Can M&C Saatchi provide both capital growth and income?

The ‘SG Quality Income Index’ tracks yield and quality. Many in the market now appreciate that both higher ‘quality’ stocks and higher yielding stocks tend to outperform, but according to the research note, stocks that share both qualities put together standout total returns that have averaged 11.6% per year since 1990, more than doubling the return of the global equity markets at a significantly reduced volatility.

This 'holy grail' stock is, simply, one with a Piotroski F-Score of more than 7 and an above-average dividend yield. Using the financial data computed and included in Stockopedia's StockReports, we can instantly check whether our own stocks meet these criteria and screen the market for new candidates.

Let's take M&C Saatchi (LON:SAA) as an example.

Checking the quality-income characteristics of M&C Saatchi

The first point to check is M&C Saatchi's Piotroski F-Score. As mentioned above, any score above 7 gets this company past the first hurdle. A quick look at the group's StockReport shows a passing F-Score of 9.

Next up is the income check. M&C Saatchi pays out a rolling dividend yield of 3.02% (covered 1.23 times) rising to 3.30%. Although the dividend cover is a little low, M&C Saatchi's perfect F-Score provides a degree of reassurance that the group can afford to continue paying this dividend.

What does this mean for potential investors?

M&C Saatchi has an F-Score that suggests it could be a promising investment candidate worthy of further research - but it's only a first step. Higher F-Score stocks can still have weaknesses and may trade at premium prices compared to other stocks. We've identified some areas of concern with M&C Saatchi that you can find out about here.