Inside Analysis: The Luminos Dividend Rating and 6DYA

Something that the reader may have encountered in the last few weeks are two ratings that I have began to use in various articles when analysing a stock or security.

The first and most prominent is the "Luminos Dividend Rating". This is a star-rating, similar to Morning Star, that measures the previous 6 reporting periods of a stock or security in paying a dividend to shareholders. Also, stocks that are less than 6 periods old can be rated as I will describe below.

Some stocks report quarterly, while most report monthly. I assume all stocks to report monthly unless informed otherwise.

6-Star Rating: A stock or security that has provided a dividend in each of the last twelve reporting periods.

5-Star Rating: A stock or security that has provided a dividend in the 6 previous reporting periods.

4-Star Rating: A stock or security that has provided a dividend in 5 of the last six reporting periods, but the most recent must have been successfully provided.

3-Star Rating: 4 of the last 6 (or 66% if not mature enough to cover 6 periods), including the most recent.

2-Star Rating: >33% but 1-Star Rating: Intermittent Dividend Payments for Applicable (or up to) 6 periods equalling Another important metric I have created is called the 6DYA, which stands for 6-Month Dividend Yield Average. This was created so that stocks and securities that are of the same Star Rating can be measured against one another. It is derived by simply creating an average of the most recent 6 dividend payment periods, either months or quarters. In this situation a stock that is not fully mature (6 reporting periods old) will be at a distinct disadvantage.

In my personal analysis, when I consider investments, I divide the current Share Price by the 6DYA, which gives me a rough estimate, with the current 6DYA, of how many reporting periods a stock or security would have to be held to pay for itself in dividend payment. Because this can fluctuate often, I usually do not report on the P/6DYA, but I do keep an eye on it.

The Luminos Dividend Rating and 6DYA are not a comprehensive analytic tool, and investors should not use them exclusively in their analysis of the risk/reward of a potential investment. They are but a tool introduced so that a broader picture can be seen.

Many investors also discount the entire dividend aspect to stock investing, as do some CEO's. There are various theories that support such views and almost every investor has a different criteria they use in analysing the risk/reward of any particular investment.

I hope to get a database created of all the current Luminos Dividend Ratings, but this will take some time. I try and report it as often as possible in my normal coverage of stock market news, but depending on the time I have available, may not be able to universally apply it.

Company CEO's are encouraged to email me or IM me inworld with their current 6 Reporting Period (monthly or quarterly) Dividend History and 6DYA if they would like to ensure that I include it as often as possible in the normal course of financial news coverage.