Christopher Liu, CFA, Portfolio Manager
February 18, 2021
It has been said many times before in this blog and it will continue to be said. Companies with a long track record of growing their dividends tend to have enduring business models with sustainable competitive advantages. Crises such as the Covid-19 pandemic - although painful - present an opportunity for market forces to pressure test the health of a company’s business model. A company’s ability to raise its dividend during times of crisis is generally a leading indicator of business model health.
Griffin Asset Management’s Low Volatility Dividend Growth Strategy has 40 portfolio constituents. Among those 40 portfolio constituents, the strategy received a total of 23 dividend raises (including 4 quarterly raises from Realty Income) averaging a +5.53% dividend raise between March 15, 2020 and December 31, 2020. Among the remaining 17 portfolio constituents, 14 did not make a change to their dividend and only 3 companies in the portfolio cut or suspended their dividend.
Dividend Growth businesses are the types of businesses that investors should feel confident about buying and holding for the long-term since dividends can only be raised on a consistent, long-term basis if the company is generating increasingly more revenues and profits over time.
The securities identified and described do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. All material of opinion reflects the judgement of Adviser at this time and are subject to change. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services.