Dividend Value Investing and the 12 Rules|Kanwal Sarai - a podcast by Cody of Fly to FI and Justin aka Saving Sherpa
from 2020-07-07T15:10
Today's episode features Kanwal Sarai from Simply Investing.
Kanwal shares with us his unique investing style.This style is a combination of value investing like Warren Buffet and a focus on dividend payouts.
Kanwal takes our questions in stride and makes some really great points.Listen, learn, and let us know what you think about this awesome episode.
Episode SummaryKanwal's Background
Kanwal graduated with a computer science degree at age 24 in 1996About three years in, he realized traditional work couldn't be a forever path
This was before anyone was calling it"F.I.R.E"His first side hustle attempt was purified water
Long story short...the side hustle was a flopNeither of them knew anything about marketing/sales
Building His Own Investment MethodIn 2003 Kanwal started developing his own investment strategy
His son was just born and was keeping him up all night
One of those sleepless nights he grabs an investing book and was hookedAt the time he was paying 2.5-3% fees for advisement
His main focus came down to strong dividend-paying companiesHe calls it"Dividend Value Investing"This is a combination of undervalued companies that also pay dividends
12 Part Checklist of Dividend Investing1. Do you understand the product or service
2. Will people still be using the product/service in 20 years3. Do they have a low-cost lasting advantage (think Coke's secret recipe)
4. Would you use the product that people would use during a recession5. Do they have consistent earnings growth
6. Do they have consistent dividend growth7. Do they have a low payout ratio (dividend vs earnings)
8. Do they have low debt %9. Do they have a good credit rating
10. Do they actively buy back their shares11. Is it under or overvalued
P/E 25 or lessThe current dividend yield is higher than the 10-year average
Price to Book ratio<3
12. Keep your emotions out of investingKanwal publishes 227 companies that meet these criteria as part of his Simply Investing Report
Even with all these rules, you still may find a dudThat's why diversification is still so important
Kanwal recommends 25-50 fundsWhy Dividend Investing Over Index Investing
Holding the total market (index funds) means that you're going to own some poor quality stocks
Getting cashback in your pocket to diversify instead of simply seeing appreciation in one companyKanwal reinvests dividends across all his dividend stocks and not right back into the company that originally paid it
The average annual yield Kanwal sees from his dividend stocks are 3.5-5%
Key TakeawaysTake The Emotion Out: Kanwal's 12 rules help create a systematic process without being clouded by human emotion
Set Goals, Be Patient: Don't get sucked in to get rich quick schemes, find quality companies and make continual progress.
Call to ActionLeave a review on iTunes, share it with us, and then we'll select two lucky listeners for a prize. One listener will get a year subscription to the Simply Investing Report and the other will get full access to the Simply Investing Course. That's $500+ of value!
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