Combining Moving Average Alignment, Positive P/E, and Dividend Payout

Summary

This Chinese equity screen combines three filters: at least five moving averages should converge, the price-to-earnings ratio must be positive, and the dividend payout ratio for 2019 must exceed 25%. The document interprets moving average convergence as a sign of a relatively stable price pattern, positive P/E as evidence of earnings, and a high payout as shareholder return. It also suggests assessing market and liquidity risks as part of the final selection process.

The article identifies a limitation of relying on trend and basic company measures without broader risk or liquidity assessment. A strict convergence condition may also leave out stocks with larger short-term swings. Its code example filters on P/E and dividend payout but does not implement the moving average condition or the proposed risk checks. No backtest, sample results, or return evidence is provided, so the screen should be treated as a selection concept rather than a validated trading strategy.

Key ideas

• The proposed screen requires five converging moving averages, positive P/E, and a 2019 dividend payout ratio above 25%.
• The document treats moving average convergence as a possible indicator of price stability.
• The author notes that market and liquidity risks are not adequately covered by the core filters.
• The sample code does not implement the moving average or risk-assessment conditions.
• No empirical performance evidence is supplied.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.