All articles tagged with #quality stocks
After a surge in stock prices, some investors are now seeking quality stocks, which are defined as shares of companies with growth, reliable profits, and strong balance sheets. These stocks range from recent high-performers like Microsoft and Nvidia to steady performers like Coca-Cola and Johnson & Johnson.
High-yielding stocks have underperformed this year due to increased bond yields and a lack of outperformance by cyclical factors. However, investors can improve their returns by focusing on high-quality companies with sustainable dividends. Piper Sandler suggests using an "ability to sustain" screen, which analyzes cash flow, preferred dividends, capex, and common dividends. This approach has shown a 9% increase in returns compared to just screening for high dividend yield. Some attractive dividend payers identified by Piper Sandler include Altria, Verizon Communications, Keycorp, Truist Financial, Comerica, Boston Properties, AT&T, Simon Property, and Citizens Financial.
As earnings season ramps up, investment firm Jensen focuses on return on equity (ROE) as a key metric for assessing the financial health of companies. They only invest in companies that have achieved a 15% ROE for at least 10 consecutive years. Jensen has crossed off Netflix and Zoom from their list due to concerns about their long-term competitive advantage. Instead, they highlight companies like Broadridge and Marsh McLennan that have demonstrated enduring competitive advantages. Jensen missed out on Nvidia's stellar returns but believes in the resilience of companies that meet their investment criteria.