The Top 20 Dividend Stocks portfolio seeks to outperform the S&P 500 by at least 1% per year over any five-year rolling time horizon while generating safe, growing dividend income every year.
We expect the portfolio to underperform in bull markets and outperform in bear markets due to the higher quality level of its holdings.
Total return is expected to be composed of:
2.5% – 3.5% dividend yield
7% – 9% earnings growth
We invest in high quality companies with enduring competitive advantages, long operating histories, shareholder-aligned management, and large markets that provide opportunity for long-term growth. These businesses maintain reasonable payout ratios, generate consistent free cash flow, and have healthy balance sheets, providing a sturdy foundation for consistent dividend increases.
When we make an investment, we take a patient, long term investment horizon and expect to hold the stock for at least five years, keeping portfolio turnover low. Generally speaking, we will only sell a stock if the safety of the dividend payment has come into question, the company’s long term earnings power appears to have become impaired, the stock’s valuation reaches seemingly excessive levels, or we find a more attractive idea.
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