What Will Drive Return?
PDF
Earnings drive stock prices over time. This simple truth is evident in the past century’s market performance. Over the past 100 years, both the S&P Composite index and S&P Composite
Rising Dividend Portfolio
Separately Managed Account
This portfolio seeks quality, large-cap companies with rising dividends at reasonable valuations. A quality company should have low debt, stable cash flow, and productive assets. We generally look for firms with five or more consecutive calendar years of dividend increases. Moreover, we attempt to buy these quality companies without paying premium prices.
Quality
The watchword for the WCA Rising Dividend Portfolio strategy is quality. We look for resilient, conservatively-financed businesses with a competitive advantage. Academic studies show that quality is one of the few market anomalies that tend to persist over time.
Steadily Rising Dividends
Eligible companies must have demonstrated at least five consecutive years of dividend increases. Failure to raise the dividend is grounds for removal from the portfolio. Yet, we do not see a rising dividend as an end in itself, as much as a means to find quality. Thus, dividend growth rather than dividend yield is most important to us.
Value
Quality endures and we seek to buy it at a reasonable price. We use a proprietary valuation process using leading-edge techniques.
Style Considerations
We seek solid risk-adjusted returns and income growth, but no strategy outperforms in all markets. Quality styles tend to perform better in flat to down markets, but lag in strong bull markets. Because the strategy avoids high debt and volatile earnings, performance can differ substantially from traditional value strategies.
Related Commentaries:
Good Advice
PDF
Investors have done well to heed Marty Zweig’s advice “Don’t fight the Fed” since he published his 1970 book, Winning on Wall Street. The idea has generally stood the test
Asking Better Questions
Download PDF
Just because something is popular does not mean it is right. Take, for example, the ubiquitous use of the “value and growth” labels in investing. Most portfolios end up
Recession or Booming?
Download PDF
The economy is either in recession or booming. This is what the headlines are telling us each week. So, against this muddled stream of seemingly conflicting and contradictory information,
When Going Gets Tough: Quality or Yield?
Where do you want to be invested when faced with the prospect of a bear market? Some say that high dividend yields provide protection when stocks fall. This implies that
Beta, Revisited
The U.S. stock market has soared to $52 trillion from $33 trillion in value in the past two years, a 56% rise. Naturally, many are now worried about holding on
Putting Dividend Growth to the Test
Adobe
The “Case for Rising Dividends” rests on a crucial proposition: that dividend growth tends to point to quality. In this brief, we wish to put this proposition to the test
Risk in Portfolio Management
There is more risk in the world than most people realize, and it is often inadequately measured. Frequently practitioners measure risk using “standard deviation,” which assumes returns are “normal.” But
Basic Math
Imagine two stock investments. We will call them Exciting Company and Boring Company. Exciting Company has lots of new and exciting prospects but faces lots of uncertainties. By contrast, Boring
What Price for Quality?
Easy money policies and rising debt lead us to focus on quality first. In past commentaries, we made a case for owning high-quality firms over low and offer an alternative
The Magic Garden of Growth
The gardener must sow seed in fertile ground for a garden to grow. Once planted, young seedlings must be cared for and cultivated. If all goes well, the seed grows
Illusion and Reality
Our economy grows decade to decade, with corporations capturing an increasing share of global income in the form of profits in recent years. Along the way, low interest rates prompted
WCA Equity Investing
Portfolio Factsheet
Dividend Announcements
Cornerstone Commentary
Dividend Investing
