When grouping companies, using data analytics, interesting observations and phenomena, become visible across those groups.

When companies start paying dividends, they may still go through their early growth cycle where dividends aren’t always paid, not always increasing, showing higher volatility - towards a very mature and stable company that pays consistent, sustainable, increasing dividends and showing less volatility.

The extent to which a share's price grows over time may exceed the growth of that company's dividends and earnings as the market favour some shares.

Very large and stable companies carry less risk and provide consistent dividends but not good capital growth. Simultaneously, smaller companies are riskier but provide much higher capital growth or losses and lower dividend returns.

Each element of the balance sheet data is measured relative to its average and is accordingly awarded a score which is used to identify distinct groups of companies. This score/number offers a precious quality rating of each company within the mentioned quality categories. In addition, it includes share price or market inputs, which reflect investor sentiment. Therefore, some parameters are weighted according to importance, as shown in the heading of the columns.

Calculating the average of the measurements within each group uncovers hidden phenomena. We notice that the values from quality shares are higher than the group averages. Further, each group shows unique characteristics around volatility, risk, and return. If we calculate the risk/return ratio, we even notice which groups offer better returns for less risk, and which groups offer very high returns for high risk.

A high-grade company may have low financial leverage (assets/equity), high cashflow coverage (total cash flow/long-term debt), and a high cash position (cash/assets).

The economy influences the entire market, and therefore, a company's performances. Some companies will fall out of one group into another. Incoming tides lift all the boats.

By using these observations, it's possible to create a portfolio that matches an investor's risk profile.

The Favourite group offers the highest return at the lowest risk but offers the highest 5year dividend growth and highest 10-year price growth with the least market volatility. Thus, these shares are for investors that prefer consistent dividend income.

For example, a portfolio may comprise shares across the groups to form a balanced portfolio, with shares that provide price growth, dividend growth and balanced risk.

1. If you need high income growth, you will select fewer shares in your portfolio and have, for example: 1x Favourites + 1x Tightly + 2x Bluechips + 2x Rising starts + 1 Maverick

2. If you need high dividend growth, you will select more shares in your portfolio and have, for example: 3x Favourites + 2x Tightly + 3x Bluechips + 2x Rising starts

The system also creates lists showing unique characteristics.

a) Fundamental quality with the highest historical dividend growth rates

b) Fundamental quality with the highest historical price growth rates

c) Shares with a higher risk but achieved highest dividend growth rates

d) Shares with a higher risk but achieved highest price growth rates