Dividend-Focused SMA Opportunities

Picture of Scott Hohman, CFP®, AIF®

Scott Hohman, CFP®, AIF®

A Low-Volatility Strategy Focused on Yield

This article marks the seventh and final installment in our Investment Strategy Series, where I’ve been introducing each of the valuable elements of our newly enhanced investing strategy for Resolute clients. If you’d like to review any of the previous articles, you may do so through these links:

Today, I’d like to discuss dividend strategy and, specifically, the opportunity to utilize a dividend-focused separately managed account (SMA).

Why Do You Need a Dividend Strategy?

If it’s your dream to retire someday with a steady, passive income, having the right dividend strategy can help you accomplish your goals. Of course, there are multiple ways investors approach dividend investing, and it can be daunting to select the investments in your portfolio that will give you the long-term income you desire. That’s why we’re excited to be offering Resolute clients access to a dividend-focused SMA that takes much of the guesswork out of building your own dividend strategy.

How Does it Work?

The dividend-focused SMA we have partnered with emphasizes holding large-cap stocks as a step to reduce downside risk. This strategy seeks out companies that are perceived to have free cash flow over the next three to five years to support the current dividend.

Traditionally, you might expect this strategy to underperform in strong upward markets, but also to provide more stability during volatile markets.

SEE ALSO: Two Emotional Biases That Could Sabotage Your Retirement

Is it Right for You?

Our offering is designed for investors who are seeking a lower volatility strategy in their stock allocation, with an emphasis on dividend yield. It is a strategy that is particularly well-suited for those who are looking to reduce the overall downside risk in their stock portfolio or those who are seeking income opportunities while still having the potential for capital appreciation. These investors understand that they are likely owning lower-risk stocks, but they do still own stocks and that carries more risk than fixed-income investments. So, utilizing this dividend strategy can be a fit for those who are comfortable with adding risk by reducing some of the fixed income portions of their portfolio and replacing it with income-producing stocks.

Do You Have Dividend Strategy Questions?

If you’d like to learn more about the services discussed in this article, or any facet of our enhanced investment management strategy, let’s talk. If you’re a Resolute client, reach out to your advisor at any time. And, if you’re not yet a client, schedule an introductory discussion so we can get acquainted.

At Resolute, we believe in helping you regain the personal aspect of your advisory relationship and in helping you better customize your investment portfolio. We look forward to getting to know you and your unique goals, and to answer your questions about dividend strategy or about our wealth management and investment management services. Our professional team offers the depth of experience, customized plans, client engagement, and a commitment to providing our clients with confidence in – and ownership of – their respective financial futures. If this sounds like what you may be looking for, reach out today. We look forward to hearing from you!

The views expressed represent the opinion of Resolute Wealth Advisor, Inc. (RWA). The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While RWA believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and the RWA’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.

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