The 3 Most Valuable Traits Of Any Winning Stock

2. Companies that have excellent customer loyalty:
The ability to retain a loyal customer base and keep those consumers buying your products for years is a hallmark of the world’s best businesses. Firms that can lock in a loyal base generate strong free cash flows and superior profit margins, putting them in a better position to return money to shareholders through dividends and share buybacks.

3. Stocks with enormous shareholder yields:
You may have heard me talk about the concept of ‘shareholder yield’ before. What we believe to be most profitable for the vast majority of investors is a metric that most people have never heard of. We call it “shareholder yield.”

Shareholder yield adds together the dividends a company pays, its share buybacks, and the debt it pays down. In other words, shareholder yield gives you a real picture of how much cash a company is returning to its owners. Studies prove that companies with the highest shareholder yields tend to outperform the broader market.

Of course, all of these points make sense — strong companies with irreplaceable assets, loyal customers and that take care of their shareholders should do better over the long-run. It doesn’t take a Ph.D to understand that.

It’s simple, but it works.

That said, no one can pick winners all the time. While our annual Top 10 Stocks recommendations have beaten the market 7 out of the past 10 years, and Buffett’s Berkshire Hathaway has beaten it 6 out of the past 10, even the seemingly strongest companies aren’t guaranteed to deliver a positive return.

But we think if you invest in companies with one or more of these simple traits, you have a good chance of making money without an overly complex investing strategy.