How To Use A Stock Screener To Find The Best Stocks
When I started looking for some dividend stocks to add to my TFSA, one of the first places I went was the TD Waterhouse markets and research section. I was looking for a stock screener to help me narrow down my selections.
I’ve held my RRSP, TFSA and RESP accounts with TD Waterhouse since I started investing in stocks. It’s convenient, since most of my accounts are with TD, plus the customer service has always been excellent.
When you have less than $50,000 in household assets, discount brokerages like TD Waterhouse can be expensive in terms of trading and account fees. In that case, you’re better using an online broker like Questrade, which has no account fees and offers trades as low as $4.95 each.
Related: 10 Fees That Are Worth The Money
However, a discount brokerage like TD Waterhouse offers a number of advantages for clients looking to invest, including free market information, research reports and online tools to help manage your investments.
How To Use A Stock Screener
First, I log into Web Broker, click the Markets & Research tab and then click the Screener tab. That brings me to my saved stock screeners, which I use to keep an eye on dividend growth stocks that are trading at a discount.
The first stock screener is called Dividend Yield, which searches for stocks based on the following criteria:
- Dividend Yield between 4% – 10%
- Dividend Growth Rate Current to Prior Year between 0% – 25%
- Dividend Coverage between 200% – 2,000%
- Price/Book Ratio between 0.25 – 2
- Return on Equity (TTM) between 10% – 60%
- % Change from 52-Week Low between 0% – 540%
- % Change from 52-Week High between -90% and -0.1%
- Beta between -1.0 – 0.5
Related: Pitfalls Of Chasing The Highest Dividend Yield
This screen gave me 17 results from the TSX, NYSE and NASDAQ:
| Symbol | Exchange | Name | Dividend Yield |
| SPLS | NASDAQ | Staples Inc |
4.06% |
| IAM | TORONTO | Integrated Asset Management Corp |
9.62% |
| ETR | NYSE | Entergy Corp |
4.83% |
| NA | TORONTO | National Bank Of Canada |
4.31% |
| QCCO | NASDAQ | QC Holdings Inc |
5.83% |
| NWFL | NASDAQ | Norwood Financial Corp |
4.44% |
| BEK.B | TORONTO | Becker Milk Co Ltd |
5.09% |
| ACD | TORONTO | Accord Financial Corp |
4.70% |
| CET | TORONTO | Cathedral Energy Services |
4.75% |
| EH | TORONTO | Easyhome Ltd |
5.28% |
| MRT.UN | TORONTO | Morguard REIT |
5.43% |
| ESBK | NASDAQ | Elmira Savings Bank |
4.71% |
| KMP | TORONTO | Killam Properties Inc |
4.38% |
| REI.UN | TORONTO | RioCan REIT |
4.85% |
| PMZ.UN | TORONTO | Primaris REIT |
5.00% |
| CAR.UN | TORONTO | Canadian Apartment Properties |
4.15% |
| NHTB | NASDAQ | New Hampshire Thrift Bancshares |
4.08% |
The second stock screener I use is called Graham-like stocks. This is based on well-known value investor Benjamin Graham, who always tried to buy stocks that were trading at a discount to their Net Current Asset Value. In other words, you should buy stocks that are undervalued and hold them until they became fully valued.
Related: Market Corrections – Do You Buy, Sell or Ignore?
