Bart Rekucki, Vice President of Schafer Cullen Capital Management, joined Zoe Hunt, Host of RIA Channel, to discuss why a higher interest rate environment may favor dividend stocks.
As investors navigate rising interest rates and inflation, Rekucki highlights the potential benefits of dividend-paying stocks, particularly companies with the pricing power to raise prices and grow dividends at or above the rate of inflation.
Rekucki explains that it is important to distinguish between high-quality and low-quality dividend-paying companies, as high-quality companies tend to generate sufficient cash flow to fund internal growth initiatives. On the other hand, lower-quality companies may rely on external financing, potentially exposing investors to greater financial risk.
When evaluating dividend stocks, Rekucki notes that Schafer Cullen Capital Management looks beyond dividend yield, focusing also on earnings growth. He explains that companies capable of growing earnings may be better positioned to increase dividends and help offset inflation.
Rekucki also highlights the potential advantages of a growing stream of equity dividends compared to the fixed coupon payments of traditional bonds. Unlike a bond’s fixed coupon, dividend growth can increase an investor’s yield on their original investment over time.
Companies mentioned are our current holdings in some of our portfolios and being represented for illustrative purposes only in order to provide examples of Schafer Cullen’s methodology and process for stock picking. This is not a recommendation to buy or sell any securities. Please go to our website (Schafer Cullen High Dividend Value Equity | Managed Account | Cullen Funds) for the most recent top 10 holdings of High Dividend Value Strategy.
Resources:
International High Dividend ADR