Tactically Investing in Dividend Stocks in an Attempt to Minimize Risk
The Day Hagan Tactical Dividend strategy views dividends as an objective, controlled means of valuation, as earnings are often subjective and uncorrelated to future corporate performance. Companies that have a history of consistent dividend payouts, balance sheet strength and sound corporate fundamentals may prove resilient to downturns and are considered valuable during upmoves. Historically, S&P 500 companies paying or increasing dividends tend to outperform those that are cutting or not paying dividends. We believe investors should focus on companies that are maximizing and returning wealth to shareholders.
- Diversification is important; single industry exposure is limited to 20% of the portfolio at cost and single equity exposure is limited to 5% of the portfolio at cost
- Favors industries with relatively high dividend yields, low debt, strong cash flows, good margins and the ability to maintain and grow the dividend payout
- Utilizes long-only stock market exposure, attempts to minimize portfolio turnover (thus providing tax-efficiency) and allows for daily liquidity and transparency