Why Dividends Matter for Equity Investors

Dividends have taken a back seat in recent years, but historically have represented 40% of large cap equity market total returns. In some periods, dividend income was the only return to equity investors. Higher yielding equities provide strong current income plus the opportunity for appreciation without being eroded by future inflation. The Relative Value Dividend Focused strategy’s annual gross yield of 2.9% as of December 31, 2011 was 30% higher than the S&P 500 yield of 2.2% and over 50% higher than the 10-year Treasury yield of 1.9%. Historically, the strategy’s higher yield has provided a downside cash cushion while capturing a significant percentage of strong upside market moves. While there is no guarantee past performance and yield advantage will continue, the Relative Value Dividend Focused strategy’s goal is to have a gross dividend yield in excess of the S&P 500, without the use of derivatives or structured financial instruments.