|
During the past one hundred years, dividends have provided more than 40% of the stock
market's total return. However, quarterly dividends offer shareholders more than just a
stream of income. Dividends are also an indication of a company's financial health. In the
1990's, investors ignored the latter attribute as accounting irregularities and dreams of
overnight wealth replaced this basic market fundamental.
Over the past nine years, investors have witnessed numerous market environments,
including a three-year bear market, September 11 and the War in Iraq, escalating energy
prices, a rise and fall in the housing sector, and the implosion of sub-prime loans. As a result,
most portfolios have ridden a roller coaster of volatility where losses will take years to
overcome. Mr. Bugg's investment philosophy is equally focused on protecting against
potential losses in a down market and upside performance during a bull market. The Strategy
does not rely on "home runs"…which are usually followed by strike outs. Instead,
singles and doubles (with few strike outs) have proven to be the Strategy's success.
At Brookmont Capital, we offer a core diversified Equity Strategy that is comprised of
dividend-paying stocks. We do not restrict our holdings to a specific "box" or category.
Instead, we go wherever there is value and management's commitment to rewarding its
shareholders with a rising dividend payout. The Strategy's holdings will include small
through large-capitalization stocks, domiciled in the U.S. or around the world, and considered
to be value, core, or growth styles.
The Strategy will hold 35-40 individual names that are diversified among each of the ten
sectors in the S&P 500. Our holdings have been screened based on their credit ratings, ability
to increase their dividend in the future, quality of management, and position within its
specific industry.
The Strategy is tax-efficient with a turnover ratio of 20% or lower. Volatility is managed
(Beta=.80) with a standard deviation that is below market average. With a yield that is twice
the S&P 500, the Strategy provides a current stream of income that qualifies for the 15% tax
rate on dividends. The Strategy is benchmarked against the Russell 1000 Value Index.
The Brookmont Dividend Equity Strategy:
- No constraints on domicile, market capitalization, or style
- Portfolio average dividend is 50% higher than the S&P 500
- Average credit rating is A-
- 97% of the Strategy's annual income qualifies for the 15% tax-rate on dividends
|
