Why does a fund that has underperformed its benchmark for the past five, 10 and 15 years have $20.4 billion in it? The answer is that investors with long memories are still willing to pay professionals not only to screen stocks for quality but to gain further insight through access to management.
“Companies that have demonstrated sustained dividend growth tend to hold up well in challenging markets,” Nicholas Getaz, a manager of the fund said during an interview. He has co-managed the fund since 2014. Donald Taylor has been the lead manager since 1996. The other co-manager is Matt Quinlan. Microsoft is paying a quarterly dividend of 46 cents on its common shares, which makes for a yield of only 1.33%, based on the closing price of $137.86 on Aug. 30. Then again, the company increased its dividend by four cents, or 9.5%, in September 2018. With such strong numbers, it is reasonable to expect the company to increase the dividend again by a significant amount later this month.
Getaz said he, the other fund managers and their analysts follow “a debate-driven consensus-oriented process,” to narrow down investment candidates after an initial screen that includes:• A payout ratio below 65% of earnings. “One of the advantages with meeting with management is taking a sampling, over the long term, of how they answer the same question,” he said.
Two other companies Getaz discussed with cultures he admires are Linde PLC LIN, +1.29% and Air Products and Chemicals APD, +0.45%.
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