How to use
- Copy the installation command and review the source package before installing it in your own agent environment.
- Check the source document for required tools, credentials and supported hosts.
- Describe your input and desired deliverable; review the output against the source material.
npx skills add https://github.com/tradermonty/claude-trading-skills --skill kanchi-dividend-sopBefore you start
- Installation does not include a model subscription, API allowance or permission to access your files.
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Rendered from the source repository. Headings, examples, code, tables, links, and referenced images are preserved.
Kanchi Dividend Sop
Overview
Implement Kanchi's 5-step method as a deterministic workflow for US dividend investing. Prioritize safety and repeatability over aggressive yield chasing.
When to Use
Use this skill when the user needs:
- Kanchi-style dividend stock selection adapted for US equities.
- A repeatable screening and pullback-entry process instead of ad-hoc picks.
- One-page underwriting memos with explicit invalidation conditions.
- A handoff package for monitoring and tax/account-location workflows.
Prerequisites
API Key Setup
The entry signal script requires FMP API access:
export FMP_API_KEY=your_api_key_hereInput Sources
Prepare one of the following inputs before running the workflow:
- Output from
skills/value-dividend-screener/scripts/screen_dividend_stocks.py. - Output from
skills/dividend-growth-pullback-screener/scripts/screen_dividend_growth_rsi.py. - User-provided ticker list (broker export or manual list).
Expected JSON Input Format
When using --input, provide JSON in one of these formats:
{
"profile": "balanced",
"candidates": [
{"ticker": "JNJ", "bucket": "core"},
{"ticker": "O", "bucket": "satellite"}
]
}Or simplified:
{
"tickers": ["JNJ", "PG", "KO"]
}The optional value-dividend-screener and dividend-growth-pullback-screener handoffs use stocks[].symbol. Both build_sop_plan.py --input and build_entry_signals.py --input accept that shape directly, as well as the native candidates[].ticker and tickers[] shapes above.
For deterministic artifact generation, provide tickers to:
python3 skills/kanchi-dividend-sop/scripts/build_sop_plan.py \
--tickers "JNJ,PG,KO" \
--output-dir reports/For Step 5 entry timing artifacts. `--yield-floor` is mandatory — it is the Step-1 yield gate; without it every row fail-safes to STEP1-RECHECK (a row can never reach a PASS tier without Step 1). Pass --profile / --safety-bias for run_context, and --events-json for the Step 4b scan (absent ⇒ every row is treated as SKIPPED and a TRIGGERED name is capped to HOLD-REVIEW — never silently clean):
python3 skills/kanchi-dividend-sop/scripts/build_entry_signals.py \
--tickers "JNJ,PG,KO" \
--alpha-pp 0.5 \
--yield-floor 3.0 \
--profile balanced --safety-bias medium \
--events-json reports/kanchi_events_2026-05-17.json \
--output-dir reports/Workflow
1) Define mandate before screening
Collect and lock the parameters first:
- Objective: current cash income vs dividend growth.
- Max positions and position-size cap.
- Allowed instruments: stock only, or include REIT/BDC/ETF.
- Preferred account type context: taxable vs IRA-like accounts.
Load references/default-thresholds.md and apply baseline settings unless the user overrides.
2) Build the investable universe
Start with a quality-biased universe:
- Core bucket: long dividend growth names (for example, Dividend Aristocrats style quality set).
- Satellite bucket: higher-yield sectors (utilities, telecom, REITs) in a separate risk bucket.
Use explicit source priority for ticker collection:
skills/value-dividend-screener/scripts/screen_dividend_stocks.pyoutput (FMP/FINVIZ).skills/dividend-growth-pullback-screener/scripts/screen_dividend_growth_rsi.pyoutput.- User-provided broker export or manual ticker list when APIs are unavailable.
Return a ticker list grouped by bucket before moving forward.
3) Apply Kanchi Step 1 (yield filter with trap flag)
Primary rule:
- Step-1 yield = the regular forward yield = `latestdeclaredregular
dividend × cadence-implied frequency / price (WS-1 dividend_basis.py). Never use profile.lastDividend` / TTM — it lags the latest declared raise (defect D5) and silently bundles specials (D4).
- Apply the profile floor (income-now 4.0% / balanced 3.0% / growth-first
1.5%) to the regular yield only.
