Value Equity Management
Dividend Focused Value Equity
Our Dividend Focused Value strategy is implemented by constructing portfolios solely of dividend-paying stocks, selected on a bottom-up basis. Portfolios reflect all three value characteristics: price/earnings and price/book ratios below the market and a dividend yield above the market. In addition, the Dividend Focused Value strategy requires that stocks purchased in the portfolio not only pay a dividend, but also that each stock has a consecutive 25-year history of paying cash dividends.
Through a research-intensive process, our seasoned investment team identifies large, well-known companies that are undervalued and temporarily out-of-favor for reasons we can identify and understand.
|Asset Class||U.S. Equity|
|Portfolio Benchmark 1:||S&P 500® Index|
|Portfolio Benchmark 2:||Russell 1000® Value Index|
|Portfolio Assets||$8,104 MM as of 12/31/2016|
|Mutual Fund||Transamerica Dividend Focused: TDFIX ‡|
Our approach to the equity market is based on the underlying philosophy that markets are inefficient. These inefficiencies can best be exploited through adherence to a value-oriented investment process dedicated to the selection of securities on a bottom-up basis. We do not attempt to time the market or rotate in and out of broad market sectors, as we believe it is difficult, if not impossible, to add incremental value on a consistent basis by market timing.
We stay fully invested with a defensive, conservative orientation based on our belief that superior returns can be achieved while taking below-average risks. We implement this strategy by constructing portfolios of individual stocks on a bottom-up basis. Portfolios reflect all three value characteristics: price/earnings and price/book ratios below the market and a dividend yield above the market (S&P 500). In addition, the Dividend Focused Value strategy requires that stocks purchased in the portfolio not only pay a dividend, but also that each stock has a consecutive 25-year history of paying cash dividends. As the majority of the stocks in the portfolio have long established histories of dividend increases, the growth of the dividend stream is expected to be greater than that of the market as a whole.
While we are exacting in our definition of value, we are equally demanding in our pursuit of quality companies. We look at stocks for what they are - an ownership interest in a business - and never want to own an interest in a company that has a deteriorating business. We seek companies with profitability and earnings growth greater than the market.
Our strategy of emphasizing low price/book ratios and strong balance sheets, as well as high dividend yields, provides a measure of protection in down markets, helping to preserve assets. In periods of economic recovery and rising equity markets, profitability and earnings growth are typically rewarded by the expansion of price/earnings ratios and the generation of excess returns.
Our greatest source of value added comes through individual stock selection. The vast experience of Barrow Hanley's investment team, both in absolute terms and in years working together, brings value to the qualitative part of the decision-making process. The Barrow Hanley team not only has the experience necessary to identify the reasons for a temporary undervaluation of a company's shares in the market, but also has the conviction and patience to invest in shares of stock of the business on a contrarian basis.
Portfolio Characteristics as of 12/31/2016
|Weighted Average Market Cap ($B)||118.6||150.1||119.5|
|Median Market Cap ($B)||63.8||19.4||8.2|
|P/E Trailing 1-Year (Ex. Negative Earnings)||17.8||20.3||18.5|
2Russell 1000® Value Index
|Top Holdings as of 12/31/2016|
|Bank of America||5.0%|
|Johnson & Johnson||3.6%|
|Philip Morris International||3.1%|
|Sector Weightings as of 12/31/2016|
|Performance as of 12/31/2016|
|Annualized Portfolio Returns (%)|
*3 Month returns are not annualized.
Barrow Hanley's returns are shown before investment management fees and custody expenses. Index returns do not reflect transaction costs, management fees, and other expenses. Performance is expressed in U.S. currency. Holdings and statistics are presented as supplemental information to the BHMS Dividend Focused Value Equity composite. A full disclosure presentation may be accessed from the link above. Barrow, Hanley, Mewhinney & Strauss, LLC claims compliance with the Global Investment Performance Standards (GIPS®).
All institutional product information has been provided by Barrow, Hanley, Mewhinney & Strauss, LLC. Any questions about this material or requests for additional information may be made directly to the firm from the "Contact Us" link above.
Mutual Fund Disclosure
Investing involves risk including loss of principal. For more information pertaining to the mutual fund products above, including investment objectives, risks, charges and expenses, obtain a prospectus. Read the prospectus carefully before investing or sending money. Neither this material nor any accompanying oral presentation or remarks by a representative of the distributors is intended to constitute a recommendation of the funds or a determination of suitability for any investor.
‡Transamerica Dividend Focused Fund is distributed by Transamerica Capital, Inc., which is not affiliated with Barrow, Hanley, Mewhinney & Strauss, LLC or any other affiliate. To request a copy of the prospectus, please call 1-888-233-4339.