In an effort to help my clients navigate this time of uncertainty, my team and I at the Susan O’Brien Group created a five-part series of calls titled, Financial Wellness During a Pandemic. On April 28th, I chatted with Sri Iyer from Guardian Capital. Sri’s global mandate focuses on dividend growth and sustainability. What makes Sri and his team unique is their depth of experience and their use of artificial intelligence.
As a Calgary financial advisor and expert in wealth management, I work with a network of highly knowledgeable, innovative individuals like Sri. In fact, we’ve been working together since 2006. As Sri said in the call, the relationship is critical when it comes to asset management because we each know our roles and responsibilities. He used the analogy of a doctor and surgeon. I’m the doctor, coordinating the master plan, while Sri is the surgeon, investing money for my clients, which is one specialized area of your overall financial plan.
During these interesting times, Sri is managing close to $3.2 billion and most of Guardian’s assets are in quality companies that pay dividends. He says the thing that people are concerned about and asking in the current situation is: are dividends safe? He notes it’s such an irony that we buy dividend stocks and try to protect the downside and precisely when things go bad, we wonder whether a company will cut its dividends and whether their income is sustainable. Thankfully, both the Susan O’Brien Group and Guardian Capital have processes in place to protect our clients.
Sri talks about how he invests our client’s money in 40 global gorilla companies around the world that pay a sustainable dividend. He calls it collecting rent for you on behalf of the Susan O’Brien Group and paying you that rent in the form of dividends. He praised our decision to go global. The portfolio consists of technology companies, pharmaceutical companies, biotech companies, industrial and garbage collection companies, among others, from around the world. All of these companies still do pay rent. While Sri says there were companies they had to exit, by using his GPS approach – Growth, Payout and Sustainability – he’s been able to ensure the yield provided is safe, sustainable and continues to grow. He cautions against yield for yield’s sake saying, if it can’t be paid out, what’s the point?
Sri says you can’t take your money and put it under the bed. You won’t retire. You have to invest and he has been able to find great companies that are paying rent and growing in this market. For example, Guardian bought European pharmaceuticals and the revenue in these companies is looking to be enormous in the future. In addition to pharmaceuticals, secular technology companies and consumer staples like companies that make toothpaste and diapers are all doing really well. We transitioned clients towards this path to make sure their portfolios are strong and still paying a good dividend.
The next decade of investing will be about dividend growth, Sri predicts. We’ll be looking at which companies have the ability to stay in business, grow their business and pay something out to investors over the long-term. Yet, the context of how life is lived and business is done has been disrupted. That’s where artificial intelligence comes in front and center.
Sri and his team use artificial intelligence to analyze data. It takes all of the profit and loss and balance sheet data for thousands of companies in the world, across multiple time horizons. They also factor in sentiment data, which includes everything from Twitter feeds to the news written about companies. The statistical machines learn from the data and predict the future growth rate of dividends from the companies. Artificial intelligence machines allow him to objectively manage the risk for dividend strategies by predicting the forward dividend growth rate with a high degree of accuracy. Yet, Sri is careful to point out, artificial intelligence isn’t replacing people. It’s an “and” function and not an “or” function. It takes experience and human intelligence to correctly interpret the findings and implement a strategy.
The call closed out with Sri discussing the economic outlook. He predicts we’ll see some significant disruption in the EPS cycle of certain sectors and in certain industries and suggests avoiding consumer-driven stocks. Yet, he also says there are strong reasons for the market to hold up right now with free money being pumped into it and certain industries and sectors benefiting from the pandemic. By using objective ways of managing money and combining artificial intelligence with our human intelligence, he believes we’re well positioned for this economic cycle.
If you’re feeling overwhelmed and want to be in a position to not only weather this storm but build wealth, contact me today. I use my Net Worth Thinking Lens to create a fully realized, integrated, long-term financial plan that is always adapting in order to serve your needs in any situation. And, be sure to tune in to our next webinar on Thursday, May 28 at 1:00 pm MST with Picton.