The Financial Post reports in its Saturday edition that stock screening can often provide some great investment ideas, and highlight some stocks you may have never heard of. Post columnist Peter Hodson cautions, however, that stock screening does have some disadvantages: The data output is only as good as the data input. Mr. Hodson uses Bloomberg for his screens, which he says is generally very accurate, but is not perfect. For high dividends, the fund manager looks only at dividend yield. "We are not going to screen for debt, cash flow or dividend risk, so take that under advisement," Mr. Hodson explains. Generally, high dividends mean extra high risk, but -- once in a while -- it presents an opportunity. He uses a minimum market cap of $500-million here to screen out the riskier, smaller companies. Some of the companies that qualified had high yields because they had paid special dividends, so they were moved out. At the top of Mr. Hodson's list of this screen then were Atrium Mortgage Investment at 6.5 per cent yield, Chemtrade Logistics at 11.4 per cent and Vermilion Energy at 13.6 per cent. He adds that screening can often provide some great investment ideas, and highlight some stocks you may have never heard of.
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