Successful investing is all about making consistent decisions based on hard facts, such as dividends and their long history of growth, sound logic and a little common sense, rather than on hopes dreams and emotions.
Working closely with every client we create personalized investment portfolios. Each Headwaters portfolio will contain between 30-40 high quality dividend paying and dividend growing companies. Headwaters uses a proprietary valuation system and an advanced algorithm for measuring specific risk metrics such as dividend and earnings volatility.
Dividends are real. They are not like the other accounting metrics which rely heavily on estimates and projections. They are actual cash paid out to the shareholders. Thus, using dividends as the starting point to valuing stocks offers much more consistency and stability than any of the alternative accounting-based cash-flow and earnings models.
Dividends remind management four times a year who really owns the company. They reinforce what should be the proper relationship between management and, you, the shareholder. They keep management focused in its discipline to continue creating and maintaining shareholder value.
Dividend history is very important because the longstanding payment of the dividend is a great indicator of the stability of a company's business model. This steady record of rising dividend payments gives us the confidence to hold through short-term market fluctuations as it directly relates to strong underlying operating performance.
Dividends are an expression of management's confidence in the present - and a rising dividend is a very strong expression of its confidence in the future. As a strong part of corporate culture, a rising dividend is a clear signal from management that they can maintain into the future the current performance of the company.