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Front Street Financial is a professional investment office and advisory firm. Our investment framework is designed to combine the advice and best practices of some of the world’s most successful investors. We assembled this knowledge and take pride in delivering it’s value to a diverse investor base.
With that in mind, we believe having a core investment in a diversified group of dividend stocks make a great portfolio for any client.
The objective of the Dividend Growth Strategy is to invest in companies that look to return income back to investors in the form of dividends. We seek companies that not only pay dividends, but also have a track record of growing those dividends every year. Over time, dividends have made up a substantial portion of the total return of the S&P 500. As a general rule, companies are reluctant to cut a dividend after they issue one because it sends a strong negative signal, thereby incentivizing them to prudently maintain their balance sheets and their ability to pay a dividend. It’s this “fixed income” component of dividend-paying stocks that generally provides support when the broad- er markets fall. Investing in companies that pay dividends has insulated portfolios from larger losses and translated into lower volatility for investors. While U.S. inflation and bond yields are secularly low, many leading dividend payers have yields that exceed both. While looking at companies that pay dividends, we realize that our global economy, population demographic and tastes are all changing. What was popular, innovative or extremely reliable just 10 years ago is not necessarily leading the pack today. Simply put, companies like General Electric are not the same behemoths that they once were. Here at Front Street, we take innovation and corporate leadership into consideration when constructing our clients’ portfolios.