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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.
- Kanwal graduated with a computer science degree at age 24 in 1996
- About 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 flop
- Neither of them knew anything about marketing/sales
Building His Own Investment Method
- In 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 hooked
- At the time he was paying 2.5-3% fees for advisement
- His main focus came down to strong dividend-paying companies
- He calls it “Dividend Value Investing”
- This is a combination of undervalued companies that also pay dividends
12 Part Checklist of Dividend Investing
- 1. Do you understand the product or service
- 2. Will people still be using the product/service in 20 years
- 3. 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 recession
- 5. Do they have consistent earnings growth
- 6. Do they have consistent dividend growth
- 7. 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 shares
- 11. Is it under or overvalued
- P/E 25 or less
- The current dividend yield is higher than the 10-year average
- Price to Book ratio <3
- 12. Keep your emotions out of investing
- Kanwal publishes 227 companies that meet these criteria as part of his Simply Investing Report
- Even with all these rules, you still may find a dud
- That’s why diversification is still so important
- Kanwal recommends 25-50 funds
Why 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 company
- Kanwal 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%
- Take 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 Action
Leave 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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