The WCA Rising Dividend strategy focuses on quality large-cap value companies with rising dividends at reasonable valuations. To be considered a quality company, we look for low debt, stable cash flow, and productive assets, measured as return on capital. Portfolio companies must have demonstrated dividend increases for at least five consecutive years, with ability to further raise the dividend over time. The portfolio is a long-only equity strategy, diversified across a range of sectors, industries, and issuers.
Portfolio companies must have demonstrated at least five consecutive years of dividend increases. Failure to raise the dividend is grounds for removal from the portfolio.
The watchword for the WCA Rising Dividend Portfolio strategy is consistency. Therefore, the selection process favors companies with strong balance sheets and consistent earnings that are capable of sustained growth of shareholder value.
We believe that chasing yield without regard for capital growth is folly. Therefore, this portfolio seeks companies we believe are capable of growing the dividend as the result of expected improvement in earnings and free cash flow.
Because the portfolio does not focus solely on yield, the WCA Rising Dividend Portfolio is free to invest across many sectors and industries. We limit exposure to a single sector to 30%. While diversification does not eliminate the risk of investing, and losses are possible in diversified portfolios, the goal is to increase returns while reducing risk.
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