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How to Get Lucky, Rebalancing the Microcaps Millionaires portfolios, and More - Views on News from Equitymaster

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The Equitymaster Research Digest

How to Get Lucky, Rebalancing the Microcaps Millionaires portfolios, and More
Feb 12, 2016

Long-time subscribers would know we had a service called MidCap Select (MCS) which we later folded into The India Letter. I bring this up is because I want to discuss a stock that we recommended under MCS that has gone on to become one of the service's top performers.

The stock is VST Industries. It is up a huge 650% in the last seven years and perhaps has many more years of great returns in store for investors.

As I look back to see why the stock did so well for our subscribers, it's clear that luck played a significant role. Of course, the fact that we recommended it at attractive valuations did help, but what really moved the needle was a change in company's dividend strategy.

Sample this: In the last seven years, the company's dividend payout (profits that the management shares with shareholders) has averaged a whopping 73%. This means out of every Rs 10 the management earned as profits, it has distributed more than Rs 7 to shareholders.

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