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Federated Strategic Value Dividend Investing

Posted by WrapManager's Investment Policy Committee
November 28, 2016

Federated Investors Stock Market CommentaryDaniel Peris, Ph.D., CFA and Head of Strategic Value Dividend Team, answers questions about the the Federated Strategic Value Dividend Strategy including:

  • Overview of the Federated Strategic Value Dividend Strategy
  • How the strategy is performing in the current rising-rate environment
  • What is the outlook and positioning strategy over the next 3 to 6 months

Questions About: Federated Strategic Value Dividend

Can you explain the Federated Strategic Value Dividend Strategy? Our income-first approach is driven by a core belief that we invest as owners of companies, not traders of stocks. As owners, we take the long view, seeking high-quality companies that make a practice of sharing the profits with the company owners, regardless of market conditions. Companies in our relatively concentrated portfolio tend to be non-cyclical and well established, with substantially higher dividend yields than the broader market and a history of paying above-market dividends and regularly increasing them.

How is the strategy performing in the current rising-rate environment? While our portfolio has no business sensitivity to near-term interest rates, the stock market historically bids down so-called “bond-proxies” in a rising-rate environment. That has been the case since July, and even more so since the election in November. While we are far from a bond proxy—we have rising coupons and our income streams are well above those of government bonds—we have a seen an approximately 10% “correction” in share prices since the summer, with no fundamental change in the income stream we generate.

To read the complete Q&A, including the outlook and positioning strategy for the fund over the next 3 to 6 months, read the Federated Investors market commentary online.  Or, review JP Morgan's 4Q 2016 Guide to the Markets.

To learn more about Federated Investors and other Money Managers, give us a call at 1-800-541-7774 or contact us here to speak with one of WrapManager's Wealth Managers.

Read Federated Investor's full commentary here

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