Finding dividend opportunities as the profit cycle ages

A high-conviction, bottom-up approach to finding sustainable profit margins

Walsh_Meggan_sm_150dpi_RGB 0814As dividend value investors, my team is focused on sustainability of profit margins over a full profit cycle. I believe that we are in the later stages of the profit cycle, with corporate profit margins at about 1%1 below their peak levels in late 2014. What does that mean for us as high-conviction, bottom-up investors?


Dividend value: These three sectors warrant a closer look

Changing risk-reward profiles in these sectors may signal new dividend value opportunities

Walsh_Meggan_sm_150dpi_RGB 0814In a year like 2016 — in which equity markets plunged and then bounced back to flat all in the first quarter — portfolio managers are often asked where opportunities lie in “up” or “down” markets. For the Invesco Diversified Dividend team, however, that’s simply not the way we look at the world. Performance for a manager may be great in either a bull or a bear market, but it’s the ability to add value over both that we believe is most important.

Our fundamental-based research process is designed to deliver appreciation, income and preservation across a full market cycle by investing in companies with sustainable and growing dividends. With that in mind, I’d like to focus on three sectors where new opportunities are starting to develop: