Growth vs dividend paying companies
Posted: Sat Jan 07, 2023 3:38 pm
All of the companies in our High Yield Income Portfolio are "Growth + Income".
The answer to your question is "it depends".
> In the upstream oil & gas industry subsector: An "Aggressive Growth" company will beat the market if (a) they are completing a lot of very good wells that come on strong and add lots of proved reserves and (b) oil & gas prices hold up. Matador Resources (MTDR) was outspending cash flow for years to build up some great assets. Their business model (although risky) has paid off for their investors. Matador has lot of running and funding all growth + paying dividends with operating cash flow.
> Our largest gains have been small-caps that the Wall Street Gang has ignored, which ramp up production & proven reserves AND get to the point where they can fund more growth with operating cash flow. It is really great when they reach the point where they can payoff all of their interesting debt and pay dividends too.
> HMENF and IPOOF are perfect examples of what I am constantly looking for.
> I think HEI and ROK have similar upside for us. Ring Energy (REI) has recently closed a "Transformative" acquisition that gives it a lot of upside.
In a Bear Market (like we've been in for a while) the companies that can sustain their dividends will do better. My goal for the High Yield Dividend Portfolio is to find companies that can grow and keep paying nice dividends. PAGP has announced a plan to increase dividends since their free cash flow will be going a lot higher after 2022.