One of our founding principals, Tom Cameron, pioneered cash dividend growth investing in the 1960s and went on to run one of the most significant mutual funds on Wall Street in the 1980s. Our other founding principal, Troy Shaver, contributed his more than 40 years of experience investing in energy infrastructure as well as the acumen of running several of Wall Street’s largest asset managers. Joining with other industry veterans in the early 2000s, they created Dividend Assets Capital based on a straightforward dividend growth investment philosophy that has endured the test of time and is still at the core of our process.
Though we customize portfolios to meet individual client objectives and preferences, our 3-D method drives our stock selection. Most equity portfolios hold 35 dividend-generating stocks, across many industries and sectors. While strict sector weightings do not bind us, we are sensitive to diversification considerations. Although the majority of our companies are large cap, our portfolios also include small and midsize companies, providing further diversification. Portfolio turnover is generally low.
As we construct each portfolio, we have the flexibility (for those clients seeking higher current income) to purchase securities that provide attractive income yields, such as Master Limited Partnerships (MLPs). MLPs issue K-1s which, depending on the tax status of the portfolio, may defer tax liability. Our sell discipline is straightforward. We sell when we think fundamentals are likely to deteriorate, valuations are excessive, or we have a better investment opportunity. In addition, companies whose dividends fail to increase are subject to review for likely sale.
The DAC Equity Strategy is a concentrated portfolio of high-quality, dividend growth stocks. It is designed for investors seeking increasing dividend income and long-term growth of principal with reduced market volatility.
The strategy employs DAC’s distinctive, dividend growth process, requiring a company to grow dividends by at least 10%, on average, for a minimum of 10 consecutive years. This process endeavors to identify high quality U.S. and international companies that offer a combination of earning profitability, cash flow sustainability, reasonable financial leverage and consistently increasing dividend payouts. These stocks tend to be large, well established companies with unique competitive advantages. While the majority of holdings are in large companies, the Equity Strategy also offers diversification among small and mid-size companies.
Investments for our Equity Portfolios are selected across many industries and sectors, favoring companies in a growing global economy. Each portfolio is constructed to help the investor meet their objectives, which may include greater income, tax considerations, and risk tolerance.
The DAC North American Midstream Energy (“NAME”) Strategy invests in high quality, publicly traded midstream energy Master Limited Partnerships (MLPs) and C Corporations that derive a majority of their earnings and cash flow from gathering, transporting and/or storing energy commodities. It is designed for investors seeking higher income than more traditional investments offer as well as portfolio diversification and the potential for long term, capital appreciation.
Within our midstream universe, we seek companies that have historically consistent rising distributions, strong balance sheets and diversified, high quality, energy infrastructure assets. We focus on factors such as cash flow durability, geographic footprint, investment grade credit quality, attractive valuations and strategic plans to benefit from renewables and other advancements toward a clean energy economy. Investments for our NAME Strategy generally offer the potential for greater diversification in an overall investment strategy than traditional stocks and bonds.
The DAC Equity Income Strategy is a growth and income portfolio of investments in dividend growth stocks as well as midstream energy companies and Master Limited Partnerships (MLPs). It is designed for investors seeking enhanced income and growth of principal through an equity investment with reduced market risk.
DAC seeks to invest in high quality U.S. and foreign corporations and midstream energy investments that offer a combination of earning profitability, cash flow sustainability, reasonable financial leverage and consistently increasing dividend/distribution payouts. A majority of the holdings will be stocks of large, well established companies identified through DAC’s investment process requiring dividend growth of at least 10%, on average, for a minimum of 10 consecutive years. A balance of the remaining holdings are publicly traded midstream energy MLPs and C-Corporations that offer the opportunity for higher income and the ability to participate in the energy sector while historically demonstrating less volatility than the underlying commodity. Each portfolio is constructed to help meet the investors’ objectives, which may include asset growth, greater income, tax considerations, and risk tolerance.
The DAC Sustainable Dividend Growth Strategy weighs environmental, social, and governance factors alongside financial factors, reviewing a company’s operational standards as success indicators. It is designed for investors seeking long-term total return with reduced market volatility from a portfolio of dividend paying securities that integrate favorable environmental, social and governance (“ESG”) characteristics into their business management.
Rapidly increasing in popularity, ESG criteria inform socially conscious investors of a company’s values, stewardship, relationship management, community impact, and other sustainability factors. It is also useful in helping investors avoid practices that indicate negative impact and therefore greater risk. Portfolios will have some flexibility to be constructed in alignment with investors’ specific sustainable investing requirements. ESG investing enables clients to say they’ve “put their money where their values are.”