During the past one hundred years, dividends have provided more than fifty-percent 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.

In August 2000, this breakdown in the market was recognized as an opportunity to launch a new Equity Strategy based on stocks with above-average dividend yields. From its inception through May 2007, Robert Bugg co-managed this Strategy with a focus on consistent performance and low volatility.

Over the next seven years, the Strategy 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. The Strategy outperformed the S&P 500 and its specific benchmarks on a consistent basis. The Strategy proved that investment performance did not need to rely on "home runs"…which are usually followed by a few strike outs. Instead, singles and doubles (with few strike outs) proved to be the Strategy's success.

At Brookmont Capital, we continue to implement a 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 37-40 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 S&P 500, the Russell 3000 Value, and the Lipper Large-Cap Value Median.