dividend-growth-pullback-screener

Dividend Growth Pullback Screener

Overview

This skill screens for dividend growth stocks that exhibit strong fundamental characteristics but are experiencing temporary technical weakness. It targets stocks with exceptional dividend growth rates (12%+ CAGR) that have pulled back to RSI oversold levels (≤40), creating potential entry opportunities for long-term dividend growth investors.

Investment Thesis: High-quality dividend growth stocks (often yielding 1-2.5%) compound wealth through dividend increases rather than high current yield. Buying these stocks during temporary pullbacks (RSI ≤40) can enhance total returns by combining strong fundamental growth with favorable technical entry timing.

When to Use This Skill

Use this skill when:

• Looking for dividend growth stocks with exceptional compounding potential (12%+ dividend CAGR)
• Seeking entry opportunities in quality stocks during temporary market weakness
• Willing to accept lower current yields (1.5-3%) for higher dividend growth
• Focusing on total return over 5-10 years rather than current income
• Market conditions show sector rotations or broad pullbacks affecting quality names

Do NOT use when:

• Seeking high current income (use value-dividend-screener instead)
• Requiring immediate dividend yields >3%
• Looking for deep value plays with strict P/E or P/B requirements
• Short-term trading focus (<6 months)

Screening Workflow

Step 1: Set API Keys

Two-Stage Approach (RECOMMENDED)

For optimal performance, use FINVIZ Elite API for pre-screening + FMP API for detailed analysis:

# Set both API keys as environment variables
export FMP_API_KEY=your_fmp_key_here
export FINVIZ_API_KEY=your_finviz_key_here

Why Two-Stage?

• FINVIZ: Fast pre-screening with RSI filter (1 API call → ~10-50 candidates)
• FMP: Detailed fundamental analysis only on pre-screened candidates
• Result: Analyze more stocks with fewer FMP API calls (stays within free tier limits)

FMP-Only Approach (Original Method)

If you don't have FINVIZ Elite access:

export FMP_API_KEY=your_key_here

Limitation: FMP free tier (250 requests/day) limits analysis to ~40 stocks. Use --max-candidates 40 to stay within limits.

Step 2: Execute Screening

Two-Stage Screening (RECOMMENDED):

cd dividend-growth-pullback-screener/scripts
python3 screen_dividend_growth_rsi.py --use-finviz

This executes:

1. FINVIZ pre-screen: Dividend yield 0.5-3%, Dividend growth 10%+, EPS growth 5%+, Sales growth 5%+, RSI <40
2. FMP detailed analysis: Verify 12%+ dividend CAGR, calculate exact RSI, analyze fundamentals

FMP-Only Screening:

python3 screen_dividend_growth_rsi.py --max-candidates 40

Customization Options:

# Two-stage with custom parameters
python3 screen_dividend_growth_rsi.py --use-finviz --min-yield 2.0 --min-div-growth 15.0 --rsi-max 35

# FMP-only with custom parameters
python3 screen_dividend_growth_rsi.py --min-yield 2.0 --min-div-growth 10.0 --max-candidates 30

# Provide API keys as arguments (instead of environment variables)
python3 screen_dividend_growth_rsi.py --use-finviz --fmp-api-key YOUR_FMP_KEY --finviz-api-key YOUR_FINVIZ_KEY

Step 3: Review Results

The script generates two outputs:

1. JSON file: dividend_growth_pullback_results_YYYY-MM-DD.json

   • Structured data with all metrics for further analysis
   • Includes dividend growth rates, RSI values, financial health metrics

2. Markdown report: dividend_growth_pullback_screening_YYYY-MM-DD.md

   • Human-readable analysis with stock profiles
   • Scenario-based probability assessments
   • Entry timing recommendations

Step 4: Analyze Qualified Stocks

For each qualified stock, the report includes:

Dividend Growth Profile:

• Current yield and annual dividend
• 3-year dividend CAGR and consistency
• Payout ratio and sustainability assessment

Technical Timing:

• Current RSI value (≤40 = oversold)
• RSI context (extreme oversold <30 vs. early pullback 30-40)
• Price action relative to recent trend

Quality Metrics:

• Revenue and EPS growth (confirms business momentum)
• Financial health (debt levels, liquidity ratios)
• Profitability (ROE, profit margins)

Investment Recommendation:

• Entry timing assessment (immediate vs. wait for confirmation)
• Risk factors specific to the stock
• Upside scenarios based on dividend growth compounding

Screening Criteria Details

Phase 1: Fundamental Screening (FMP API)

Initial Filter:

• Dividend Yield ≥ 1.5% (calculated from actual dividend payments)
• Market Cap ≥ $2 billion (liquidity and stability)
• Exchange: NYSE, NASDAQ (excludes OTC/pink sheets)

Dividend Growth Analysis:

• 3-Year Dividend CAGR ≥ 12% (doubles dividend in 6 years)
• Dividend Consistency: No cuts in past 4 years
• Payout Ratio < 100% (sustainability check)

Financial Health:

• Positive revenue growth over 3 years
• Positive EPS growth over 3 years
• Debt-to-Equity < 2.0 (manageable leverage)
• Current Ratio > 1.0 (liquidity)

