Investment Strategy
- 30-45 undervalued non-US equities with a focus on developed economies
- Growing earnings & dividends
- High current dividend yield (goal of above 4.5%)
Portfolio Managers
Strategy Attributes
The International High Dividend Value portfolio gives investors a way to participate in the long-term upside potential of international equities while at the same time providing greater than average downside protection, given dividend yield support. While the foreign markets provide considerable upside potential, they are also exposed to additional political and currency risk. We believe the combination of low P/E, high dividend yield and dividend growth should offset this risk and reduce the overall volatility of the portfolio.
We select international stocks that combine the following:
- Low P/E Discipline
- High Dividend Yields
- Strong Dividend Growth
- The strategy invests in undervalued, non-US equities with above average earnings growth and dividend yields (goal of 4.5%+).
- Focus on developed economies, this concentrated portfolio of 30-45 stocks is diversified across all sectors of the market.
Investment Process
The Schafer Cullen investment team relies heavily on fundamental research as part of its investment selection process. Because the firm has a disciplined value investment philosophy, a rigorous review of company fundamentals vs. industry peer and the overall market is an important part of the investment process.
Screen for Value:
- Begin with largest 2,000 publicly traded equities
- Typical market capitalization > $5 B
- Sector and Industry Inflection Points
Fundamental Research:
- Screen for stocks in bottom quintile according to P/E and P/B basis
- High dividend yield
- Seek low debt to equity and high returns on investable capital
- Search for catalysts that can drive earnings, including:
- New markets
- New products
- Strong management with clear vision and commitment to shareholder value
Portfolio Construction:
- Approximately 30-45 holdings
- Diversification across 15-20 industries
- No more than 4% in any one stock at cost
- No more than 15% in any one industry at cost
- No more than 30% in any one sector at cost
- Top 10 holdings typically represent 35 – 40%
- Up to 25% international exposure (ADR) at cost
Sell Discipline:
- P/E multiple not justified by EPS growth rate
- Deteriorating fundamentals or negative change in investment thesis
- Decline in dividend yield below 2%
- Cuts in dividend policy
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