Rising Dividend Strategy for Financial Advisors

Time-tested strategies for potentially increasing income

Rising Dividend Portfolios

The Core Rising Dividend separately managed account portfolio invests in companies diversified across numerous sectors, which offer the potential for a yield greater than that offered by the S&P 500, plus the potential for mid- to high-single digit annual dividend growth over the long term. The combination of a current yield greater than the S&P 500 plus the potential for dividend increases offers investors a portfolio that we believe will perform well in both rising and falling markets.

Core Rising Dividend Fact Sheet
Balanced Income 60/40 Fact Sheet
Balanced Income 80/20 Fact Sheet
Core Rising Dividend Income Book

The High & Rising Dividend separately managed account portfolio invests in companies diversified across numerous sectors, which offer the potential for a yield greater than that offered by the S&P 500, plus the potential for mid-single digit annual dividend growth over the long term. The combination of a current yield greater than the S&P 500 plus the potential for dividend increases offers investors a portfolio that we believe will perform well in both rising and falling markets.

High & Rising Dividend Fact Sheet
Concentrated Balanced 60/40 Fact Sheet
Concentrated Balanced 80/20 Fact Sheet
High & Rising Dividend Income Book

The Dearborn Partners Multi-Asset Separately Managed Account (SMA) provides three primary investor benefits. First, the portfolio emphasizes above-average current income. Second, at the same time of providing above-average current income, the portfolio is focused on the discipline of providing a growing stream of income. This growing stream of income is generated primarily through the ownership of dividend-growing stocks. Finally, the portfolio maintains a “go-anywhere” asset allocation, seeking to allocate capital to investments from which we expect the greatest potential return. We attempt to find the best suitable mix of stocks and fixed income while still keeping our risk profile appropriate for moderate income and growth investors.

Multi-Asset Fact Sheet
Multi-Asset Commentary

 

 

Dearborn Partners offers a Rising Dividend Mutual Fund. Please click the link below.

 

Dearborn Partners Rising Dividend Mutual Fund

The Core Rising Dividend separately managed account portfolio invests in companies diversified across numerous sectors, which offer the potential for a yield greater than that offered by the S&P 500, plus the potential for mid- to high-single digit annual dividend growth over the long term. The combination of a current yield greater than the S&P 500 plus the potential for dividend increases offers investors a portfolio that we believe will perform well in both rising and falling markets.

Core Rising Dividend Fact Sheet
Balanced Income 60/40 Fact Sheet
Balanced Income 80/20 Fact Sheet
Core Rising Dividend Income Book

The High & Rising Dividend separately managed account portfolio invests in companies diversified across numerous sectors, which offer the potential for a yield greater than that offered by the S&P 500, plus the potential for mid-single digit annual dividend growth over the long term. The combination of a current yield greater than the S&P 500 plus the potential for dividend increases offers investors a portfolio that we believe will perform well in both rising and falling markets.

High & Rising Dividend Fact Sheet
Concentrated Balanced 60/40 Fact Sheet
Concentrated Balanced 80/20 Fact Sheet
High & Rising Dividend Income Book

The Dearborn Partners Multi-Asset Separately Managed Account (SMA) provides three primary investor benefits. First, the portfolio emphasizes above-average current income. Second, at the same time of providing above-average current income, the portfolio is focused on the discipline of providing a growing stream of income. This growing stream of income is generated primarily through the ownership of dividend-growing stocks. Finally, the portfolio maintains a “go-anywhere” asset allocation, seeking to allocate capital to investments from which we expect the greatest potential return. We attempt to find the best suitable mix of stocks and fixed income while still keeping our risk profile appropriate for moderate income and growth investors.

Multi-Asset Fact Sheet
Multi-Asset Commentary

 

 

Dearborn Partners offers a Rising Dividend Mutual Fund. Please click the link below.

 

Dearborn Partners Rising Dividend Mutual Fund

 

Our Rising Dividend Strategy

Investing in a diversified mix of rising dividend companies can, in our opinion, provide a defensive ballast to an investment portfolio. Rising dividend portfolios offer the potential not only to provide investors with a current income stream but one that can increase over time, while offering a prudent way to participate in the wealth-building potential offered by the stocks of high quality companies over the long term. The Rising Dividend portfolios are co-managed by Carol M. Lippman, CFA and Michael B. Andelman.

Dearborn Partners’ Rising Dividend Philosophy

The Dearborn Partners investment team does not make predictions about the market or the economy or interest rates or any other macroeconomic factors. We concentrate solely on finding high quality, financially solid companies that we think are capable of consistently increasing dividends at rates that can help investors keep ahead of the rising costs of living, i.e., inflation—which has averaged 3% per year for the past nine-plus decades—regardless of the environment. Then we assemble what we consider to be these great companies into well-diversified portfolios. Inflation over the past 11 years has averaged about 2.6%. Dividends paid by the companies in our portfolios have increased roughly three to four times the average annual rate of inflation. Our stated objective for average annual dividend growth is mid- to high single digits.

We are stock pickers. We certainly subscribe to and read a great deal of macroeconomic and market research. We take economic and market strategy views into account as we decide what companies to include in our portfolios. We make no predictions ourselves, however. We believe that always owning well diversified portfolios of good quality companies that pay us dividends while patiently waiting is a viable strategy for building wealth over the long term. Trying to time when to get in and out of the market, and back in again, can result in missing wealth-building opportunities.

Our Approach

In the early 1990s, Carol spent many months researching weekly market data from 1934 to 1989. She discovered that stocks of companies that consistently raised dividends each year did not go down as much in bad markets as did stocks of companies that either paid no dividend at all or did not raise their dividends. As a result of her research, Carol began this strategy in the early 1990s, at the dawn of the dot-com era. At the time, few investment strategies emphasized dividends. As a result of the fortunes lost—twice in one decade—from three consecutive years of negative stock market returns after the dot-com bubble burst in year 2000, and then the financial crisis of 2008, now there are many strategies emphasizing dividends.

 

 

Two primary differences distinguish the Dearborn Partners Rising Dividend Strategy from others: Many of the dividend strategies now available emphasize high yields. Our work shows that high yields frequently indicate high levels of risk, including the risk that the dividend may not be sustainable. Instead, we look for attractive current yields with prospects for dependable dividend growth. Next, many of the current dividend strategies are based on screens of companies with a record of a certain number of years of past dividend increases. Markets trade on the future, not the past. Our strategy attempts to uncover companies for which we have a high degree of confidence that the companies offer the potential for dependable, regular dividend increases.

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