Our investment process for the DIVIDEND GROWTH PORTFOLIO starts with a universe of all U.S. and multi-international companies paying dividends. Next, we screen out any companies that do not have a minimum dividend yield of 1.5%. Then we screen out those companies which have not increased their dividend in each of the past five years or have actually decreased their dividend in any of the preceding five years. We also eliminate any companies that have a dividend payout ratio in excess of 60 % or an average daily trading volume of less than 200k shares.
From this reduced pool of securities, we then select 20-25 companies that we feel provide diversification among the ten S&P 500 sectors. The primary goal is to generate tax-advantaged income annually with the potential for capital gains over time. The stocks in the portfolio are given an equal weighting vs. using a weighting based upon the relative market cap of each security.
Since dividends are taxed at 15% to 20% (based upon a client’s income level), this approach should be more attractive than interest earned on fixed income investments, which can be taxed as high as 39.6%. And, in periods of rising interest rates, there should be less pricing volatility with these stock holdings vs. fixed income instruments.
The Trend Dynamics Dividend Growth Strategy Portfolio performance returns reflects gross returns. This material has been prepared solely for informational purposes from data sources that are believed to be reliable, and is not to be taken as professional advice. There can be no assurance that your portfolio or positions can achieve the indicated performance due to client directed purchases and sales of securities and capital flows. All information and data provided herein are subject to change without notice. As with all historical data, past performance is not indicative of future results. All investments involve risk including loss of principal.