The investment objective of Griffin’s European Dividend Growth Strategy is long-term capital appreciation and income.
The Strategy invests primarily in large and mid-capitalization dividend paying stocks that are domiciled in Europe, conservatively financed and trading at a discount to the investment managers’ assessment of intrinsic value.
The key to the Strategy’s success is a disciplined approach to stock picking and portfolio construction. A focus on dividends and low P/E multiples is a major piece of the puzzle. In addition, non-traditional valuation and quality metrics like Free Cash Flow Yield and Return on Invested Capital have enhanced the Strategy’s ability to perform well in all market environments.
HIGH DIVIDEND GROWTH & YIELD
Despite the fact that dividends have accounted for close to half of global stock market returns since 1900 it is often statistically ignored. Numerous studies have shown that dividends not only matter for total return, but also for assessing the quality of a company. Dividends rarely increase unless a company has complete confidence in its own future.
Portfolios with a core holding of high-quality companies tend to outperform and offer some downside protection over a full market cycle, research shows”. High-quality stocks have outperformed large- and small-cap growth and value stocks with substantially less volatility over a full market cycle.
(High Quality Study by Robert Novy-Marx,)
HIGH RETURN ON INVESTED CAPITAL
Long term earnings growth can only be achieved if a company can reinvest excess cash at returns similar to, or higher than, their existing business. A high and rising return on invested capital is a key metric when determining both management’s discipline and a company’s long term prospects.
HIGH FREE CASH FLOW YIELD
One of the most important measures of a company’s health is how much cash it can generate. Earnings alone are not enough to give you an accurate picture of a company’s ability to generate cash. Free Cash Flow Yield helps us analyze what returns you would expect over time if you bought the entire company.