The objectives for the program are:
As its name suggests, The Dividend Value Discipline™ brings together three critical investment filters: dividends, value and discipline.
Our research function is in-house. We do not depend on any outside analyst(s). One of the great things about having an in-house investment team is that we can ask questions until we are satisfied that we have the right answers. We spend an inordinate amount of time studying the corporate culture and competitive advantage(s).
Our buy strategy starts with the concept of relative strength. If a security is not starting to outperform its peer group and/or the market, there is little incentive to own it. In short, we want to avoid the "value traps". Sell decisions can be triggered by a number of things – when the company fails to materialize as expected, when a company’s stock price exceeds what we believe it to be worth, negative relative strength, or when we find a better opportunity elsewhere.
Unlike most of our competition, we only buy those securities which become attractively priced on a go forward basis, i.e. if you start today and your brother starts three months from now, your portfolios are going to be different in the short-term, and more closely aligned the longer you are in the program together. We call this “The Buys Only Mandate".
The target return is 10% gross, or roughly 8% net of all fees. Depending on the need for income, we anticipate roughly one-half of the return coming in the form of income, dividends and/or trust distributions, while the balance will come from capital growth. Please understand that our focus is on absolute returns, not relative returns.