)

Auto Parts

5

2.28

18.18

46.64

60.0

20.43

9.6

29,834

15.8

11.2

11.1

Prudential Financial, Inc.

(NYSE:PRU)

Insurance

6

2.63

9.43

50.66

(12.6)

19.29

9.4

40,027

25.4

14.4

25.4

Dow Chemical Company

(DOW)

Chemicals

5

3.57

13.51

50.00

30.4

14.01

9.1

54,255

11.7

21.4

10.4

Eaton Corp. plc

(NYSE:ETN)

Machinery

6

3.63

12.24

57.29

14.2

15.78

9.1

28,297

16.7

13.0

14.4

Norfolk Southern

(NYSE:NSC)

Railroad

14

2.80

3.51

37.88

13.2

13.54

8.9

25,708

8.8

10.2

10.3

Travelers Companies

(NYSE:TRV)

Insurance

11

2.30

10.91

22.36

(22.5)

9.73

8.6

33,026

9.7

10.6

11.8

CSX Corp.

(NYSE:CSX)

Railroad

11

2.30

12.50

35.82

35.9

15.56

8.0

30,771

6.8

12.1

16.5

In this last example, I just ran the scoring system on the companies in the Champions tab. The following are the highest ranking 25 companies:

Company

Ticker

No.

Div.

MR%

EPS%

+/-% vs.

TTM

Est 5-yr

Dugan

Name

Symbol

Industry

Yrs

Yield

Inc.

Payout

Graham

P/E

Growth

Scoring

System

Chevron Corp.

CVX

Oil & Gas

27

4.84

7.00

46.83

(32.5)

9.68

(4.5)

81

Helmerich & Payne Inc.

HP

Oil & Gas

42

4.76

10.00

42.24

(30.1)

8.87

n/a

79

Archer Daniels Midland

(NYSE:ADM)

Agriculture

40

2.36

16.67

29.47

(5.5)

12.48

7.4

76

Lowe's Companies

(NYSE:LOW)

Retail-Home Improv.

53

1.61

21.74

40.00

176.6

24.77

17.3

73

Nordson Corp.

(NASDAQ:NDSN)

Machinery

51

1.19

22.22

22.92

118.8

19.30

15.5

68

Sherwin-Williams Co.

(NYSE:SHW)

Paints

37

0.96

21.82

27.29

728.3

28.29

18.0

67

AFLAC, Inc.

(NYSE:AFL)

Insurance

32

2.44

5.41

24.34

(18.4)

9.99

4.0

66

Walgreens Boots Alliance, Inc.

(NASDAQ:WBA)

Retail-Drugstores

40

1.49

6.67

38.30

95.3

25.70

14.7

64

Franklin Resources

(NYSE:BEN)

Financial Services

35

1.32

25.00

15.67

12.2

11.89

2.1

63

Chubb Corp.

(NYSE:CB)

Insurance

33

1.83

14.00

27.01

8.6

14.73

9.7

62

VF Corp.

(NYSE:VFC)

Apparel

42

1.66

21.90

53.78

210.6

32.39

11.5

61

Carlisle Companies

(NYSE:CSL)

Rubber & Plastics

38

0.99

13.64

24.21

76.2

24.52

16.0

60

3M Company

(NYSE:MMM)

Conglomerate

57

2.71

19.88

53.52

146.5

19.76

9.5

59

Target Corp.

(NYSE:TGT)

Retail-Discount

48

2.74

7.69

57.14

85.3

20.88

12.8

58

Valspar Corp.

(VAL)

Paints

37

1.44

15.38

25.26

145.4

17.53

11.5

58

Stepan Company

(NYSE:SCL)

Cleaning Products

47

1.47

5.88

28.46

31.9

19.37

18.0

57

CLARCOR, Inc.

(NYSE:CLC)

Auto Parts

31

1.33

17.65

26.94

55.6

20.26

9.9

57

Becton, Dickinson & Co.

(NYSE:BDX)

Medical Instruments

43

1.58

10.09

43.96

127.3

27.87

11.3

56

Parker Hannifin Corp.

(NYSE:PH)

Industrial Equipment

59

2.24

31.25

32.86

40.9

14.70

9.3

56

Cintas Corp.

(NASDAQ:CTAS)

Business Services

32

0.99

10.39

24.71

135.7

24.85

12.2

56

Old Republic International

(NYSE:ORI)

Insurance

34

4.42

1.37

60.66

(18.1)

13.71

10.0

56

H.B. Fuller Company

(NYSE:FUL)

Chemical-Specialty

46

1.30

8.33

52.53

102.1

40.46

12.7

55

Dover Corp.

(NYSE:DOV)

Machinery

59

2.50

6.67

39.41

40.9

15.78

8.5

55

Medtronic plc

(NYSE:MDT)

Medical Devices

38

1.94

24.59

56.72

65.2

29.25

6.6

54

Hormel Foods Corp.

(NYSE:HRL)

Food Processing

49

1.69

25.00

40.82

109.1

24.17

7.1

53

A strategy for a DIY DGI investor who likes big companies and CCC Champions and doesn't want to spend a lot of time managing a portfolio could be to buy all 25 (or a smaller or larger number) of the highest-rated (by my formula's measure anyway) Champion companies and rebalance once a year to the following year's 25 highest-rated companies. Another Champions strategy, if you need a certain yield across your portfolio, would be to take the highest rated 50 Champions companies, sort those by yield and buy the highest-yielding 20 from the 50. This would give you an average yield of 3.17 for those 20 companies.

If there appears to be interest by the SA community in this scoring system, my next article will explain how to modify my formula so it contains your values, not mine.

The 11 steps in the above instructions look daunting. I've been doing steps 1 through 3 for about 4 years now, as I spend a lot of time sorting and filtering CCC. It takes me about 2 minutes for steps 1-3. I just timed myself to do steps 4 through 11. It took me 1 min. 53 secs. I've done it a few hundred times, so I should be able to do it fast. The point is that if you believe an effective scoring tool will improve your investing results by disciplining your process to consider only high-quality stocks as defined by your very own system, it will be worth going through the learning curve.

As valuable a tool as I think this could become, it still has a way to go. An SA member who is a wiz at Excel should be able to simplify the concept to improve its usefulness and value. Hence the title - seeking help from Seeking Alpha. If anyone does improve on the system I've started, please share the improvements with all of us.

BTW, I only have Microsoft Excel 2013. Earlier or later versions may differ somewhat.

Comments and suggestions are desired and encouraged. Thank you for your interest. And, thanks to a dozen SA authors who provided suggestions that were very helpful.

Disclosure: I am/we are long JNJ, PFE, XOM, RGA, MHLD, HMN, CNQ, RTN, CAT, DOW, TGT.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation. (Stolen from Chuck Carnevale.)