There are two components that comprise the return on a stock market investment: capital appreciation and dividends. Of the two components of return the only one with any degree of certainty is the dividend. Why is that? First and foremost the cash dividend is a policy that must be voted on and declared by the board of directors. When a company board declares a dividend there are 3 specific dates associated with the dividend: The Record Date; The Ex-Dividend Date; and, The Payment Date.
The Record Date is the date a company establishes who its shareholders of record are. The primary purpose of the Record Date is to ensure that the cash dividend is paid to the appropriate people. The Ex-Dividend Date is the date on which the seller, and not the buyer, of a stock will be entitled to a recently declared dividend.
The Ex-Date is usually two business days before the record date. The Payment Date is the date shareholders who bought the stock before the ex-dividend date receive the dividend. Because the dividend is central to our approach, we produce the Dividend Increases to highlight dividend activity as a convenience to our readers.
The dividend yields indicating the Undervalue area have been established over multiple
market cycles. Although these low-price/high-yield areas are repetitive, they are neither absolute nor
inviolate. In fact, a range of 10 percent
above and below Undervalue is normal. Financial academics call this 10 percent range "the standard
For various reasons though, sometimes specific to a company or to its sector, or due to a
disruption in the broad market, stocks will occasionally exceed this 10 percent range. Typically this is a
transitory event as abnormally high-yields
will attract sufficient buying interest to return dividend yields to long-established norms.
On those occasions when a dividend yield deviates 30 percent or 3 standard deviations or more from its historically repetitive area of Undervalue, Investment Quality Trends will highlight those stocks in the YIELDS TO WATCH so readers can make note of the abnormal behavior and conduct additional research before including a stock or stocks in their investment considerations.
The Lucky 13 appears in the January issue of the newsletter and shows 13 stocks we think can outperform the market.
In short, The Lucky 13 has been extremely successful and not surprisingly, quite popular. While not every stock in each Lucky 13 portfolio has been a winner, there have been sufficient winners in each group to produce 15 years of positive total returns, twelve of which have exceeded 10%.
Whether you are looking to build a portfolio from scratch, are partially invested and looking to add new positions, or are fully invested and merely in need of some affirmation and hand holding, The Timely Ten presents our top ten recommendations as of each issue.
Short of utilizing the personal investment management services of our sister company, IQ Trends Private Client Asset Management, this is as close to real time as you can get.
The Investment Outlook can be found in each issue, and is where our Editor presents his thoughts on the general state of the markets, a specific stock or industry, or a discussion about value identification and our methodology.
Since assuming the helm as Managing Editor in 2002, Kelley Wright has penned the majority of commentaries, which have ranged far and wide afield. Whether didactic, philosophical or with a touch of whimsy, Kelley most definitely has never been one at a loss for words.
In each issue, with the exception of the first of the quarter, IQ Trends publishes four of our proprietary charts. These charts range from new entries into the Service, new entries into the Undervalued category or modified Profiles of Dividend Yield, companies in the Timely Ten, or companies that exhibit characteristics that show promise.
As a value added benefit to our subscribers, IQ Trends now allows access our archive of proprietary charts. No longer will subscribers have to wait for their favorite company to fall into one of the above mentioned categories for its chart to be published.