What’s the best way to make money in stocks?
Which investing strategy works the best?
How about a strategy that turned $10,000 into $1.8 billion – by simply buying stocks?
$10,000 invested would have turned into $1,838,450,713 by investing in a “shareholder yield” strategy from 1928 through 2009… That’s according to Jim O’Shaughnessy’s book, What Works on Wall Street.
[ad#Google Adsense 336×280-IA]This strategy would have trounced the stock market for decades… with less volatility.
That’s exactly what you want to invest in…
O’Shaughnessy’s shareholder yield strategy involves buying stocks that return cash to shareholders through dividends and share buybacks – when they’re in an uptrend.
O’Shaughnessy found that it was one of the top-performing strategies in history (out of hundreds that he tested).
The term “shareholder yield” describes how much of a company’s cash flow it’s giving back to shareholders…
The more a company is giving back to shareholders, the higher the return shareholders have made over history.
Last summer, I told DailyWealth readers about a simple fund my good friend Mebane Faber created to take advantage of this concept. The fund is called the Cambria Shareholder Yield Fund (SYLD)… and it has outperformed the U.S. stock market by around 5.5% since launching last May.
Recently, Meb launched another fund to capitalize on this investment system… OUTSIDE the U.S…
Meb’s new fund is the Cambria Foreign Shareholder Yield Fund (FYLD). Its goal is identical to SYLD… but with a global focus.
The majority of the stocks in this fund are from Europe. And they are cheap… Specifically, the fund’s average forward price-to-earnings (P/E) ratio is just 12.2, which is significantly cheaper than U.S. stocks. (The forward P/E on U.S. stocks is averaging 14.0.)
The fund’s holdings have an average dividend yield of about 5% (versus a 2% dividend in U.S. stocks). On top of that, these companies are buying back shares. (Remember, buybacks are good because they reduce the number of shares outstanding… So mathematically, buybacks increase the earnings per share.)
Shares of the Cambria Foreign Shareholder Yield Fund accomplish two things: 1) They pay you a high dividend. (I expect it will be in the 4%-5% range, paid quarterly, with the first payment coming in March.) 2) They give you exposure to the dirt-cheap values in Europe.
The companies in this fund are doing the right thing for shareholders. They are cheap, they pay high dividends, and they have significant upside potential.
History is clear… Buying companies based on shareholder yield beats the market… with less volatility. That’s exactly what we want…
Right now, Europe offers better values than the U.S. And my friend Meb’s new fund, FYLD, allows you to easily put our shareholder-yield ideas to work outside of the U.S.
Check it out… For more, visit www.CambriaFunds.com.
Good investing,
Steve
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Source: DailyWealth