For a conservative investment portfolio, my first universe of candidates (40 companies now instead of 30) has an average profile that many serious investors would appreciate. I compare the new data to the initial 30:
Total Candidates = 40 (30)
Market cap = $83.0 ($85.2) billion
Forward PE = 12.9 (12.9)
Current dividend yield = 4.31% (4.88%)
1-year Performance = 12.5%
Total Return = 16.8%
ROE = 18.0% (17.44%)
ROI = 6.6% (6.98%)
Beta = 1.02 (0.98)
Average daily high/low % range = 2.05% (2.06%)
RSI-14 = 60.5 (57.8)
Consensus analyst recommendation = 2.3/5.0 (2.3/5.0)
For this type of conservative investment portfolio, I typically seek an ROE of 20%, and an ROI of 10%, with a Forward PE that is about two-thirds the S&P 500 average. These 40 high-quality dividend-yielding candidates reflect the type of companies I want to hold in a conservatively managed portfolio.
With an average portfolio weighting of six percent, I expect to hold 16 positions and trade them an average of two or three times a year. I would prefer a much longer buy-and-hold, but the reality today is that price-directing computer algorithms produce volatility that is too extreme for that.
All these companies make real products, produce minerals, or provide services essential to a growing economy, but I did extend the list from 30 to 40 to further diversify, including some financials. They are headquartered in Australia (1), Brazil (1), Canada (2), France (1), Italy (1), Netherlands (1), South Africa (1), Switzerland (2), the UK (2), and the USA (28).
There was also substantial industry diversification:
Aerospace & Defense (1)
Asset Management and Capital Markets (4)
Life Insurance (1)
Electric Utilities (3)
Gas Utilities (1)
Base Metal Mining (3)
Precious Metals Mining (4)
Oil & Gas — Integrated (3)
Oil & Gas — Drilling, Exploration & Production (2)
Oil & Gas — Pipelines (2)
Oil & Gas — Refining & Marketing (1)
Packaging & Containers (2)
Telecom Services — Domestic (2)
Textile — Apparel Clothing (1)
I seek a five-year average Total Return of about 15% per annum, net of costs, knowing that the proof of that will be in the trading performance. Some years better; some worse. To that end, I have refined my trading system methodology, which is becoming automated, to include Price Targets and Stop Loss prices.
This portfolio will be offered as a service to clients and soon to Trade Exchange subscribers. It will also provide more opportunities to diversify my writing in the blog.