When it comes to investing, everybody tells you to “Do your own research”. And rightly so! No one wants to be responsible for other people’s investments. In some places it might even be illegal to offer financial advice without a license.
But what does it really mean to do my own research?
As a beginning dividend investor, I confess I followed a lot of advice from youtubers and bloggers rather blindly. I wanted to “do my own research”, but I could not get a firm grasp of what that really meant.
While most of my purchases have been OK, and I don’t really regret any investments, a lot of them have been made without any form of research (other than looking at historic price fluctuations and dividend yield). Simply because I found the whole concept of researching daunting, and didn’t know where to start.
I have now found, through some trial and error, some common sense and a lot of tips and learning from books, podcasts, videos and other material, 12 metrics that I want to use to check if a company is one I want to own. And being a bit of a nerd who likes weird words, I decided to call it the Dodecahedron-checklist after the twelve-sided geometric figure.
You are welcome to use this checklist, just make sure you view it as just that: a checklist. It does not give a definitive answer of whether or not a company is a good investment. It might be best suited for ruling out investments, but it can also give an indication of a sound investment, but NOT a guarantee. I see it this way: If many of the metrics check out, it warrants a deeper look into the company. Also, it works for my strategy as a dividend growth investor, it might not suit you if your strategy is very different. There are also several scenarios where this would not be a great tool. Companies that do not earn money (yet), ETFs and REITs are a few examples I can think of. Also, the checklist only works for US stocks where the ticker symbol is consistent across Google finance, Yahoo finance, Seeking Alpha etc.
Please read the “How to use this checklist” first and feel free to reach out to me at @Xqdividend on twitter if you have questions or comments. I also have to give a special shoutout to the Youtube channel Everything Money, whose “8 pillars” form a basis for my check list. I have made adjustments and additions to suit my needs, and you should also do the same to find a set of criteria that fits you and your goals.
You can find the sheet here: The Dodecahedron checklist