Fund Manager Bullish On Dividend Stocks

Dividend stocks were the salvation of many investors during the financial crisis four years ago. Most fell less than other equities. They reassured investors by continuing their payouts throughout the turmoil. And they rebounded faster when it ended. Some analysts now are saying their time in the sweet spot may be coming to an end, but Les Stelmach isn’t one of them. Stelmach, co-manager of the $700-million Bissett Canadian High Dividend mutual fund for Franklin Templeton Investments, agrees that “some of the easier money has been made” in the category, but he’s still finding names to buy, particularly in the energy and industrials sectors.

The bar has been set pretty high for Stelmach’s fund, more compact and aggressive than most in the dividend space. Its objective is a return 2.5 times larger than the annual dividend yield of the Toronto Stock Exchange composite index, now around 3 per cent. That makes the target about 7 per cent. It returned 8.9 per cent in 2012 and has averaged 10.7 per cent going back 10 years. Investors in the fund get a base distribution each month, with additional quarterly payouts if there’s extra cash, so dividend increases and sustainability are priorities for Stelmach and co-manager Leslie Lundquist.

Source: Montreal Gazette

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