The screen itself is based on stocks that boast the highest quartile of yields among companies with market capitalisations of over £200m – size is an important determinant of reliability for Mr Dreman. This is what else we screened for:
■ Improved EPS growth in the most recent six-month period.
■ Positive forecast EPS growth.
■ A return on equity of over 10 per cent, which acts as a basic measure of underlying business quality.
■ Gearing of less than 75 per cent.
■ A current ratio of more than 1. The current ratio is a measure of easily realisable assets and indicates a business that can cope with the unexpected.
■ Above-average five-year compound average dividend growth. In the case of
■ A payout ratio (the amount of available profits that are paid to shareholders as dividends) of less than either two-thirds or the five-year average, which suggests the company is not overstretching itself with the current level of dividend.