Trap & freshness controls (machine-emitted by dividend_basis.py):
special_dividend_flag→ exclude specials; report regular vs ttm yield.variable_policy_flag→FAIL(CALM-style; not an income base).cut_flag→FAIL;suspension_flag→FAIL.freeze_flag→HOLD-REVIEW(income cash-cow exception decided in
Step 8 synthesis only if safety is clean & unblocked).
- Data Freshness Gate: if the regular yield is within ±0.20pp of the
floor (floor_borderline) and the latest declared dividend is not confirmed from an authoritative source, emit STEP1-RECHECK — never a hard FAIL (this is the CFR D5 fix).
4) Apply Kanchi Step 2 (growth and safety) — sector-dispatched
Safety is sector-specific — a uniform GAAP/FCF triad mis-judges banks (FCF meaningless) and regulated utilities (FCF structurally negative). Use references/sector-step2-modules.md; the deterministic dispatch is scripts/payout_safety.py.
- Always compute the payout triad: GAAP-EPS payout, Adjusted-EPS
payout, FCF payout. The safety verdict uses Adjusted-EPS + FCF (consumer), or the sector module (bank / utility / insurer).
adjusted_eps_source = UNAVAILABLE⇒ capHOLD-REVIEW(fail-safe;
never a silent PASS).
- GAAP↔Adjusted EPS divergence > 25% ⇒ Step-4 one-off flag.
- A merger completed within 4 quarters presumes GAAP EPS is distorted
⇒ force the adjusted path or HOLD-REVIEW (FITB/Comerica golden case).
- Regulated utilities: negative FCF is not an auto-FAIL — judge on
FFO/debt + allowed ROE + rate-case + equity-issuance risk.
When trend is mixed but not broken, classify as HOLD-REVIEW instead of hard reject.
5) Apply Kanchi Step 3 (valuation) with US sector mapping
Use references/valuation-and-one-off-checks.md and apply sector-specific valuation logic:
- Financials:
PER x PBRcan remain primary. - REITs: use
P/FFOorP/AFFOinstead of plainP/E. - Asset-light sectors: combine forward
P/E,P/FCF, and historical range.
Always report which valuation method was used for each ticker.
6) Apply Kanchi Step 4 (one-off event filter)
Reject or downgrade names where recent profits rely on one-time effects:
- Asset sale gains, litigation settlement, tax effect spikes.
- Margin spike unsupported by sales trend.
- Repeated "one-time/non-recurring" adjustments.
Record one-line evidence for each FAIL to keep auditability.
6b) Apply Kanchi Step 4b (forward structural-event scan)
Step 4 is backward-looking; Step 4b catches pending/recent structural events (the MKC-Unilever miss, D3). For each surviving candidate, run a WebSearch + issuer-IR/SEC check using the source hierarchy: issuer IR → SEC filing (8-K/10-Q/10-K/proxy/S-4) → exchange/company deck → reputable wire → finance portals (secondary only). Record findings into a curated events JSON and pass it via build_entry_signals.py --events-json.
- Only a major structural event caps the verdict to
HOLD-REVIEW
(tx > 10% mcap, share issuance > 10–20%, leverage +0.5x EBITDA, control/listing/HQ change, merger-of-equals / RMT / spin-off / large asset sale, dividend/rating/leverage-policy change, sector-specific materiality, or rolling-24m cumulative M&A > 15% mcap). Minor bolt-ons are a CAUTION note only.
- Pessimistic cap:
FAILED-DEGRADED/SKIPPED/NO_EVENT_FOUND
on a Step-5 TRIGGERED name ⇒ HOLD-REVIEW + T1 BLOCKED. WebSearch unavailable (web app / offline) is treated the same — never a silent skip. CLEAN_CONFIRMED (primary source checked) is stronger than NO_EVENT_FOUND (search only).
7) Apply Kanchi Step 5 (buy on weakness with rules)
Set entry triggers mechanically:
- Yield trigger: current yield above 5y average yield + alpha (default
+0.5pp). - Valuation trigger: target multiple reached (
P/E,P/FFO, orP/FCF).
