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Richard Rudden, Target Rock Advisors, explains how sustainable practices can improve a company’s bottom line.
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Right it's been a wild ride for the markets lately leaving many investors worried about where to put their money.
Well our next guest actually uses an unconventional -- to find stocks with the best returns.
Joining us now is Richard read in CEO of target -- advisors.
-- this really interesting because this notion of using a company's sustainability record.
Is what you do to pick stocks we do you know what is that mean.
Well thanks so much for having -- your personal unappreciated.
-- children we have children and that's very unsustainable.
That apparently.
Eight anyway yeah -- we look at the sustainability you know sustainable he's been a very important that the very important issue in the investment community in the world in general.
Being -- being right right is his old are important stuff.
But what you don't hear very often is is that the -- utilities using that same context.
In our view is that utilities are every bit as much.
Sustainable.
-- industry sector.
As sustainable and investment as as any other sector might be that that to ours isn't.
Sustainable because it's not going anywhere I mean we needle I don't know -- -- to the bottom line.
To the contrary it's it's it's going to a funny place we need more more electricity.
And if you know and and the sector itself is changing dynamic -- it's moving from coal to natural gas it's modifying its approach to nuclear.
It's using more renewables every day extended and renewals of doubling tripling.
You have -- -- -- six screening fact yeah yeah news and sustainability.
Goes to their practices but then.
He also -- yield and safety the sustainability.
Of their pay caps out how do you judge that.
Well by looking at and very hard analytical way and we look at their historical performance or historical commitment to -- increases we look at their forward projections price projections.
Make sure they have sufficient growth to sustain the dividend and grow the dividend the fact.
So there's a lot of analytics that go go into it as well as well as the quality -- all of these stocks have.
Pretty nice dividend yields only do they do you have that ranges from 5% the high end for the stocks that we've looked at down to.
About 39 which is a little bit below the industry average but the quality of the dividend is so good payout ratio was so low.
That they're very sustainable dividend.
-- -- your thought the best of your index are pretty much all electric.
It's -- a company's.
Although they are yes and that's what we look at -- we're we're dedicated to utility sector of the electric utility sector some of those have drama related natural gas operations as well.
And we look at that the natural gas operations also know call.
Hot called ridiculous no multiple -- -- in there except to -- the leaders that you leaders don't have as much coal or they are moving in very positive directions are reducing their emissions are reducing.
The concentration of -- their portfolios.
So given good grades for that.
One of the perks are supposed to these companies is that there are based -- -- we don't have the sovereign debt you're that's a big issue as well you know no sub note.
Consumed silence on concern to be made him -- to be concerned about.
So look at these companies it expand into other things -- you'll have to go back and retest their sustainability correct.
Yes we -- -- annually we we did we do a check on them every every year and they're staying with unlike utilities of old where they went into banking S and l.s right.
Real -- -- they're sticking to what they know.
And but they're doing a very Smart jobs of this within that context.
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