LONDON — To me, capital growth and dividend income are equally important. Together, they provide the total return from any share investment, and, as you might expect, my aim is to invest in companies that can beat the total return delivered by the wider market.
To put that aim into perspective, the FTSE 100 has provided investors with a total return of around 3% per annum since January 2008.
So this series aims to identify appealing big-cap investment opportunities and during recent weeks I’ve looked at Apple Inc. (NASDAQ:AAPL), Wolseley plc, CRH PLC (ADR) (NYSE:CRH) (LSE:CRH), ARM Holdings plc (ADR) (NASDAQ:ARMH), and Marks and Spencer Group Plc. This is how they scored on my total-return-potential indicators (each score in the table is out of a maximum of 5):
|Price to earnings||4||4||4||2||3|
|Total (out of 25)||23||20||15||22||14|
This collection of potential big-cap investments looks like a team of two halves, with Apple Inc. (NASDAQ:AAPL), Wolseley, and ARM in the leading pack, and CRH and M&S bringing up the rear.
At first glance, ARM Holdings and Apple Inc. (NASDAQ:AAPL) seem to have much in common, both operating in the technology sector. Closer inspection reveals some fundamental differences. For example, Apple Inc. (NASDAQ:AAPL) makes must-have electronic gizmos, and the success of its sales efforts depends on having new products hit the right fashion receptors of its (so far) loyal customers. That’s not certain to continue happening, despite past successes, and that realization could be behind recent share-price weakness.