Dividend investing key to market volatility

November 13, 2012

A focus on companies that have a track record of growing dividends is the key to a low-volatility strategy

What is the investment approach taken by Leon Frazer?

Up to 60% of the portfolio is invested in the backbone of the Canadian economy – regulated companies in the pipeline sector, utilities, telecoms and financial services. Says Douglas Kee, Leon Frazer’s chief investment officer, “We invest in sectors people need everyday. You turn on your lights. You heat your home.

“Companies that provide these services tend to have better earnings, cash flow prospects and are less volatile than other sectors” says Kee. “In up markets, we capture 70-80% of the market returns. In down markets, the portfolio is typically down only 40-50% of the market.”

Market volatility may be here to stay. Which is part of the appeal of a dividend growth strategy. “If you are going to be in equities you want a low-volatility strategy,” says Kee. “And you get that focusing on companies that have a track record of growing dividends.”

It seems so simple.

“It is simple if you stick with it over time,” says Kee.