Leith Wheeler focuses on total returns, not just dividends

Sustainable business models, profits, returns on invested capital, free cash flow yields, and strong balance sheets, are some of the things manager Patrick Reddy seeks

Diana Cawfield 21 February, 2019 | 6:00PM

When it comes to dividend investing, Patrick Reddy, manager of the Gold-rated Leith Wheeler Canadian Dividend Series F, says the investment team seeks sustainable, resilient companies, not dividend yields.

Reddy, a Canadian equity analyst at Vancouver-based Leith Wheeler Investment Counsel says, “Our view is that what’s key for dividend investing is to focus on the total return of a business, not just a dividend. We believe it’s a mix of capital appreciation and the dividend that’s important. As a firm, we’re value managers, and our mantra since inception is to buy businesses that we understand, trading at discounts to intrinsic value.”

According to Reddy, the mandate has traditionally had a yield greater than the TSX, but on average, it’s been anywhere between 3% and 4%. “When investors screen dividend funds to pick the ones with the highest yield, ours would not score well,” says Reddy.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Canadian National Railway Co110.03 CAD1.57
Saputo Inc33.84 CAD1.65
The Toronto-Dominion Bank59.83 CAD2.34

About Author

Diana Cawfield

Diana Cawfield  Diana Cawfield is an award-winning writer who has been a regular Morningstar contributor since 2000. Her numerous publication credits include the Toronto StarAdvisor's Edge and Chatelaine, as well as the Canadian Securities Institute's online educational services.