DARS™ – Dividend Advantage Rating System
Dividend.com was founded to make dividend investing easy for long-term and income-seeking investors. Much of our dividend stock research is compiled in our proprietary rating system.
DARS™ Ratings are comprised of five distinct factors:
- Relative Strength,
- Overall Yield Attractiveness,
- Dividend Reliability,
- Dividend Uptrend, and
- Earnings Growth.
Each dividend-paying stock receives a rating of one to five stars for each of these influential factors. Read more about our rating criteria below.
How to Intrepret Dividend.com DARS™ Ratings
Each stock we rate on Dividend.com falls into one of four categories:
A Highly Recommended dividend stock is considered an outstanding investment (also known as a "Strong Buy"). Only stocks achieving DARS™ Ratings of 3.75 or above qualify for this prestigious distinction.
A Recommended dividend stock is considered a good dividend-paying stock to purchase at current levels (also known as a "Buy"). Only stocks achieving DARS™ Ratings of 3.5 to 3.7 stars qualify for this distinction.
A Neutral rating means a stock is considered an average investment at current levels (also known as a "Hold"). Stocks with DARS™ Ratings of 2.5 to 3.4 stars qualify for this grouping.
Avoid for Now
An Avoid rating means a stock is not investable at the current time (also known as a "Sell"). Stocks with DARS™ Ratings lower than 2.5 stars are given this dubious distinction.
Important Note about Downgrades
When we remove a name from our "Recommended" dividend stocks list, that downgrade generally means that we no longer recommended adding to existing positions, or establishing new positions in that stock (essentially it is a "Hold" signal, not a "Sell" call).
All investors should develop their own sell strategies to limit losses.
The Five Factors of the DARS™ System
1. Relative Strength
The relative strength of a dividend stock indicates whether the stock is uptrending or not. One major determining factor in this rating is whether the stock is trading above its 50- and 200-day moving averages.
2. Overall Yield Attractiveness
This rating reflects our personal opinion about a stock's ability to continue to make its current dividend payout. High dividend yields (usually over 10%) should be considered extremely risky, while low dividend yields (1% or less) are simply not very beneficial to long-term investors.
3. Dividend Reliability
A stock's dividend reliability is determined by the number of years the company has been paying dividends, along with our opinion on how likely current payout levels are to continue.
4. Dividend Uptrend
A stock's Dividend Uptrend rating is dependent on the company's history of regularly increasing its stock dividends. Other factors also weigh into this rating, such as our opinion on the likelihood of future dividend raises.
5. Earnings Growth
A stock's Earnings Growth rating indicates a company's projected earnings for the next four quarters.
Access to our proprietary DARS™ Ratings is only available to Dividend.com Premium members.
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