Turning the investment upside down
As the baby-boom generation grew up over the past quarter century, investor focus was primarily on companies that could grow their revenues and, in particular, companies that could grow quickly.
Companies that paid dividends were often shunned. Dividends were viewed as evidence the company could not grow. This emphasis on growth generated a whole new style of “momentum investing,” culminating in the tech wreck of 2000 and the resource wreck of 2008.
In a world where uncertainty reigns, the assurance of safe and growing dividends has been a focus of investor attention
With baby boomers now reaching retirement age, investor sentiment is now shifting more towards income and away from revenue growth. In particular, having gone through the market meltdown of 2008-09, emphasis is not only on income, but capital preservation as well.
In some respects, the investment world has been turned upside down.
The pipeline and telecom sectors were strong performers in 2011. Relative to earnings, some pundits view these stocks as expensive. Yet on an income basis, relative to other income investments, they remain attractively valued and at the core of the Leon Frazer investment strategy. With an increasing investor need for a regular and growing income stream, we do not see these types of equities falling out of favour soon.
At Leon Frazer, dividend investing is what we have always done, and looking at what the market is paying for income is integral to our analysis. While others may focus on timing the purchases and sales of non-yielding cyclical and technology stocks, we are committed to getting the best income and growth in income for every dollar we invest.
THIS ARTICLE ADAPTED FROM THE LEON FRAZER QUARTERLY REVIEW, Q4 2011
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