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:
- Which is Sturdier: A Three-Legged Stool or a Four-Legged Chair?
- Investing in Individual Stocks and ETFs Through Separately Managed Accounts
- How Resolute Clients Benefit from a Network of Research Groups with Targeted Expertise
- Investing in Emerging Technology, Innovation & Digital Assets
- Impact Investing and Values-Based Investing
- Tax Management Overlays and Tax Loss Harvesting
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!
