Straightforward Rules
Buy Criteria
- High-quality companies within all sectors from the S&P 500 and the Russell 1000 Value indexes
- Dividends paid out of free cash flow - a sign that a company is not over-drawn and has a strong financial foundation
- Long history of steadily increasing dividends - exhibits continued strength and growth and shows a dedication to investors
Sell Criteria
- Reduction in dividends - Company’s performance is likely trending downward soon, prioritizing protection over growth
- Elimination of dividends - Company’s performance is likely trending downward in the immediate future, a drastic course correction at the cost of investors
- Dividend payout ratio >80% - Indicates dividend is under stress and has potential for a reduction Close attention is paid to the quality of the balance sheet, including profitability, free cash flow, & earnings’ growth
Our Process
Close attention is paid to the quality of the balance sheet, including profitability, free cash flow , & earnings’ growth
We pick stocks from each sector in the S&P 500 and quarterly reassess the portfolio. We evaluate each sector for companies with large market cap and high potential for earnings growth, while looking at future estimated earnings growth 5 years out. Ideal companies have a track record of increasing dividends year over year, keeping things simple and transparent.