I looked for companies, usually small ones, with the potential to increase their earnings quickly and recommended buying them if that growth was not already "in the price".
It was a fairly mechanical process, which involved comparing the valuation of a company's shares with its profits growth to arrive at a measure we called the PEG, standing for Price Earnings Growth. Basically, a low PEG was good, achieved via high growth or a low valuation or a combination of the two.
You don't read much about PEGs these days for the simple reason that while cheap valuations are 10 a penny, high growth is a great deal scarcer.
The growth that we had got used to during the 1980s and 1990s was – to a larger degree than we thought at the time – a product of progressively cheaper money, consequently rising house prices and ever-increasing debt. That world has disappeared and with it, for the time being, the environment in which anyone would think seriously about launching a publication such as Investing for Growth.
The world investors find themselves in today is very different, at least in the developed world. A low-growth environment in which rapidly rising earnings are the exception. It is a world that investors before the 1980s would easily recognise, one in which income, not growth, is the principal driver of returns.
When investors come to expect double-digit capital gains each year, it is unsurprising that they are uninterested in the extra few percentage points of return chipped in by a company's dividend. It's nice to have, no more. But those kinds of super-charged returns have in recent years been rapidly wiped out by similar-sized falls so that the net gain after a so-called "lost decade" has been negligible.
Over very long periods, almost all the gains from investing in the stock market can be attributed to the reinvestment of dividends. We forgot this in the Investing for Growth years.
Something else we forgot during the low volatility years of what has been called the Great Moderation is that dividend income is a great deal more stable and predictable than economic growth, company profits and so share prices. Company bosses will do almost anything to avoid cutting their dividend because they tend to pay for it with their jobs.
Another thing we are going to have to get used to in our low growth but volatile world is persistently low interest rates. This environment of paltry returns from both cash and government bonds is another reason why investors are going to become increasingly attracted to companies able to offer a high and sustainable income.
For as long as inflation is still a problem, equity income also provides one of the few ways of generating a real return in excess of the cost of living.
The generation of that high and sustainable income is furthermore an indication of a company's quality. It is no coincidence that some of the most attractive dividend yields are currently being paid by the big multinational companies that are also most exposed to the places in the world where there is actually still some decent growth, the emerging markets.
Dividend income, unlike that from fixed interest securities like bonds, tends to grow over time. For the past 50 years or so that has meant investors have been prepared to accept a lower ongoing yield. But today many blue-chip companies are paying a higher yield on their shares than their bonds. High and growing income is a powerful combination.
With the developed world's baby boomers edging towards retirement, the demand for income-generating investments can only increase. If I were looking to relaunch that newsletter today, I can't help thinking it would be called Investing for Income.
Tom Stevenson is an investment director at Fidelity Worldwide Investment. The views expressed are his own. He tweets at
@tomstevenson63
