Crawford Dividend Yield

The strategy’s investment objective is to offer above average dividend yield and attractive total investment return with below market risk. Crawford believes that across an uncertain equity investment landscape, many participants continuously underestimate the variability of returns from individual stocks and the market overall. In an effort to overcome some of the inherent uncertainty in equity investing, the firm focuses on high quality companies. The firm believes characteristics of these companies enhance visibility and predictability of the portfolio, which narrows the potential range of investment outcomes.

Dividends are an important part of the firm’s philosophy, as yield represents a key component of total return over time. Income is a factor that gives value to stocks and improves predictability of return, and a consistent and growing dividend often demonstrates a company’s ability to generate a sustainable and growing cash flow stream. Because the firm believes that dividends and quality are, in most cases, aligned, a company’s dividend history is utilized as the initial indicator of quality. 

The firm agrees with empirical studies that highlight the merits of investing in higher yielding stocks. In fact, over extended periods of time, higher yielding securities have experienced an absolute return advantage when compared to lower yielding peers. The firm believes that high yield coupled with high quality can produce income with lower volatility and help protect capital in declining markets. It is for these reasons that the Crawford Dividend Yield strategy focuses exclusively on high quality securities and targets an overall yield in the 8th – 9th decile of all U.S. dividend-paying stocks. The firm also seeks to mitigate interest rate risk through both its quality orientation and broad sector diversification. 

The goal of the strategy’s investment process is to identify high quality companies and invest in them when risk/reward is positively skewed, which often occurs when short-term business conditions deteriorate or other market considerations reduce valuation, and over a longer-term time horizon, allow the company’s fundamental progress, valuation improvement, and dividend stream to contribute to a favorable total investment return. The strategy adds value through a fundamental, bottom-up investment process that seeks to create an information advantage, enabling long-term investors the opportunity to capitalize on behavioral biases and periodic inefficiencies in the pricing of high quality, dividend paying stocks. Constructing a portfolio of high quality, high yielding, and undervalued securities enables the firm to provide attractive, risk-adjusted returns over a full market cycle, while avoiding much of the volatility typically associated with equity investing.