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Zacks Investment Management and Dividend-Focused Money Managers

Posted by WrapManager's Investment Policy Committee
January 15, 2014

With uncertainty surrounding the current and future interest rate environment, some investors are seeking potential alternatives to holding bonds in their portfolios. Dividend strategies surface as a popular alternative, given they can provide income and the potential for equity-like returns.

When searching for dividend strategies, many investors inquire about money manager Zacks Investment Management, which has appeared on our Monthly Top Ten Most Researched Money Managers. For investors wanting to learn more, below we’ll provide information about Zacks’ Dividend Strategy and its investment objectives.

(This is for informational and comparison purposes only. WrapManager is not affiliated with Zacks Investment Management, and it has not approved for use nor entered into contracts with them.)

About Zacks Dividend Strategy

Zacks Investment Management is a subsidiary of Zacks Investment Research, which is a privately held investment research firm based out of Chicago, IL. As of September 30, 2013, Zacks Investment Management had approximately $2.97 billion of assets under management, across various strategies.1

The Zacks Dividend Strategy invests primarily in value stocks that, on a historic basis, have paid in aggregate a higher dividend yield than the broader market. They generally buy stocks found in the Russell 1000 Value Index,1 and will hold 80 – 100 stocks.2 As of September 30, 2013, the dividend yield on the Zacks Dividend Strategy was 2.94%,1 while the yield on the Russell 1000 Value Index was 2.40%.3

Zacks Dividend Strategy Focuses on Value Stocks - What is a Value Stock?

Value stocks are companies that generally exhibit slower growth and sell at lower prices. Here are some of their characteristics:

  • Lower rate of growth in earnings/sales
  • Low price/earnings and price/book ratios
  • Higher dividend yields
  • Turnaround opportunities4

A few examples from the current Zacks Dividend Strategy Portfolio are Exxon Mobil, General Electric, and Wells Fargo. As of September 30, 2013, over 80% of the stocks held in the Zacks Dividend Strategy were large-cap stocks like the examples just listed, with the balance invested in mid-cap stocks.5

How the Zacks Dividend Strategy Invests in the Stock Market

The Zacks Dividend Strategy invests under the principal that dividend paying stocks outperform broad based indexes by generating excess returns in periods when the broad market is under pressure.1 In other words, that dividend stocks will outperform non-dividend paying stocks during down markets.

Since inception in 2004, the Zacks Dividend Strategy has maintained their equity-based posture – meaning they participated on the upside during bull market years but also experienced downside associated with the 2008 bear market.2

Comparing Zacks Dividend Strategy to Other Dividend-Focused Money Managers

Since inception, the Zacks Dividend Strategy has performed slightly better than its benchmark, the Russell Value 1000.1 Another good performance measure would be to see how Zacks Dividend Strategy has performed versus its dividend-focused peers.

If you’re interested in comparing other dividend money managers to Zacks Dividend Strategy, call one of our Wealth Managers today at 1-800-541-7774 or click here.



1 PSN Enterprise

2 Morgan Stanley

3 Russell Investments

4 BlackRock

5 Zacks Investment Management

401(k) Rollover Zacks Investment Management, Inc.