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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 -0.7% -1.0% -2.0% -0.8% -4.1% 1.0% 3.8% -0.4%
1 month 3.5% 1.9% -1.1% -3.4% 2.8% 5.3% 5.0% 2.3%
3 months 5.4% 6.3% 9.2% 0.7% 11.7% 9.3% -1.5% 1.8%
6 months 17.2% 20.4% 33.4% 21.9% 14.1% 12.7% 22.9% 16.5%
1 year 49.7% 50.3% 34.9% 24.7% 31.5% 32.4% 63.6% 18.0%
2 years -4.1% 8.5% -9.8% -14.4% 17.6% 25.3% 22.9% -8.0%
Annualised 12.7% 6.8% -2.2% 10.7% 3.7% 18.2% 12.1%
 
Risks
Max Drawdown -56.0% -54.5% -61.8% -52.6% -48.8% -21.0% -47.8%
Avg Holdings 10.5 10.8 10.4 8.2 7.2 12.9 11.9
Diversification Moderate Moderate Moderate Moderate Low Moderate Moderate