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James Li
James Li
Articles (325)  | Author's Website |

Score Big Returns With Dividend Growth Companies

Backtesting identifies winning investing strategies for 2017

July 14, 2017 | About:

Among U.S. companies, high dividend yield companies like Cisco Systems Inc. (NASDAQ:CSCO), Infosys Ltd. (NYSE:INFY), Novo Nordisk A/S (NYSE:NVO), Strum Ruger & Co. Inc. (NYSE:RGR) and Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) generated high portfolio returns during the backtesting period from January 2006 to January 2017.

Backtesting highlights criteria for good companies

GuruFocus launched the Backtesting feature within the All-In-One Guru Screener June 2016. You can generate a list of stocks that suits your investing style by selecting from over 200 financial filters using our Screener. Once you finish setting your desired criteria, you can backtest your strategy against the Standard & Poor’s 500 index ETF benchmark. The following YouTube webinar gives a deep walkthrough of the Screener and backtesting features.

Table 1 lists the backtesting results for 17 investing strategies and their performance ranks compared to the S&P 500 benchmark. All model portfolios are rebalanced every 12 months with a maximum of 20 stocks ranked by decreasing market cap.

Investing Strategy

3 months

Year to Date

3 years

5 years

All time

3yr rank

5yr rank

All time rank

Ben Graham's Lost Formula

-8.47%

-9.67%

-9.38%

30.50%

102.63%

16

14

11

Dividend Growth Screener

5.77%

6.20%

54.44%

116.92%

318.13%

1

1

2

Fast Growers

6.18%

4.36%

8.94%

51.18%

73.27%

13

12

14

Good Quality Companies

10.35%

13.65%

21.41%

67.14%

117.57%

8

8

8

Good Dividend Yield Earnings Growth

10.69%

3.23%

-42.22%

-17.79%

-18.98%

18

18

18

Mega Caps Only

0.26%

0.06%

-9.48%

10.02%

-15.81%

17

16

17

Peter Lynch Growth

0.79%

4.99%

10.14%

70.55%

152.56%

12

7

6

Good Margin Growth

7.37%

5.94%

-0.21%

22.60%

75.02%

14

15

13

All Predictable Companies

8.23%

15.49%

26.64%

57.77%

72.89%

5

10

15

Profitable Predictable Margin Expanders

4.88%

-1.62%

30.87%

51.54%

233.88%

3

11

4

Founder's Good Companies

4.54%

5.43%

17.89%

61.30%

111.01%

9

9

9

Stalwarts

9.29%

14.42%

24.81%

75.19%

104.17%

6

6

10

Walter Schloss

5.17%

19.38%

-4.69%

9.53%

23.04%

15

17

16

Strong Stocks 2017

5.10%

3.73%

29.46%

83.44%

215.37%

4

3

5

FZM Screener

4.38%

11.55%

13.35%

40.34%

126.50%

10

13

7

High Dividend Yield and ROE

-10.18%

4.29%

10.43%

75.62%

394.46%

11

5

1

Five Criteria for Good Companies

9.99%

14.62%

44.77%

106.37%

248.54%

2

2

3

S&P 500 ETF

5.12%

9.35%

23.69%

80.05%

96.31%

7

4

12

Table 1: Backtesting results for various strategies compared to the S&P 500 benchmark

For the period January 2006-2017 with yearly rebalancing

Max 20 stocks ranked by decreasing market cap

Based on the following backtesting results, investing strategies that included the following criteria outperformed the benchmark:

Cisco met all of the above criteria as of July 14.

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See also

GuruFocus celebrated the one-year anniversary of the Backtesting feature launch by adding two new features within the Screener: loading from a portfolio and screening using historical data. While Premium and Premium Plus members have full access to the Screener, Premium members can only access backtesting data up to January 2014. The Premium Plus membership gives access to additional features including backtesting data up to January 2006, unlimited Excel Add-in queries and the Manual of Stocks for all global regions subscribed.

Disclosure: The author has no positions in the stocks mentioned.

About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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