Geraldine Weiss

Trading Legends: Geraldine Weiss

Folks who ignore the importance of dividends in making stock market selections are not investors. They are speculators.Geraldine Weiss

Investing is a serious business, so why take risks when you can make a good return without doing so? This is the attitude of blue chip stocks guru Geraldine Weiss.

Called “the Grand Dame of Dividends” by the Los Angeles Times, Weiss maintains that the best way to invest is to back solidly-performing companies consistently paying dividends. A regular payout to shareholders, she argues, is the best indicator of corporate financial health – a much better one than an earnings figure, which can be manipulated. Investing this way also means that investors don’t have to wait until they sell shares to receive an income from them.

Her approach is not just buy-and-hold, however. Regular trading, if conservatively, is a important part of her strategy. She advises that investors should monitor the dividend levels and share prices of dividend-paying companies and regularly adjust their portfolios to ensure they include only ones paying historically high dividends for a share price that undervalues them.

Click to buy the book, Dividends Don't Lie by Gerladine Weiss

Weiss, born in 1926 in San Francisco, studied business and finance at the University of California after graduating from high school. However, she only began formally developing her investment theory in her thirties after marrying and having children when she wanted to increase her and her naval officer husband’s modest income.

As her interest in investment grew, she tried to find a job in the sector. But, because of the sexist attitudes of the time, she was only offered work as a secretary. Undeterred, she instead set up an investment newsletter business, Investment Quality Trends (IQT), with her broker and, after it saw some success, bought him out.

Gender continued to be an obstacle, however. Weiss, whose family had experienced anti-Semitism when she was a child that led her father to change their surname, found it difficult to convince some potential clients that a woman could provide good investment advice. The way to get round prejudice that she chose, like Harry Potter author J.K. Rowling many years later, was to sign her work for many years using only her initial – “G. Weiss” – rather than her full first name.

The business thrived, and Weiss became the first women at the head of a successful investment advice newsletter. She also became a popular commentator on investment in print for publications including Fortune and The Wall Street Journal and at events and on television. She published two bestselling books that explained her theory: Dividends Don’t Lie and The Dividend Connection. Though Weiss retired in 2002, her newsletter is still going strong, these days as an online service.

Click to buy the book Dividends Still Don't Lie, by Kelley Wright

The Weiss way of investing was always geared towards safe rather than spectacular returns. Detractors might also say that an approach that IQT itself describes as “wonderfully old-fashioned” is now even more limited because it has failed to take account of Silicon Valley giants like Apple, Google and Facebook that have dramatically changed the US blue-chip landscape.

Despite her Californian roots, Weiss is not a fan of these dividend-adverse but strongly performing behemoths. “A company that has been around as long as Apple and has been as innovative as Apple is a selfish company if it doesn't want to share some of its good fortune with its stockholders” she told a reporter in 2014. She much prefers the more conventional food and pharmaceuticals sectors.

Taking the Weiss approach would still serve an investor very well to this day, however. Between 2000 and 2016 the “Lucky 13”, the portfolio of stocks recommended annually by IQT and currently including Boeing and Coca-Cola, outperformed both the S&P 500 and Berkshire Hathaway, the investment vehicle of Weiss’s bridge buddy Warren Buffet, another of our Trading Legends (see below).

Trading Legends: Warren Buffett

As her successor at IQT, Kelley Wright, says in his 2010 book about her theory, Dividends Still Don’t Lie, Weiss has proved that “Wall Street is no match for mom’s common sense and experience.”

Fear and greed abound, patience and discipline are rare. For the value investor to be successful you must strive for the latter and resist the former.IQT