Stable drivers for return

Dividend policies do matter

- Kera Van Valen

In an increasingly unpredictable market landscape, investors are looking to preserve capital while staying invested.

The first half of 2025 has been a turbulent period; heightened uncertainty driven by geo-political tensions, shifting trade policies and broader economic concerns, creating a sharp contrast to the relative stability of the previous two years.

Although markets started the year with the upward momentum seen at the end of 2024, the rally quickly lost steam. Sentiment shifted abruptly as United States President Donald Trump's erratic tariff announcements sparked a "risk-off" environment, shaking global confidence and disrupting market stability.

Now that has changed again, and we are sure to see markets respond accordingly.

A predictable strategy

In times of economic and political turbulence, dividends take on heightened importance for investors seeking stability and long-term value.

Companies with consistent, well-managed dividend policies signal financial health, disciplined capital allocation, and a commitment to returning value to shareholders, even during uncertain periods.

They also tend to outperform and do so with less volatility.

History shows that companies with stable and growing dividends tend to outperform companies that either don't pay a dividend or have an inconsistent dividend policy resulting in cuts or reductions to dividends.

We like to focus on more stable drivers for return a diversified portfolio of high-quality companies that generate sustainable free cash flow and consistently return cash to shareholders in the form of dividends, share buybacks, and debt reduction.

The aim is to achieve a 9% average annual return over a market cycle made up of 4-4.5% in dividends, 1-1.5% in share buy backs, and at least 3% from cash flow growth

Weathering volatility