Jimmy Lee, vice chairman of JP Morgan Chase, made an appearance on CNBC yesterday. He listed the following negative attributes for companies:
According to Lee, there are three basic principles that typically get companies into trouble:
1. Too much debt
2. Too little liquidity
3. Poor risk management
We couldn’t agree more. As we have said many times, the U.S. economy encounters several headwinds next year to cause us to have sluggish growth for an extended period of time. What are the best types of stocks for that scenario?
1. low debt
2. strong cash flow
3. management committed to a solid dividend paying policy
In other words, high quality dividend paying stocks.