MAGIC ARISTOCRATS

SUSTAINABLE DIVIDEND GROWTH

INVESTING PHILOSOPHY

Magic Aristocrats

42,55 %

26,60%

Magic Aristocrats

Year

2017

2018

2019

Capital Gains Fund

26,79%

-1,23%

13,89%

Capital Gain S&P 500

19,42%

-6,24%

13,07%

FOCUSING ON LONG TERM SUSTAINABLE DIVIDEND GROWERS

OUR SCREENING AND RANKING SYSTEM IN A NUTSHELL

Here is how the stocks of the Magic Aristocrats are selected
Consistent dividend growth history for each of the last 10 years or more

proof of disciplined capital allocation, shareholder friendly management

Free Cash Flows covering the dividends with a strong margin of safety

sustainable dividends only come from operating cash flows less investments

Limited increase in shares outstanding, or even better: strong shares buy-backs

we don’t want Ponzi schemes

A long history (10 years or more) of above average ROTCE

consistant high ROTCE signals a strong business franchise and is statistically significant

Reasonable leverage

dividends and ROTCE must come from the business, not from debt financing

 
Companies matching those criteria are ranked by increasing valuation multiples

the valuation being a mix of price to earnings, price to free cash flows and dividend yield

Equal ponderation of capital across the remaining 20 stocks

keep enough diversification to limit volatility, but not too much

Repeat regularly (monthly)

allow your capital to grow and multiply

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