This the editorial of our monthly Shareholder Yield Letter published on 2024-04-09. Sign up here to get it in your inbox the first Tuesday of every month.
More information about the newsletter can be found here: The best large cap investment strategy ever
In May 2023 we started a new newsletter based on the best large cap investment strategy we ever tested.
I just sent out the latest issue and the high-quality, high shareholder yield large cap companies the strategy comes up keeps on surprising me.
Performance so far has lagged the overvalued high-flying tech companies a bit, all ideas up an average of 10.8%, as the strategy purposefully avoids overvalued high-flying companies. It focuses on companies returning cash to shareholders, and that means you.
Dividend 4.6% + Share Buybacks +4.2% = 8.8% Shareholder return
Even if you ignore average share buybacks yield of 4.2% the portfolio’s average dividend yield is 4.6%. That’s very attractive, perhaps something for your income portfolio?
I can’t give you the company names recommended in this issue (that would not be fair to subscribers), but I can give you a rough indication.
Here is a sneak preview of what’s included in this issue:
This month you can read why I am not invested in all ideas.
But first the portfolio changes.
Portfolio Changes
Buy Four
Four new recommendations this month as the MSCI World index is above its 200-day simple moving average.
The first is a growing €11.1 billion French retailer with a shareholder yield of 14.7%. Over the past 12-months, it has bought back 9.2% of its shares and paid a dividend of 5.6%.
The second is a €77 billion high free cash generating Norwegian energy company with a shareholder yield of 19.0%. It made share buybacks of 6.8% in 2023 and paid a dividend of 12.2%.
The third is a huge $367.2 billion US-based healthcare company with a shareholder yield of 11.1%. Over the past year it bought back 7.9% of its shares outstanding and paid a dividend of 3.2%.
The fourth and last recommendation is a €27 billion Swedish bank with a shareholder yield of 9.2%. It made share buybacks of 2.0% and paid a dividend of 7.2%.
Why I am not invested in all ideas
This is a question asked by a few subscribers, and something you may have asked yourself.
There are several reasons.
I may already be fully invested
Firstly, I may already be fully invested.
I follow a few investment strategies and depending on how much money I have invested in each, there may not be anything left to invest in newsletter ideas.
I also follow other investment ideas or themes
Secondly, I follow other investment ideas or themes.
I also invest in ideas recommended by fund manager friends, mainly focusing on deeply undervalued companies.
I also invest in smaller companies
Additionally, I mainly invest in smaller companies like the ones recommended in the Quant Value newsletter.
I invest in trend following
I am also invested in trend-following strategies to diversify my portfolio.
Trend following involves momentum-based strategies in the futures market, which offers a wide range of potential investments across stocks, bonds, commodities, currencies and more. I have an investment in a trend-following fund run by a friend.
I don't know any better than you
It's important to add that I don't have better knowledge than you as to what company will perform best. I have made mistakes by avoiding certain newsletter companies based on personal biases, only to find out later that they were the best performers.
This just shows you that no one knows what will happen with the investments we make and the importance of diversifying our portfolio.
Remember no investment strategy will always beat the market. It's thus a mistake to think that good performance over the long-term guarantees beating the market every year.
There will be times when we underperform, and the biggest risk is that we abandon a sound investment strategy to chase the most recent best-performing strategy.
This leads to significant capital losses, as seen during the internet and tech stock bubble.
Slow and steady wins the race
In the end, I, and I hope you also, value slow but steady returns year after year. It’s not exciting, but it lets us compound our capital at high rates over the long term.
Your analyst wishing you profitable investing!
