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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 5.1% 3.4% 20.8% 4.6% 12.7% 1.5% 10.2% 11.4%
1 month -32.9% -25.3% -23.8% -23.3% -35.5% -10.2% -32.4% -15.5%
3 months -49.0% -34.0% -35.7% -25.4% -27.4% -16.8% -39.9% -26.7%
6 months -41.3% -28.5% -38.0% -26.5% -29.1% -14.5% -38.0% -24.9%
1 year -37.5% -27.6% -35.7% -38.8% -22.5% -11.1% -34.0% -23.6%
2 years -42.2% -40.3% -35.3% -43.8% -32.7% -1.6% -33.4% -21.2%
Annualised 7.8% 1.0% -8.8% 4.6% -5.7% 12.1% -1.2%
 
Risks
Max Drawdown -56.0% -53.9% -61.8% -52.6% -48.8% -21.0% -47.8%
Avg Holdings 10.9 10.9 10.8 8.4 8.7 12.9 12.7
Diversification Moderate Moderate Moderate Moderate Moderate Moderate Moderate