The portfolio’s investment objective is to provide increasing dividend income over time, long-term capital appreciation, and reasonable current income through investments primarily in dividend-paying stocks. Preservation of capital, while not a goal, is also an important consideration. Risk is managed through diversification and by adhering to a well defined sell discipline.

Minimum: $250,000

DIVIDEND GROWTH STRATEGY

APPROACH

Tower’s Dividend Growth Portfolio focuses primarily on top quality growth companies with above benchmark dividend yields. Particular emphasis is placed on identifying companies that have consistently increased dividend payouts and the historical and prospective rate of dividend growth.

INVESTMENT PROCESS

We aggressively screen candidates, choosing only high quality companies with a minimum 10% growth rate, strong free cash flow, impeccable financial statements, and primarily, a strong, consistently growing dividend component. Then, utilizing Tower’s proprietary “Growth to Risk” modeling, we further refine the list, categorizing candidates based on their “Growth to Risk” ratio, focusing on only the companies with above average growth, but below average risk. This model analyzes a number of criteria, such as historical performance, dividend growth and compounding, analyst research and forecasts, “earnings surprise” data, as well as company specific metrics to come up with the “Growth to Risk” score. Companies that pass this rigorous screening process generally demonstrate very consistent performance even in down markets, with the additional return supplied by their dividend yield.

PORTFOLIO CONSTRUCTION

Sector strategy considerations are then overlaid versus the list of stocks that pass our screens to construct a portfolio of between 30 to 50 holdings. The resulting Dividend Growth Portfolio combines strong, growing companies with a low risk profile with the power of a compounding dividend component to drastically enhance performance over time.

SELL DISCIPLINE

Generally, stocks in the Dividend Growth Portfolio will be held for long periods to maximize returns and dividend compounding. But as with all Tower Portfolios, there is a specific sell discipline in place to help protect your investment from company specific issues and market downturns. Should a holding in the Dividend Growth Portfolio deteriorate to near one of our “soft stops points”, it is immediately run through a thorough analysis to determine if a “hard stop” will be put in place. Should a stock warrant this action and the hard stop is violated, the holding is sold. This exit strategy is a critical component in risk management, as we seek to avoid irreparable losses from even the highest quality stocks that may exist in the portfolio.

RISK MANAGEMENT

The Dividend Growth Portfolio mandates a maximum 25% cash position. In high risk markets, the portfolio manager has flexibility to move some holdings into cash to help protect returns. Under certain conditions Tower may also consider implementing a hedge component through the use of selected mutual funds or other securities.