The Globe and Mail attempts to identify stocks with a history of increasing
dividends and positive cash-flow
momentum in its Friday, Feb. 10, edition. The Globe's guest columnist Michael Pe writes in the Number Cruncher column that every investor would like an
option of high returns without
the risk. However, seeking greater
potential of return is commonly
associated with greater potential
of loss, notes Mr. Pe. Therefore, when focused
on long-term capital appreciation,
Mr. Pe says one should look for an
investing strategy with an attractive
risk-return profile. An example
of such a strategy would be a
portfolio of dividend paying
stocks with low risk characteristics. Mr. Pe looked for stocks with the
best combination of:
expected dividend yield;
five-year dividend growth rate;
quarterly cash-flow momentum
(latest four quarters of cash flow
compared with the same number
one quarter ago). Mr. Pe only considered companies with a market capitalization greater than $1-billion, to ensure
they are not smaller cap stocks,
which are
more susceptible to volatile price
swings. Mr. Pe recommends buying Aimia, Maple Leaf Foods, Corus Entertainment, Magna International and E-L Financial.
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