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| Global
Utilities + Infrastructure |
| Global
Utilities + Infrastructure seeks opportunities among utility companies
and their suppliers worldwide, offering an appealing combination
of growth and income for total return investors. |
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| Investment
Philosophy |
| Within
the universe of utilities, financially strong stocks with rising
dividends offer the most consistent performance as well as the highest
added value. Over time, increases in dividends induce increases
in the price of the equity producing those dividends. Utilities
that are low-cost producers, serve territories with a favorable
competitive environment, and that conservatively exploit new opportunities
will consistently generate rising revenues and rising dividends. |
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| Investment
Objective |
| Our objective
is to exceed the total returns available from fixed income strategies
of intermediate or long-term duration without increased volatility,
and to provide investors with a unique path to participate in the
equity markets. The goal is to provide investors with a current
stream of income, growth of income, and growth of the underlying
principal. |
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| Investment
Strategy |
| The process
begins with a universe of traditional utilities-providers of water,
gas, electric, and telecommunications services-to which some other
essential services (waste disposal, natural gas and oil production,
infrastructure equipment, and wireless communications companies)
are added. Financially weak stocks are eliminated, as are stocks
with a high ratio of dividends to earnings since there is little
chance of a dividend increase for these issues. Risk/reward analysis
and a socially responsible philosophy converge (we hold no nuclear-based
electrics, for example) to produce a list of eligible, financially
strong candidates. |
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| In addition
to high financial strength, a low dividend payout ratio, and a history
of dividend increases, a company should offer a congenial regulatory
environment, a sound competitive business position, growth demographics,
and an absence of visible risk. While we prefer companies that have
shown proven positive benefits from careful diversification that
leverage their basic management strengths, we also consider diversification
skeptically from a risk standpoint. Too, in the current environment
of reduced regulation, we look for consolidation opportunities. |
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| Portfolios
contain 25-35 stocks in all the essential services, are fully invested,
and are selected on a bottom-up basis. All stocks play a "role"
as an element in a compounding machine of rising dividends. They
may be held for a lifetime if they continue to play that role. Stocks
are sold when companies fail to raise dividends, when prices increase
to a point of overvaluation, when new risks manifest, or when we
need to "make room" for a new and improving company. Occasionally
we will invest in companies that do not pay a dividend but that
offer strong prospects overall. |
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