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Winning Growth & Income 14 Qualifying

Winning Growth & Income is a dividend investing strategy inspired by an approach used by American investment analyst Kevin Matras in his book, Finding #1 Stocks. It combines growth and dividend factors by sorting the market for high yielding companies with strong growth characteristics. Apart from a high yield, this strategy looks for companies with an above average return on equity, a below average price-to-earnings ratio and where analysts have been upgrading their earnings forecasts. It also looks for companies with a low beta (the sensitivity of a share price to the movement of the market). Kevin Matras says the screen works for investors that are "looking for good companies with solid revenues that pay a good dividend". In some respects, this strategy is a small cap version of the Large Cap Dividend Attraction strategy. In Matra's original strategy criteria he uses Zacks Rank, which is a metric for analysing analyst forecasts.

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Finding #1 Stocks: Screening, Backtesting and Time-Proven Strategies

by Kevin Matras

Kevin's backtesting found that his version of this strategy had an average annual compounded return of 20.6% (that's while taking on about 40% less risk than the S&P 500).

This screen uses the following criteria:

  • % 3m EPS Upgrade FY2 > 0
  • ROE % > 1.002 x Median ROE %
  • P/E Rolling 1y < Median P/E Rolling 1y
  • Gross Gearing % < 100
  • Yield % > Median Yield %
  • Beta < 1
  • Mkt Cap £m > 20

Results are sorted by:

  • Yield % in descending order


And limited to the first 14 Results


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Performance Tracking


Returns FTSE 100
1 week 1.5% 1.0% -1.0% -5.3% -5.4% -2.5% -2.6% 3.9%
1 month -1.6% -9.2% -3.4% -7.2% -18.4% -0.6% -4.6% 2.5%
3 months 2.1% -6.3% -0.6% 7.7% -12.5% -3.3% 6.9% 1.2%
6 months 0.7% -8.6% -2.8% -4.8% -15.0% 0.3% 12.7% 7.5%
1 year -9.3% -16.7% 4.0% 18.1% -12.1% -3.5% 1.3% 7.8%
2 years 27.3% 19.3% 33.1% 82.4% 5.4% 26.7% 44.1% 24.8%
Annualised 10.3% 4.0% -1.5% 14.4% -0.1% 15.1% 9.9%
 
Risks
Max Drawdown -56.0% -54.5% -61.8% -52.6% -48.8% -21.0% -47.8%
Avg Holdings 10.3 10.8 9.9 8.8 6.3 12.9 12.1
Diversification Moderate Moderate Moderate Moderate Low Moderate Moderate