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Building Wealth Through Rising Dividends

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Rising Dividend Growth Video 

In today’s complex markets, many investors use a company’s dividend history as a way to gauge its overall health and commitment to shareholders. We take it one step further. Simply put, we believe that a company that not only pays, but also consistently raises its dividend, is a company you want to own in the core of your investment portfolio. It is important to remember that dividends are not guaranteed and a company’s future ability to pay dividends may be limited.

Dividend Payers Outperformed the Non Dividend Paying Stocks

RDG Hypo Graph

Source: Ned Davis Research, Morningstar. Dividend Paying and Non-Paying dividend stocks are defined by each stock’s dividend policy that is determined on a rolling 12-month basis. Ned Davis Research classifies a stock as a dividend-paying stock if it pays a cash dividend any time during the previous 12 months. For instance, if a stock pays a dividend on July 1, it will be dividend-paying (or non-paying) stocks. A stock’s return is only included during the period it is a component of the S&P 500 Index. The dividend figure used to categorize the stock is the company’s indicated annual dividend, which may be different from the actual dividends paid in a particular month. Dividend Growers/Initiators is a subset of dividend-paying stocks and included stocks that increased their dividend anytime in the last 12 months. Once an increase occurs, it remains classified as a grower for 12 months or until another changed in divided policy. Investors cannot invest in any index. Past performance does not guarantee future results, which may vary. This information does not represent performance for the Fund.

The S&P 500 Index is the Standard & Poor’s 500 Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index is unmanaged and the figures for the Index do not include any deduction for fees, expenses or taxes. It is not possible to invest directly in an unmanaged index.

Consider Our 10/10 Test

We believe that rising dividend history is an important measure of a company’s financial health and that companies that not only pay, but consistently grow their dividend, perform better across full market cycles. Our proprietary 10/10 test is designed to identify companies that have increased their dividend by 10% on average for 10 years in a row. The result is a focus on quality companies with sound balance sheets, strong earnings growth potential, and a commitment to paying shareholders.

RDG 10 10 test

Differentiated Income through US Energy Expansion

We believe improving technology is increasing production of energy, which may bring forth a renaissance for the US economy. The Fund seeks to capitalize on this opportunity by investing up to 20% of its assets in Master Limited Partnerships. A Master Limited Partnership (MLP) is a publicly traded partnership that is predominantly involved in energy infrastructure and, as a result, exposed to the growing production of US energy sources.  Similar to stocks, MLPs can provide investors with additional opportunities for growth, but they can also provide a hedge against inflation and a differentiated source of potential income.  

RDG Differentiated Income