Imagine trying to make it big on Wall Street in the 1960s, not as just anyone, but as a woman. The industry offered her a clipboard and a closed door. She skipped both, built a method simple enough to test with a pencil, and left behind seven rules that still separate sturdy companies from shaky ones. Here is how she did it, and what those rules reveal today.
Nicknamed the “grande dame of dividends,” Geraldine Weiss died on April 25, 2022, at 96. Her method outlived her: as of September 30, AAII’s Weiss screen has returned 8.9% since inception, against 7.5% for the S&P 500.
The Underdog Who Outsmarted Wall Street
Weiss began when the glass ceiling was more like reinforced concrete. She wrote her newsletter, Investment Quality Trends, under the name “G. Weiss” in 1966. Most subscribers had no idea the “G” stood for Geraldine until she appeared on “Wall Street Week with Louis Rukeyser” in 1977.
Geraldine’s 7 Rules for Picking Stocks
Seven criteria form the bread and butter of her strategy. Each is paired below with how it reads in today’s market.
1. Dividend Yield Above the 5-Year Average
Weiss judged a stock by its own history: a yield at or above its historical average high signaled a buy, and a yield at or below its average low signaled a sell. AAII’s version looks for yields within 10% of the seven-year average high.
2. Dividend Growth of at Least 10% Over 12 Years
Weiss wanted growth, not just income. A blue chip had to raise its dividend at least five times in 12 years, and she looked for an increase roughly 42% of the time.
3. Price No More Than 2x the Book Value
Stocks passing AAII’s Weiss screen on October 27 averaged a price-to-book ratio of 2.1.
4. Price-to-Earnings Ratio Below 20
Weiss preferred a P/E ratio below its historical average low, but accepted higher ones when earnings rose consistently and faster than the market average. Stocks passing the screen on October 27 averaged a P/E of 14.4.
5. Payout Ratio Around 50%
She treated any payout ratio above 50% as a warning sign, though utilities at 85% were normal.
6. Debt Below 50% of Market Cap
High debt was a no-go. Weiss wanted a debt-to-equity ratio of no more than 50%, with utilities excluded.
7. The Six “Blue Chip” Criteria
Finally, Weiss applied six checks to a universe of about 350 blue-chip companies:
Dividend Growth: At least five increases in the past 12 years.
Credit Rating: An S&P ranking of “A” or higher.
Shares Outstanding: At least five million.
Dividend History: At least 25 years of uninterrupted dividends.
Profit Growth: Earnings improved in at least seven of the last 12 years.
Institutional Ownership: At least 80 institutions holding the stock.
A stock needed to pass at least five of the six, and Weiss dropped it once it met fewer than four.
Weiss’s Legacy: Lessons for Modern Investors
Weiss proved that success does not require the flashiest stocks or the loudest strategies. Her story offers a few lessons:
Consistency Pays Off: Dividend growth stocks are not just for retirees; they also suit long-term growth.
Ignore the Noise: Weiss valued stocks by dividend yield rather than the earnings forecasts that dominated Wall Street.
Play the Long Game: Focus on companies with durable advantages and financial discipline, and the results speak for themselves.
Investors building a portfolio can channel their inner Geraldine: stick with quality, focus on dividends, and keep heads down.