Why Dividends Now?

Why We Are Confident

Recent Research on
Dividends

The Power of Compounding

Investing in companies whose dividends are increasing in a consistent fashion is a time-tested approach and is appropriate for many investors, regardless of market environment.  As the U.S. economy continues to expand and change, and as the global economy becomes more integrated, the investment landscape has, and will continue to change.  We have found that when we combine The Rising Dividend Philosphy with a thoughtful grasp of the fundamental forces driving both the world economy and the companies in our universe, we can create portfolios with the potential for growth of both income and principal.

Current Outlook

Growth of dividends for those companies in our universe that have raised their dividend every year for at least ten consecutive years, and at a rate of at least ten percent, has continued in 2007.  The early dividend announcemtnes in 2008 show a similar pattern.  The factors supporting this trend are:

• Rising dividend companies tend to have solid finances, enabling them to weather economic uncertainty.
  
• Many of our companies are doing business in the global market place which provides a counter balance to the weakening domestic economy.
  
• Many of our companies are providing essential products or services for which the need on the part of the customer can not be postponed.                                                              
• The current economic uncertainty should, we believe, focus investor attention on the cash payout that is received in the form of the dividend.                                                 

Key Trends in the Stock Market

• Total returns will probably be lower for the remainder of the decade.
  
  
• Current yield is likely to be more important than capital appreciation.
  
  
• Companies that generate cash should attract more attention.
  
  
• Dividend growth will come from companies with pricing power.
  
  
• Investor sentiment is shifting as the retirement population explodes. Retirees need rising income.
  
  
• Overall, most themes will tend to be global, not isolated to one country.