dividend-growth-pullback-screener

---
name: dividend-growth-pullback-screener
description: Use when the user wants dividend growth stocks (12%+ dividend CAGR) pulled back to an RSI oversold level (≤40), for total-return-focused dividend growth investing rather than high current income.
category: Screening
version: 1.0.0
tools: []
---

# Dividend Growth Pullback Screener

Find dividend growth stocks with strong fundamentals that are experiencing temporary technical weakness — exceptional dividend growth (12%+ 3-year CAGR) combined with an RSI pullback (≤40), which creates a favorable entry window for long-term dividend growth investors.

**Investment thesis**: high-quality dividend growers (often yielding only 1-2.5% currently) compound wealth through dividend increases rather than high current yield. Buying during a temporary pullback (RSI ≤40) combines strong fundamental growth with favorable technical entry timing.

## When to Use
Use when the user wants dividend growth stocks with strong compounding potential (12%+ dividend CAGR), entry opportunities in quality names during weakness, is willing to accept a lower current yield (1.5-3%) for higher growth, and is focused on total return over 5-10 years rather than current income — especially during sector rotations or broad pullbacks affecting quality names. Not a fit for: high current income needs, immediate yields above 3%, deep-value plays with strict P/E/P/B screens, or short-term trading (<6 months) — those call for a value/income-oriented screen instead.

## Screening Criteria

**Phase 1 — Fundamental filter**: dividend yield ≥1.5% (from actual payments); market cap ≥$2B (liquidity/stability); listed on NYSE or NASDAQ (excludes OTC/pink sheets). Dividend growth: 3-year dividend CAGR ≥12% (roughly doubles the dividend in 6 years); no dividend cuts in the past 4 years; payout ratio <100% (sustainability). Financial health: positive revenue growth over 3 years; positive EPS growth over 3 years; debt-to-equity <2.0; current ratio >1.0.

**Phase 2 — Technical filter (RSI)**: 14-period RSI on daily closes. `RSI = 100 - (100 / (1 + RS))` where `RS = average gain / average loss` over the 14 periods. Filter to RSI ≤40 (oversold/pullback condition). Interpretation bands: <30 = extreme oversold (potential reversal); 30-40 = early pullback (uptrend correction); >40 = excluded, not oversold enough.

**Phase 3 — Composite score (0-100)**: Dividend Growth 40% (rewards higher CAGR and consistency) + Financial Quality 30% (ROE, profit margins, debt levels) + Technical Setup 20% (lower RSI scores better as an entry point) + Valuation 10% (P/E and P/B for context, not exclusionary). Rank by composite score — top scorers combine exceptional dividend growth with an attractive technical entry point.

## Analysis Workflow
1. Gather candidates via web_search against the Phase 1 fundamental filter (dividend yield, market cap, exchange, 3-year dividend/revenue/EPS trends, payout ratio, leverage, liquidity).
2. For survivors, compute or source the 14-period RSI and apply the ≤40 filter.
3. Score each survivor on the four composite-score dimensions and rank.
4. For each qualified stock, present: dividend growth profile (current yield, annual dividend, 3-year CAGR, consistency, payout ratio), technical timing (current RSI, which zone it's in, recent price action), quality metrics (revenue/EPS growth, debt levels, liquidity, ROE, margins), and an investment recommendation (entry timing, stock-specific risks, upside scenario from dividend-growth compounding).

## Interpreting RSI Zones
- **25-30 (extreme oversold)**: often panic selling or negative news; higher risk, potentially highest reward. Recommend waiting for RSI to turn up as a stabilization signal; scale in with roughly a 50% position, add more once RSI clears 30.
- **30-35 (strong oversold)**: a normal correction within a strong uptrend, lower risk than extreme oversold. Full position can be initiated immediately, with a stop loss 5-8% below entry.
- **35-40 (early pullback)**: mild weakness within an uptrend, lowest risk of further decline. Full position for high-conviction names, with a tighter 3-5% stop loss.

## Dividend Growth Compounding (yield-on-cost math)
At 12% CAGR (the minimum threshold) from a 1.5% starting yield: ~2.96% yield-on-cost by year 6 (doubled), ~5.85% by year 12 (4x) — profile similar to Visa/Mastercard historically. At 15% CAGR from 1.8% starting yield: ~4.08% by year 6, ~9.22% by year 12 (5.1x) — similar to Microsoft 2010-2020. At 20% CAGR from 2.0% starting yield: ~6.00% by year 6 (3x), ~18.0% by year 12 (9x) — similar to Apple 2012-2020. Key insight: a lower starting yield with high growth beats a high starting yield with low growth over a 10+ year horizon.

## Data Sources
Treat Financial Modeling Prep (FMP) fundamentals and FINVIZ Elite screening data as the reference data model even when sourcing values manually via web_search — FMP-style fields (dividend history, income statement, balance sheet, cash flow, key metrics) drive the Phase 1/3 fundamentals, while FINVIZ-style pre-filtered fields (yield, dividend growth, EPS/sales growth, RSI) are useful for a fast first pass before deeper per-stock verification. When both a fast pre-filter and detailed verification are possible, pre-filter first (yield 0.5-3%, dividend growth 10%+, EPS growth 5%+, sales growth 5%+, RSI <40) and only deep-dive the survivors — this keeps the analysis focused on real candidates instead of the whole market.

## If Too Few (or No) Candidates
This is a genuinely strict screen — 12%+ dividend growth combined with an RSI pullback is rare, often only 5-10 qualifying stocks at any given time. If results are thin: relax the RSI threshold to ≤45 (captures early-pullback names), lower the minimum dividend growth to 10% (still excellent), or lower the minimum yield to 1.0% (captures more growth-oriented names). If the market is in a strong broad uptrend, note that oversold quality names may simply be scarce right now.

## Combining With Other Analysis
Useful as one step in a broader sequence: confirm a market-level pullback or sector rotation first (news/breadth context), run this screen to surface quality dividend growers with RSI <40, then do deeper technical analysis (support levels, entry timing) on the top 2-3 candidates before sizing a scaled-in position over a 6-12 month horizon.

**Disclaimer**: for informational purposes only. Past dividend growth does not guarantee future performance, and an RSI oversold reading does not guarantee a reversal — stocks can stay oversold for extended periods. Encourage the user to do their own due diligence before acting.