The Investment Strategy of our Dividend Growth Portfolio is straight-forward: construct a stock portfolio of high caliber companies that we believe can collectively deliver double-digit dividend growth annually while incurring only moderate risk. Our investment process is designed to create a portfolio with attractive performance and risk characteristics.

1. Quantitative Metrics Screening: Our investment process starts with an initial screen to define the investable universe. We begin with approximately 11,000 U.S. listed securities to identify companies that have increased dividends for at least five consecutive years. We also identify companies in our initial screen that have sufficient liquidity to trade. Today, our initial screen generates an investable universe of approximately 350 companies.

2. Growth and Quality Screen: We follow our initial screen with a secondary screen that focuses on specific growth and quality characteristics to identify top candidates within the universe. Our secondary screen generates a select list of approximately 120-140 companies.

3. Tertiary Screen: Environmental, Social and Governance (ESG): Our portfolio has conformed to ESG standards since 2008 by excluding companies involved in alcohol, gambling, tobacco, civilian firearms, military weapons and nuclear power.

4. Bottom Up Fundamental Research & Analysis: We perform rigorous, fundamental, bottoms-up research on 120 to 130 companies to identify and select the top candidates for inclusion in our portfolio. We focus on a company’s competitive position, strategy, and market as well as its growth outlook, and build detailed, financial models to evaluate each characteristic. We believe financial models are important to determine key business drivers, identify opportunities, evaluate risks, perform sensitivity analysis, and project future earnings and dividends.

5. Portfolio Construction and Management: To build the portfolio we select those companies with the best expected returns in a variety of industries and sectors, those with attractive valuations at purchase, and those exhibiting lower volatility. We aim to have exposure to most S&P sectors. The result is a diversified group of 20 great growth-oriented companies.