The Graham-like stock screener searches for stocks based on the following criteria:
- EPS Growth (5-Year Historical) between 3% – 300%
- Dividend Growth Rate 5 Year Average greater than 0
- P/E (TTM) between 0 – 15
- Price/Book Ratio between 0 – 1.5
- Current Ratio greater than 2
- Revenue TTM greater than 400M
This screen produced 16 results from around the globe:
| Symbol | Exchange | Name | EPS Growth (5 Year Historical) |
| GLW | NYSE | Corning Inc |
31.20% |
| PAA | TORONTO | Pan American Silver Corp |
70.30% |
| UMC | NYSE | United Micro Electronics |
72.10% |
| RS | NYSE | Reliance Steel and Aluminum |
13.90% |
| WLT | NYSE | Walter Energy Inc |
55.90% |
| S | TORONTO | Sherritt International Corporation |
5.80% |
| CSH | NYSE | Cash America International Inc |
16.70% |
| ALC | TORONTO | Algoma Central Corp |
16.10% |
| TAP.A | NYSE | Molson Coors Brewing Co |
16.70% |
| CW | NYSE | Curtiss Wright Corp |
9.80% |
| ALG | NYSE | Alamo Group Inc |
20.80% |
| UNS | TORONTO | Uni-Select Inc |
3.90% |
| CTC.A | TORONTO | Canadian Tire Corp Ltd |
7.20% |
| UVV | NYSE | Universal Corp |
10.00% |
| NHC | AMEX | National Healthcare Corp |
10.10% |
| GLT | NYSE | P H Glatfelter Co |
6.50% |
The third stock screener I use is called Canadian Graham stocks, which is fairly self-explanatory. This screen looks for stocks based on the following criteria:
- Exchange (Toronto)
- Revenue TTM greater than $400M
- Current Ratio greater than 2
- Dividend Growth Rate 5 Year Average greater than 0
- EPS Growth (5-Year Historical) between 3% – 300%
- P/E (TTM) between 0 – 15
- Price/Book Ratio between 0 – 1.5
This screen gave me 7 results from the TSX:
| Symbol | Name | Dividend Yield | EPS Growth (5 Year Historical) |
| TCK.B | Teck Resources Ltd |
2.76% |
13.30% |
| PAA | Pan American Silver Corp |
1.16% |
70.30% |
| IMG | IAMGOLD Corp |
1.96% |
21.30% |
| S | Sherritt International Corporation |
3.33% |
5.80% |
| HSE | Husky Energy Inc |
4.58% |
5.00% |
| UNS | Uni-Select Inc |
2.02% |
3.90% |
| ALC | Algoma Central Corp |
2.02% |
16.10% |
By using a stock screener, you can narrow down your choices from thousands of stocks to just a handful, which can save you from doing a ton of research.
Just set the criteria based on your investment philosophy, so if you’re looking for high growth tech stocks or a list of dividend growth stocks trading at a discount, you can set up a screen to suit your needs.
Related: HSBC Australia
Aside from the markets and research section at TD Waterhouse, I also like to use the screens over at the Stingy Investor. They have screens set up for high yield, low P/E, low P/B, value stocks and dividends at risk.
It’s important to note that a stock screener is just a starting point. Further research is required before you invest your money.
Do you use a stock screener to help you find the best stocks for your portfolio?
I use a stock screener, but TD Waterhouse is too rich for my blood. I use the free G&M filter. It’s imperfect (you can only sort stocks by their dividend payout, you can’t search by it) but does the trick. I use a leaner screen anyway to get a Ben Graham-esque result, e.g. P/E, Yield, and Price:Book. Then I screen out the scary Debt:Equity and payout ratios. I execute with Questrade, cause it’s definitely the smart choice.
From a tax perspective, it’d make sense to buy your Canadian (eligible) dividend stocks outside of your TFSA, since you’ll pay next to no tax anyway. I know you’re not an active trader (which is much smarter anyway) so it’s not like you’re going to be cashing out a bunch of more-taxable capital gains (still, these are cheaper than interest income anyway).
As for US stocks, buying them in your TFSA could be a pretty bad move since you’ll (as far as I know) get nailed with the 15% withholding tax. I’m not sure what kind of RRSP contribution room you have, but using that RRSP room to buy US dividend stocks will allow you to avoid the withholding tax.
In short, for the purposes of tax efficiency/tax planning:
RRSP — US dividend stocks
Taxable savings — Canadian dividend stocks
TFSA — I dunno, man. Junk bond fund?
