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)

Prerequisites

• FMP API key (required): Set FMP_API_KEY environment variable or pass --fmp-api-key. Free tier (250 calls/day) is sufficient for FMP-only mode (≤40 stocks). Sign up.
• FINVIZ Elite API key (optional, recommended): Set FINVIZ_API_KEY environment variable or pass --finviz-api-key. Reduces execution time from 10–15 min to 2–3 min. Sign up.
• Python 3.9+ with the requests library installed.

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):

python3 skills/dividend-growth-pullback-screener/scripts/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 skills/dividend-growth-pullback-screener/scripts/screen_dividend_growth_rsi.py --max-candidates 40

Customization Options:

# Two-stage with custom parameters
python3 skills/dividend-growth-pullback-screener/scripts/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 skills/dividend-growth-pullback-screener/scripts/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 skills/dividend-growth-pullback-screener/scripts/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

1. 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

Output

The script saves two files to its configured output location. In current packaged versions the CLI may not accept --output-dir; if that flag is unavailable, run the script from the desired working directory or move the generated files after execution. Some builds write to the repository logs/ directory even when invoked from another directory, so verify the printed paths before reading artifacts.

Report structure (Markdown):

• Executive summary (number of candidates, market conditions)
• Ranked stock profiles with dividend growth profile, technical timing, and quality metrics
• Entry recommendations based on RSI zone (extreme oversold / strong oversold / early pullback)
• Disclaimers

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