Guided by analytics, not emotion
Since its inception in 2003, Loudon Investment’s composite return after deducting management fees has been above appropriate equity and balanced indexes, with only two negative years along the way. And it’s registered these numbers in a conservative manner. The firm won’t buy stocks unless the income yield is above the market (nowadays about 2 percent) and also above the stock’s own historic range.
“While a company’s earnings can vary widely from year to year, dividends provide a much more stable growth track for valuation purposes,” says Doug Loudon, Chief Investment Officer. But Loudon’s objective isn’t just buying high-yield stocks; it’s really focused on buying strong companies when they are out of favor and depressed in price. This is when their yields are the highest. The focus is on the long term (three to five years), rather than on what is going to happen in the next three to six months. This disciplined approach has produced quite consistent and positive returns, but it still comes with a personal touch.