We use a dividend growth strategy to harness the compounding power of growing dividends from high-quality companies over extended holding periods. The effective implementation of this strategy hinges on identifying businesses with sustainable cash flows and growing dividends. Such businesses must demonstrate enduring success, high returns on capital, and robust competitive advantages. It's not just the ability to pay growing dividends that matters, but also the willingness to do so. Our strategy leverages the blend of a company's competitive longevity and a dividend culture that benefits shareholders through a prudent, growing cash dividend stream. We invest in companies with strong dividend cultures, attractive yields and consistent growth rates, or those undergoing aggressive shifts towards this model.
Our potential investments start with systematically excluding low-quality companies to minimize the risk of permanent capital loss. We focus on high-quality enterprises with clear competitive advantages, high return on equity, sensible use of leverage, and solid financial strength - coupled with attractive dividend yield and growth. These are predominantly US large cap companies, but ADR traded international dividend leaders are also considered.