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I'm not an expert, however, this is my understanding of the concept "Dividend Growth Investing" 👇
As we all know that Peter Lynch classified stocks into slow growers, stalwarts, fast growers, cyclical & turnarounds.
Here we should ignore cyclical (including commodities) (1/n)
As we all know that Peter Lynch classified stocks into slow growers, stalwarts, fast growers, cyclical & turnarounds.
Here we should ignore cyclical (including commodities) (1/n)
And turnaround.
Usually, slow growers are those growing less than the GDP rate, if we assume gross GDP growing at 7-8% these are growing at 4-5% annually.
The market does not like these companies because of their slow growth so they trade at low multiples, but (2/n)
Usually, slow growers are those growing less than the GDP rate, if we assume gross GDP growing at 7-8% these are growing at 4-5% annually.
The market does not like these companies because of their slow growth so they trade at low multiples, but (2/n)
Providing consistent dividends with a slight increase every year, because of the low multiple (PE) initial dividend yields look higher say, 5-6% ( higher than the pre-tax term deposit interest rates) but the growth is very low and the probability of capital appreciation (3/n)
First case study: Dabur India Limited.
Earnings growth: 19% CAGR for 25 years (From 1995-2020)
Returns to shareholders ( not considered the dividends) 20% CAGR.
PE in 1995: 42
PE in 2020: 52.
So, the return comes from earnings growth and the contribution of PE is... (1/n)
Earnings growth: 19% CAGR for 25 years (From 1995-2020)
Returns to shareholders ( not considered the dividends) 20% CAGR.
PE in 1995: 42
PE in 2020: 52.
So, the return comes from earnings growth and the contribution of PE is... (1/n)
Negligible.
What were the growth triggers?
19% CAGR for 25 years is not a joke.
When I studied the last 20 years financials I found a few interesting facts.
Two big triggers for the earnings growth:
1. It spins off the pharmaceutical division (mainly it was focused on. 2/n
What were the growth triggers?
19% CAGR for 25 years is not a joke.
When I studied the last 20 years financials I found a few interesting facts.
Two big triggers for the earnings growth:
1. It spins off the pharmaceutical division (mainly it was focused on. 2/n
Oncology) during 2003.
2. Acquisition of Balsara group approximately 1.4X the sales in 2004.
By acquiring the Balsara it got some valuable brands like Balsara, Babool, Promise, Meswak, Odonil, Odomos, Odopic, Sanifresh.
So, everything changed after 2003 & 2004.
(3/n)
2. Acquisition of Balsara group approximately 1.4X the sales in 2004.
By acquiring the Balsara it got some valuable brands like Balsara, Babool, Promise, Meswak, Odonil, Odomos, Odopic, Sanifresh.
So, everything changed after 2003 & 2004.
(3/n)
I convinced a few of my relatives and friends to invest in quality businesses for the long run by presenting the facts with examples( they are not naive and they have been in the market for 5-6 years, but don't know about business analysis) and also told them about the proper...
.....risk management and how to handle the situations during the different phases of the market, but never suggested any individual stock, finally changed their mindset.
Always help genuine persons but no spoon-feeding.
#EQTlearnings
Always help genuine persons but no spoon-feeding.
#EQTlearnings
I suggested them to invest in a bunch of quality stocks( and shared my watchlist) and not recommended any individual stocks.
Some unique concepts used by veteran Indian investors which may help in your investing journey.
1) QGLP~ Raamdeo Agrawal.
1) QGLP~ Raamdeo Agrawal.
3) SMILE 😊 ~ Vijay Kedia.
