An investing strategy that focuses on income first and share-price appreciation second
For investors who have been hungry for income, today’s low interest rates have erased many options from the menu.Peris, head of the Strategic Value Dividend Team at Federated, takes a different approach, focusing on providing an increasing income stream to shareholders of three mutual funds he co-manages.
Focusing on income Peris said the main objective of the Federated Strategic Value Dividend Fund is to provide shareholders a monthly income stream, while also aiming for capital growth over the long term. An important goal of the fund is to increase the portfolio yield by 4% to 5% a year, and Peris expects share-price appreciation to match dividend appreciation.
For the class R shares, dividends distributed during 2018 totaled 27 cents a share. If we divide this by the closing price of $6.15 on Dec. 29, 2017, we have a dividend yield of 4.39% for 2018. Selecting stocks Peris said he and his team look for companies with “a clear path to dividend growth,” and try to avoid companies that may be likely to cut their dividend payouts.
“The U.S. stock market is set up completely differently, where free cash is spent on repurchases,” he said. Here are the top 10 holdings of the Federated International Strategic Value Dividend Fund as of July 31:
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