@Joe – Not a TFSA fan? You’re right, I should have pointed out the problem with holding US dividend stocks in your TFSA. The post was about applying the stock screeners to any of your investment accounts.
Probably worth another post to explain, but I don’t really agree with the traditional tax efficiency rules for investing.
I don’t use a non-registered account. I don’t hold bonds or GICs. I’ll max out my wife and my TFSA with Canadian dividend growth stocks, and pay no tax on the dividends or the capital gains.
I max out my TFSA every year.
That said, I think TFSAs are a brilliant piece of self-serving Government policy. RRSPs benefit tax payers TODAY. TFSAs don’t benefit savers for quite a few years (especially in today’s low interest environment). Further, they encourage people to spend the money sooner than later, negating the tax benefit (as if consumers needed another excuse to overspend). I don’t have any numbers, but I suspect TFSAs have further lowered RRSP contributions. And, as noted, they lack a key tax benefit (US dividend stocks are among the best investments in the world). All of these facts make them a little bit too convenient; the government and Banksters push them like crack, too, which makes me even more leery.
Great post! Screening can be an excellent tool, Norm’s site is one I visit frequently.
Mark
Yes I definitely do use a stock screener and picked up Teck at its 52 week low a few weeks ago because of it. It jumped up over 10% within a week and I thought about selling…
I used the criterion from Tweedy Browne’s pamphlet “What Works in Investing”. I think it might work even better to time things and use it more heavily for “January effect” stocks. Benjamin Graham style net-nets are hard to find though.
http://www.tweedy.com/resources/library_docs/papers/WhatHasWorkedInInvesting.pdf
I agree that TD waterhouse has good service – I used to use them (from the US rather than Canada) and had good results.
If you want a screener without having to sign up for a brokerage account, the google one at
http://www.google.com/finance#stockscreener
is usable for most purposes.
I always look for a screen on future returns, but never find one 🙂
@Michael James – Let us know if you come across one; that would take a lot of guess work out of this process 🙂
@W and @Jacq – thanks for the tips on the stocks screeners you find useful.
Good post! The TD Waterhouse screener looks awesome. Unfortunately, I don’t deal with TD. Do you know of another good site that screens CDN & US stocks for dividend growth metrics?
@Bernie – I use this one to look up more information on a specific company, including consecutive years of dividend increases, dividend growth rate, dividend payout ratio – just type in the ticker symbol.
For Canadian stocks – http://www.dividendinvestor.ca
For US Stocks – http://www.dividendinvestor.com
Thanks. I am aware of dividendinvestor and have used the sites for several years. I find dividendinvestor useful for US stocks but take info on Cdn stocks with a grain of salt. The growth data is frequently wrong so I end up calculating growth rates manually.
Very useful, thanks. I am a client of TD Waterhouse and did not know about those tools.
thanks for the info. you got me motivated to try cibc investors edge service since they are my broker. it seems pretty good but the amount of information is mind boggling. sometimes just throwing the names in hat seems like a good idea when i get bogged down with so much info. (really, just kidding ). norm’s site is also a good reference. keep up the great work — i look forward to all your posts!
This looks like a decent stock screener from the TMX website – http://tmx.quotemedia.com/screener.php
interesting thanks. I will have to check out and see how some of my stocks fare with this tactic.
I use TD for my investing (TFSA, RRSP and cash accounts) and have had a great experience so far as well. I’ve played around with the stock screeners a little but nothing major. I may need to take a more serious look and put them through their paces. Thanks!
I haven’t tried TD’s tools, but also check out Stock Rover’s screener – http://www.stockrover.com. A deficiency of a lot of screeners is that they simply give you the resulting stocks that pass but then you can’t really do much research with them, but Stock Rover lets you view all of the results in a table that can be sorted by hundreds of metrics. Very cool, and currently free.
Spot on with this write-up, I honestly think this web site needs
much more attention. I’ll probably be back again to read through more, thanks for the information!