iQ International Buyback & Dividend Model

 

CLICK HERE for a complimentary Model Fact-card.

INVESTMENT OBJECTIVE

The iQ International Buyback and Dividend Model is designed to provide exposure to international-based companies that return capital to shareholders through both dividend payments and share buybacks.

WHY SHARE BUYBACK and DIVIDENDS?

Both dividends and stock buybacks are proven drivers of long-term stock returns.  The iQ International Dividend and Buyback Model is rare in that it combines both methodologies.

Here are some pertinent facts regarding the historical out-performance of both share buyback and dividends:

  • In the period from January 2000 to June 2015, the S&P Buyback Index and S&P Dividend Aristocrats Index were neck-and-neck, with an annual return of 9.90% and 9.89% respectively. Both trounced the S&P 500, which had an annual return of only 4.18% over this period.

  • Over the ten year span of 2008-2017, the Buyback Index had an annual return of 12.64%, compared with 10.39% for the Dividend Aristocrats Index. Meanwhile, the S&P 500 had annual returns of 7.81% over this period.

PROCESS

The Model follows the following rules-based and emotional selection process:

  1. Start with the 250 largest non-United States companies traded on domestic exchanges.

  2. Rank the 250 companies by Share Buyback Ratio and keep the top 50.

  3. Rank the remaining 50 companies by Operating Cash Flow to Price ratio and kickout the bottom 10.

  4. Rank the remaining 40 companies by Dividend Yield and keep the top 10.

  5. Rebalance every 3 months.

To avoid sector risk, the Model limits its exposure to any one sector to 20%.