In our recent round-up of the best performing guru-inspired investing models of 2013, we highlighted a couple of dividend strategies that had produced some exceptional price gains. But unlike many other investing disciplines, blistering capital growth isn’t necessarily the most important feature of an income strategy. Investors often prioritise high yield and strong dividend growth over any expectation that their portfolio of stocks will leap in value. With that in mind, we delved a bit deeper into how some of Stockopedia’s income models performed in 2013 and which of them currently offer the best average yields.
The top income performers
Like all of Stockopedia’s GuruModels, dividend-focused strategies are tracked based on the absolute price performances of their constituent shares. The accrued dividend income to these shares isn’t currently taken into account but they would significantly bolster the Total Returns from these screens. For that reason the performance of the Winning Growth & Income screen over the past 12 months is even better than its astonishing 63.3% price return first suggests. In a year when price momentum and value were generally highly successful, it was a strategy that hunts down shares with quality growth characteristics and above average yields that pipped all the other screens to the post. And with a current median yield of 3.4%, it’s a strategy that offers a reasonable income return to boot.
Developed by US share analyst Kevin Matras, Winning Growth & Income looks for companies that are good at generating cash and are expected by brokers to grow their earnings in the future. Together with other factors such as low levels of debt and below average price-to-earnings ratios, the strategy has been able to pick up positions in large cap stocks like J Sainsbury (LON:SBRY) and BAE Systems (LON:BA.) as well as smaller cap shares that have seen particularly strong price gains like Bloomsbury Publishing (LON:BMY) and Matchtech (LON:MTEC).
With a superior yield but more modest price appreciation in 2013, Stockopedia’s SocGen-inspired Quality Income screen continued to offer perhaps the best balance of the two. Positions in the likes of Persimmon (LON:PSN) and
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