Andrea Levy, The Plain Dealer About this series

Minding your money has never been harder. We can help. In this periodic series, Plain Dealer writers offer advice about all of your financial affairs — from your home and your bills to your bank and your investments. The first 10 topics will appear over the next two weeks, and we’ll add to them throughout the year. Have a topic to suggest? You can leave a message at 216-999-4016 or email business@plaind.com

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CLEVELAND, Ohio — There are few things in personal finance that are more time-consuming than trying to pick companies to invest in.

Whether you’re investing retirement funds, or just extra money you have to play the market, there are lots of zeroes before that decimal point and the stakes are big.

Picking stocks is different than picking mutual funds because the latter are managed by professionals, and you can easily look up mutual fund ratings from independent researchers.

Most experts caution novice investors against putting large amounts of money in individual stocks without professional help. But savvy consumers can dip their toe in the stock market a bit if they’re willing to do their homework:

• Look for dividends.

There’s no need to look any further if a company doesn’t have a good dividend history relative to its peers, said Azim Nakhooda, managing principal and CEO of Cedar Brook Financial Partners in Pepper Pike.

In this environment, for a variety of reasons, dividends are a good place to start, Nakhooda said.

Companies don’t pay dividends if they don’t have cash flow. It tells you a lot about the stability of the company, he said.

• Revenue growth.

Look for companies that have increased their revenues, not just their profits, said Solon certified financial planner Bill Russo of Securus Financial Strategies.

Ideally, a company would show five years’ worth of revenue growth, he said.

Many investors focus on profits, but companies can boost profits by laying off workers or finding other ways to reduce expenses. Revenues are more meaningful.

You can’t cost-cut your way to revenues, Russo said.

• The big picture.

Investors should ask themselves whether they’d want to own the whole company if they could afford it, said activist investor Umberto Fedeli, who owns a number of local company stocks and is president and chief executive of Independence insurance broker The Fedeli Group.

You shouldn’t necessarily buy one share of a company stock if you don’t believe in it enough to own the whole company, said Fedeli, who owns 15 to 20 individual company stocks at any given time.

• Price history.

Look at the company’s 52-week price history. You generally want to stay away from companies trading at their 52-week highs, Nakhooda said. But if a stock is near its 52-week low — assuming it’s not for some catastrophic reason — that’s a reason to get you interested, he said. That’s a buy sign. It can sometimes be an easy entry point.

• Free cash flow.

In addition to paying attention to a company’s dividend, Russo said, an investor should look at whether that company is generating revenue and cash that is not being absorbed by capital and other expenses. Free cash flow is akin to a household’s disposable income.

If a company has free cash flow, that makes the dividend seem safe, Russo said.

• Growth potential.

Is the company in a field that’s growing? This is particularly important in an age where products and services can become outdated fast.

• The it factor.

Any company worth investing in should be able to point to its critical success factor, Fedeli said. What is its edge over competitors?

For example, Nordstrom is known for customer service. Apple is known for innovation. Walmart is known for its low cost. Parker-Hannifin is known for its quality product design, he said.

• Price-to-earnings.

A company’s price-to-earnings ratio is one of the old standby indictors that experts have always relied on, and that hasn’t changed, Nakhooda said.

Also called the P/E ratio, the number is simply a valuation of a company’s current share price compared to its profits per share.

P/E ratios can vary by industry, Nakhooda said. So investors should also compare a prospective stock with that of a company’s peers.