Phase 2: Technical Screening (RSI Calculation)

RSI Calculation:

• 14-period RSI using daily closing prices
• Formula: RSI = 100 - (100 / (1 + RS))
  • RS = Average Gain / Average Loss over 14 periods
• Data source: FMP historical prices (past 30 days)

RSI Filter:

• RSI ≤ 40 (oversold/pullback condition)
• RSI interpretation:
  • < 30: Extreme oversold (potential reversal)
  • 30-40: Early pullback (uptrend correction)

  • 40: Not oversold (excluded)

Phase 3: Ranking and Output

Composite Scoring (0-100):

• Dividend Growth (40%): Reward higher CAGR and consistency
• Financial Quality (30%): ROE, profit margins, debt levels
• Technical Setup (20%): Lower RSI = better entry opportunity
• Valuation (10%): P/E and P/B for context (not exclusionary)

Stocks ranked by composite score. Top scorers combine exceptional dividend growth with attractive technical entry points.

Understanding the Results

Interpreting RSI Levels

RSI 25-30 (Extreme Oversold):

• Often indicates panic selling or negative news
• Higher risk but potentially highest reward
• Recommended: Wait for RSI to turn up (sign of stabilization)
• Entry: Scale in with 50% position, add on RSI >30

RSI 30-35 (Strong Oversold):

• Normal correction in strong uptrend
• Lower risk than extreme oversold
• Recommended: Can initiate position immediately
• Entry: Full position acceptable, set stop loss 5-8% below

RSI 35-40 (Early Pullback):

• Mild weakness in uptrend
• Lowest risk of further decline
• Recommended: Conservative entry for high conviction stocks
• Entry: Full position, tight stop loss 3-5% below

Dividend Growth Compounding Examples

12% Dividend CAGR (Minimum Threshold):

• Starting Yield: 1.5%
• Year 6: 2.96% yield on cost (doubled)
• Year 12: 5.85% yield on cost (4x)
• Example: Visa (V), Mastercard (MA) historical profile

15% Dividend CAGR (Excellent):

• Starting Yield: 1.8%
• Year 6: 4.08% yield on cost (2.3x)
• Year 12: 9.22% yield on cost (5.1x)
• Example: Microsoft (MSFT) 2010-2020 period

20% Dividend CAGR (Exceptional):

• Starting Yield: 2.0%
• Year 6: 6.00% yield on cost (3x)
• Year 12: 18.0% yield on cost (9x)
• Example: Apple (AAPL) 2012-2020 period

Key Insight: Lower starting yield + high growth > high starting yield + low growth over 10+ years.

Troubleshooting

No Results Found

Possible Causes:

1. Market conditions: Strong bull market with few oversold stocks
2. Criteria too strict: 12% dividend growth is rare (5-10 stocks typically qualify)
3. RSI threshold too low: Consider raising to RSI ≤45 for more candidates

Solutions:

• Relax RSI threshold: --rsi-max 45 (early pullback phase)
• Lower dividend growth: --min-div-growth 10.0 (still excellent growth)
• Lower minimum yield: --min-yield 1.0 (capture more growth stocks)

API Rate Limit Reached

FMP Free Tier Limits:

• 250 requests/day
• Each stock analyzed requires 6 API calls (quote, dividend, prices, income, balance, cashflow, metrics)
• Maximum ~40 stocks per day in FMP-only mode

Solutions:

1. Use FINVIZ Two-Stage Approach (RECOMMENDED)

python3 screen_dividend_growth_rsi.py --use-finviz

• FINVIZ pre-screening: 1 API call → 10-50 candidates (already filtered by RSI)
• FMP analysis: 6 calls × 10-50 stocks = 60-300 FMP calls
• Advantage: FINVIZ RSI filter dramatically reduces candidates, staying within FMP limits

2. Limit FMP-Only Candidates

python3 screen_dividend_growth_rsi.py --max-candidates 40

3. Wait 24 Hours for Rate Limit Reset

• FMP resets at UTC midnight

4. Upgrade to FMP Paid Plan

• Starter ($14/month): 500 requests/day
• Professional ($29/month): 1,000 requests/day

Note: FINVIZ Elite subscription ($40/month) + FMP free tier is more cost-effective than FMP paid plans for this use case.

RSI Calculation Errors

Issue: "Insufficient price data for RSI calculation"

Cause: Stock has less than 30 days of trading history (IPO or inactive)

Solution: Script automatically skips stocks with insufficient data. No action needed.

Combining with Other Skills

Pre-Screening Context:

1. Market News Analyst → Identify sector rotations or market pullbacks
2. Breadth Chart Analyst → Confirm broader market oversold conditions
3. Economic Calendar Fetcher → Check for upcoming rate decisions or macro events

Post-Screening Analysis:

1. Technical Analyst → Analyze individual stock charts for qualified candidates
2. US Stock Analysis → Deep dive on specific stocks before entry
3. Backtest Expert → Validate RSI + dividend growth strategy historically

Example Workflow:

1. Market News Analyst: "Market pulled back 5% this week on Fed hawkish comments"
2. Breadth Chart Analyst: Confirms market oversold (S&P breadth weak)
3. Dividend Growth Pullback Screener: Finds 8 quality dividend

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