What is the goal of the strategy?
Navigator High Dividend Equity is a conservative total return equity strategy focusing on companies with sustainable dividend policies and strong fundamentals for capital appreciation.
The portfolio is a core conservative growth portfolio with above average dividend yield and below average volatility. The goal is to provide the client with consistent dividend income and capital appreciation.
What is CCMG’s investment approach to the equity market in the High Dividend Equity portfolio?
The strategy utilizes a “bottom up” fundamental investment approach which emphasizes consistent growth of earnings as well as dividend growth. We believe it is prudent to focus on earnings and dividend growth through fundamental analysis and the ability of a company to maintain their stated competitive advantage.
On average, we hold 45 to 60 stock positions and seek out companies with higher yield and lower beta than the S&P 500. If corporate earnings, dividends and/or competitive advantage substantially deteriorate, we would look to trim or sell the position.
How is the portfolio diversified?
On average, the portfolio is usually invested in at least eight of the ten S&P 500 market sectors. There may be certain market conditions which cause us to overweight or underweight certain sectors for a period of time.
The strategy can invest up to 15% in publicly traded REITS, preferred stock, limited partnerships or master limited partnerships by way of exchange traded funds (ETFs). These vehicles are sometimes used in an effort to increase the overall yield as well as possibly lower the overall volatility.
Where does this portfolio fit in a diversified asset allocation?
The portfolio is a core conservative growth portfolio with above average cash flow. It is appropriate for equity investors to utilize this portfolio as one of the core equity portfolios and then utilize more aggressive growth strategies such as small cap or international to increase the beta of the overall client holdings.
Can the portfolio be customized?
Yes. Portfolios can be customized to satisfy the client’s unique requirements and goals, income needs and individual tax requirements.
Legacy concentrated equity positions can be transitioned into the portfolio over time to help mitigate tax consequences.
Covered call writing strategies can be utilized in an effort to increase portfolio total return and provide a cushion from downside movement in the portfolio.
Hedging can be incorporated in an effort to lower overall portfolio volatility and to ensure that potential losses in a portfolio are constrained to acceptable levels.
How could rising interest rates affect the portfolio?
Historically rising interest rates have often signaled economic growth. Companies that sustainably grow their earnings as well as dividends are an attractive long term alternative. The portfolio focuses on companies that we believe have the ability to grow earnings as well as their dividend to achieve superior returns with above average cash flow.
Why is the strategy appropriate for today’s climate?
Since the 1930s, dividends represented over 40% of the total S&P 500 Index return. We feel that dividend yielding stocks with the potential for capital appreciation can provide opportunities in all market environments. Dividend paying stocks offer periodic cash flow, which may mitigate the impact of capital losses.
Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The relative strength measure is based on historical information and should not be considered a guaranteed prediction of market activity. It is one of many indicators that may be used to analyze market data for investing purposes. The relative strength measure has certain limitations such as the calculation results being impacted by an extreme change in a security price. Not every client’s account will have these exact characteristics. The actual characteristics with respect to any particular client account will vary based on a number of factors including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment.
Clark Capital Management Group, Inc. reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. The information provided in this report should not be considered a recommendation to purchase or sell any particular security, sector or industry. There is no assurance that any securities, sectors or industries discussed herein will be included in or excluded from an account’s portfolio. It should not be assumed that any of the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein.
Clark Capital Management Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Clark Capital’s advisory services can be found in its Form ADV which is available upon request.