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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 0.4% -2.0% 0.4% -1.8% 0.6% -0.1% 0.9% -0.2%
1 month 2.0% -1.9% 4.3% -2.5% 1.9% 6.1% 6.3% 2.5%
3 months 1.6% -1.9% 0.8% -3.2% 2.0% 2.1% 8.2% 1.3%
6 months 15.7% 3.1% 1.0% -5.3% 6.4% 24.3% 10.3% 9.2%
1 year -5.9% -12.3% -4.6% -16.6% -7.5% 18.1% 2.5% -1.7%
2 years 3.0% -19.1% -15.1% 14.6% -19.6% 32.5% 12.6% 2.1%
Annualised 16.5% 6.8% -0.9% 21.2% 1.6% 21.0% 15.0%
 
Risks
Max Drawdown -27.2% -36.6% -32.4% -26.7% -32.9% -18.4% -17.1%
Avg Holdings 11.3 11 11.2 8.8 9.9 13.1 13.1
Diversification Moderate Moderate Moderate Moderate Moderate Moderate Moderate