Combining ideas from Warren Buffet and Peter Lynch's value investing, we focus on buying into companies that are BIG, SAFE, CHEAP, and pay a DIVIDEND.
BIG: To avoid speculating on smaller companies whose stock prices can fluctuate vastly (2-5%) on a daily basis, we look for big players (min. $1 billion market cap) and industry leaders that should be around for many years to come.
SAFE: Although no stock is 100% safe, we look for companies with relatively encouraging track records, that have grown at a steady pace, and have healthy balance sheets. We are specifically drawn to names that show strong earnings and cash flow while controlling a manageable level of debt.
CHEAP: An important principle in value investing is to buy companies that have had stock price declines and appear undervalued while holding off on names, regardless of market buzz and positive results, if they are considered expensive. Since entry timing cannot always be perfect, we look to buy companies at a lower price (10% - 15% below annual high) that are primed to rebound.
DIVIDEND PAYER: The value of dividends is critical to any investor seeking additional overall returns and a steady stream of income to supplement their salary or pension. As has been the case over time, total portfolio returns on equity portfolios that include dividend-paying stocks dwarf the returns of the TSX and of dividend non-payers COMBINED.