Historically, dividends and dividend growth have provided investors with a consistent and growing cash flow return. We emphasize companies possessing above-average dividend yields with the financial flexibility to grow dividends in the future. This stream of cash flow can provide opportunity for reinvestment, a steady stream of income for investors, or a portfolio cushion in weak markets.
Valuation history is important in equity selection. Companies are analyzed based on historical valuation ranges of price/sales, price/book, price/cash flow, price/earnings, as well as dividend yield. Equity selection is focused on companies that are trading at a discount to historical valuation ranges and at the upper end of their dividend yield range. Purchasing companies at historically depressed valuation levels provides capital appreciation upside to the portfolio.