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Is Simply Safe Dividend really useful for dividend investors?
Is it really worth paying for?
Are there any better and cheaper alternatives to Simply Safe Dividend?
After trying out Simply Safe Dividend, I want to share with you everything about my experience and help you make an informed decision.
Is Simply Safe Dividend Really Useful?
The biggest selling point of Simply Safe Dividend is its “Dividend Safety Score”.
So, what is a “Dividend Safety Score”?
How does it work?
Is it really useful to dividend investors?
For dividend stock investors, one of the most important things is dividend reliability.
Dividend stock investors want as much as possible to avoid companies with inconsistent dividend payouts and future dividend cuts.
So, that’s where Dividend Safety Score comes in.
Dividend Safety Scores are calculated by analyzing the following metrics for dividends:
- Payout ratios
- Debt levels and coverage metrics
- Recession performance
- Dividend longevity
- Industry cyclicality
- Free cash flow generation
- Forward-looking analyst estimates
These metrics are all relevant and help you predict dividend risk.
For example, by looking at debt levels and debt coverage metrics, you could assess whether the company is in a good shape financially.
If a company has a very high debt-to-equity ratio, it means the company uses a lot of financial leverage.
Whenever there is an economic downturn or the interest rate goes up, the chances are that highly leveraged companies might run into cashflow trouble and have difficulties repaying their debt.
It also takes into account the latest company news and industry developments.
A score between 0 and 100 is then assigned, with “100” being the safest and “0” being the most unsafe.
So, how have Dividend Safety Scores performed so far?
On its website, it claims that it has helped investors avoid 98% of dividend cuts during the pandemic.
In other words, as long as you have bought dividend stocks with a ” Dividend Safety Score” of Safe and Very Safe, you would have avoided 98% of the companies with dividend cuts during the pandemic.
However, this “Dividend Safety Score” is not unique because you can find similar tools (with equally (if not better) good performance track record) elsewhere.
Apart from “Dividend Safety Score”, there are other useful tools that are provided by Simply Safe Dividend to help you find dividend stock ideas.
For example, it has a dividend stock screener with all the basic metrics such as payout ratio, dividend yield, net debt-to-capital ratio, and 5-year dividend growth.
If you don’t want to use a screener, Simply Safe Dividend also gives you a list of dividend stock ideas.
Here are some ideas list for dividend stocks:
- High Yield Stocks
- High Dividend Growth Stocks
- Dividend Aristocrats
It also provides a library of 95 dividend stocks with a brief summary of their outlook as well as their past financial ratios.
Personally, I think that there is nothing too special about the dividend stock screener and ideas list.
A lot of stock screeners in the market can help you do almost the same thing.
For example, Stock Rover is stock research and analysis platform with one of the most powerful fundamental stock screeners.
It covers much more than just dividend stock research.
Below is a screenshot of one of its pre-defined dividend growth stock screeners.
By the way, you can customize the stock screener to suit your investment criteria.
For example, if you want to look for safe dividend stocks that are undervalued, you can easily add ” Valuation Ratings” or any of your preferred valuation metrics (e.g. P/E or P/Cash Flow) as one of your criteria.
So, if you are an active investor who prefers to do your own research, then the Stock Rover stock screener might be a good option for you.
Is It Worth Paying For Simply Safe Dividend?
So, what do you actually get as a Simply Safe Dividend subscriber?
How much does Simply Safe Dividend cost?
As a subscriber, you get access to the following:
- Dividend Safety Score
- Dividend stock screener
- Three types of model dividend portfolios ( i.e. income-oriented, blend of income and growth, or long-term growth)
- Dividend stock investment ideas
It costs $499 per year or $41.50 per month.
Is it worth paying for it?
The Dividend Safety Score is useful.
And the stock screener is decent.
But, I think it’s too expensive because there are better (and also cheaper) alternatives to Simply Safe Dividend.
Simply Safe Dividend Alternatives
One better alternative to Simply Safe Dividend is Seeking Alpha Premium.
Seeking Alpha provides Dividend Grades to help you with your dividend stock research and analysis.
So, how does Seeking Alpha Dividend Grade work?
Is it really useful?
Can it help you successfully avoid dividend cuts?
Also, can you really use it to find good timely dividend stock ideas?
Seeking Alpha helps you evaluate dividend stocks by looking at the following:
- Dividend Safety
- Dividend Growth
- Dividend Consistency
- Dividend Yield
For each of the above, a “Grade” is assigned to indicate the strength (or weakness) of the dividend stock after analyzing and comparing relevant metrics among stocks in the same sector.
“Grade A+” is the best while “Grade F” is the worst.
Now, let’s dive in and look at how Dividend Safety Grade is being derived and whether it can be trusted.
After having backtested more than 4,000 financial metrics (including 600 newly acquired metrics from S&P Global), Seeking Alpha has narrowed them down to 27 individual metrics (as shown below) to calculate the Dividend Safety Grade.
As you can see, the Dividend Safety grade is pretty robust.
For example, metrics for profitability, debt, analyst dividend estimates and revisions, and momentum are all being taken into account.
How has Seeking Alpha Dividend Safety grade performed so far?
Based on back-tested results, if you stick to stocks with Seeking Alpha Dividend Safety Grade of A+ to A-, you would have avoided 99% of dividend cuts since 2010.
Also, 98% of dividend cuts would have been averted with stocks possessing a Dividend Safety Grade of A+ through B-.
This result is really very impressive.
Do take note that Seeking Alpha’s Dividend Grades are sector-relative.
The letter grades A+ through F signify the strength or weakness of the security compared to its sector.
Of course, for dividend investors, dividend growth is just as important as dividend safety.
Seeking Alpha’s methodology for calculating the Dividend Growth Grade has a very sound basis because it not only looks at historical data but it also takes into account analysts’ future estimates for dividend growth, as well as revenue, income, free cash flow, and EPS growth.
How has Seeking Alpha’s Dividend Growth Grade performed so far?
According to its Quant Team’s backtest, from 2010-2021, stocks with Dividend Growth grades of A+ delivered a total return of 496% while the Vanguard Dividend Appreciation ETF (VIG) only returned 334%.
So, Seeking Alpha makes it very easy for you to identify dividend stocks with the best growth potential as well as the highest safety and consistency score.
What’s more, you get access to all these dividend grades and much more (Quant Rating, Wall Street Ratings, financial data, news, earnings, valuation, peers, charting, stock research reports, etc) for less than half of what Simply Safe Dividend charges you.
For Simply Safe Dividend, it costs $499 per year or $41.50 per month.
For Seeking Alpha, there are three types of pricing plans:
- Basic: Free
- Seeking Alpha Premium:
- Seeking Alpha Pro: $2400/ year (mostly for hedge fund managers)
Right now, there is a free 7-day trial for you to test drive it and see if it works for you. If you decide to get it, there is a special $50 discount for you by using this link.