Monthly salary is less than 60,000, zero experience! She relied on the "5 conditions for stock selection" to earn 14 million in 7 years. (File photo)
[Financial Channel/Comprehensive Report] With a monthly salary of less than 300,000 yen (approximately NT$60,000) and almost no investment experience, he only bought 2 shares in the beginning. Unexpectedly, his total assets accumulated to 75 million yen (approximately NT$14 million) after 7 years. Fuyuko, a popular Japanese YouTube blogger and frugal expert, mainly accumulates wealth through index investing and high-dividend stocks. She shared her stock selection method and pointed out that instead of chasing short-term stocks, she pays more attention to the five stock selection criteria of whether the company can maintain profits, operating profit margin, ROE, cash flow and dividends in the long term, and looks for high-quality stocks that can be held with peace of mind for 20 to 30 years.
Japanese media reported that Fuyuko said that her basic principle when buying stocks is to "never sell." Therefore, when selecting stocks, she will start with financial data and gradually eliminate companies that do not meet the conditions. She will refer to Yahoo Finance's dividend yield ranking, and then go back and review the company's financial statements for about the past 15 years. One of the important conditions is to exclude companies that have suffered multiple losses.
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In her eyes, if long-term holding is the premise, it is very important whether the company can make stable profits for a long time. She pointed out that among high-dividend stocks, many companies have suffered losses many times in the past. Therefore, if you can find companies that have not suffered losses for a long time, the investment scope can be significantly narrowed, and it will be easier to find targets that she believes have long-term investment value.
After completing the first round of screening, Fuyuko will also observe the company's operating profit margin. She prefers companies with operating profit margins of more than 10%. Even in the manufacturing industry, as long as it can maintain a level of more than 10%, it will be regarded as a candidate company worthy of study. However, if it has not yet reached 10% but the operating profit margin continues to grow, she will not directly rule it out.
In addition to profitability, Fuyuko will also check the return on equity (ROE), using 8% as a reference standard, and also pay attention to whether the equity ratio is higher than 50%. She believes that a higher equity ratio represents a relatively solid financial foundation of the company and is therefore an important indicator of a company's financial health.
Operating cash flow is also an important observation item when she selects companies. Since operating cash flow reflects the company's ability to actually generate cash from its core business, she will prefer companies that can maintain positive numbers every year; if operating cash flow frequently turns negative, she will consider the company insufficiently stable and exclude it from the investment scope.
Finally, there are dividends. Fuyuko prefers companies that pay fixed dividends every year, or companies whose dividends can grow steadily. Through step-by-step screening based on conditions such as profit, operating profit margin, ROE, equity ratio, operating cash flow and dividends, she said that originally thousands of listed stocks could be reduced to less than 100 in the end.
After shortlisting candidate companies, she will further read the company's brochure and investor relations information to confirm the company's operational risks. If the company's revenue is highly dependent on a specific company or a specific country, she will further study the related risks; if it is highly dependent on a certain partner, she will even investigate the other party's financial status.
As for high-quality stocks that may be on the high side, are they still suitable for small investments? Fuyuko believes that the key is not necessarily whether the stock itself is expensive, but waiting for the market to experience an overall decline. She pointed out that during Japan's overall economic downturn such as the impact of the new crown epidemic, the market may experience an overall decline. Even if the quality of the company itself does not change, the decline in stock prices will relatively increase the dividend yield.
Therefore, when the market falls, she will look for targets from the "list of companies with good financial conditions" that she has compiled in advance, but the premise is still in line with her risk tolerance.
Looking back at the starting point of his investment, Fuyuko revealed that the first stock he bought was "Okinawa Mobile Phone Company". At that time, she had approximately 5 million yen (approximately NT$1 million) in assets and a monthly salary of less than 300,000 yen. Instead of investing a large amount of money, she first bought 2 shares at a purchase price of approximately 5,000 yen (approximately NT$1,000), and then gradually increased her holdings.
From a small trial at the beginning to accumulating more than 70 million yen in assets 7 years later, Fuyuko emphasizes not making huge profits from one stock, but screening companies through financial conditions, waiting for the right time to buy, and looking at investments with a long-term holding mentality.
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