Execution pattern:
- Split orders:
40% -> 30% -> 30%. - Pre-order blockers: if a candidate has any unresolved
pre_order_blockers[] (from WS-1/2/3 — variable/cut/suspension, adjusted-EPS-unavailable, GAAP/Adj divergence, bank credit, utility FFO/debt, event-scan failed/skipped, stale dividend, …) OR t1_blocked is true, the first tranche is blocked or downsized to a ≤20% tracking tranche — not 40%.
- Sector cluster risk: when ≥
SECTOR_CLUSTER_WARN_COUNTsame-sector
names pass (e.g. many small banks share one macro beta), emit a portfolio-level CLUSTER-RISK warning.
- Require one-sentence sanity check before each unblocked add: "thesis
intact vs structural break".
8) Produce standardized outputs
Always produce:
- Screening table with the actionable verdict tier:
CLEAN-PASS,
PASS-CAUTION, CONDITIONAL-PASS, HOLD-REVIEW, STEP1-RECHECK, FAIL (synthesized by verdict.py from Step 1 + Step 2 + Step 4b + blockers). Include evidence per row.
- One-page stock memo (use
references/stock-note-template.md) with the
per-ticker provenance block (price/dividend/payout/event sources, unresolved_blockers, evidence_refs[]).
- Limit-order plan with split sizing, blocker gate, and invalidation.
- Top-level run_context (profile, yieldfloorpct, safety_bias,
universesource, excludedasset_types) so a 3%-run result is never silently reused inside a 4%-run.
Output
Return and/or generate:
- SOP screening summary in markdown.
- Underwriting memo set based on
references/stock-note-template.md.
- Optional plan artifact file generated by
skills/kanchi-dividend-sop/scripts/build_sop_plan.py in reports/.
- Optional Step 5 entry-signal artifacts generated by
skills/kanchi-dividend-sop/scripts/build_entry_signals.py in reports/.
Cadence
Use this minimum rhythm:
- Weekly (15 min): check dividend and business-news changes only.
- Monthly (30 min): rerun screening and refresh order levels.
- Quarterly (60 min): deep safety review using latest filings/earnings.
Multi-Skill Handoff
Run this skill first, then hand off outputs:
- To
kanchi-dividend-review-monitorfor daily/weekly/quarterly anomaly detection. - To
kanchi-dividend-us-tax-accountingfor account-location and tax classification planning.
Guardrails
- Do not issue blind buy calls without Step 4, Step 4b and safety checks.
- Do not treat high yield as value before validating coverage quality.
- Use the regular forward yield for Step 1, never a special/TTM-inclusive
figure; near-floor + unconfirmed ⇒ STEP1-RECHECK, not FAIL.
- A failed/skipped event scan on a TRIGGERED name ⇒
HOLD-REVIEW+ T1
blocked. Never silently skip Step 4b.
- Keep assumptions explicit;
adjusted_eps/data missing ⇒ fail-safe
HOLD-REVIEW, never silent PASS.
Resources
scripts/thresholds.py: single source of truth for all SOP
thresholds + SCHEMA_VERSION (downstream schema-evolution guard).
scripts/dividend_basis.py: WS-1 regular/special/variable/freeze/cut +
Data Freshness Gate engine (pure, offline).
scripts/payout_safety.py: WS-2 sector-aware GAAP/Adjusted/FCF payout
triad + completed-merger linkage.
scripts/event_scanner.py: WS-3 isolated forward/recent corporate-action
scanner + materiality gate + pessimistic cap.
scripts/verdict.py: WS-5 actionable-tier synthesis + run_context +
evidence_ref helpers.
scripts/build_entry_signals.py: orchestrator (Step 5 targets + WS-1/2/3/5
integration). Flags: --yield-floor, --events-json, --profile, --safety-bias, --universe-source.
scripts/build_sop_plan.py: deterministic SOP plan scaffold generator.scripts/tests/test_golden_p0.py: P0 merge gate — end-to-end frozen
verdicts for CALM/ORI/CMCSA/MKC/CFR/cut (run via scripts/run_all_tests.sh).
references/default-thresholds.md: human-readable threshold mirror.references/sector-step2-modules.md: Step 2 safety indicators by sector.references/valuation-and-one-off-checks.md: Step 3 valuation + Step 4 one-off.references/stock-note-template.md: one-page memo + provenance block.

