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At The Money: Can Dividend Investing Give You Yield AND Growth? · Masters in Business

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio, news. Dividends are one of
• 0:21
  Speaker 1: the oldest and most highly regarded forms of equity investing.
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  Speaker 1: But in an era of mega cap growth stops, should
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  Speaker 1: you own dividend paying equities? To help us unpack all
• 0:34
  Speaker 1: of this and what it means for your portfolio, my
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  Speaker 1: extra special guest is David Bonson. He is the founder
• 0:40
  Speaker 1: and chief investment officer of the Bonson Group and author
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  Speaker 1: of a brand new book, Profit from the Profit, the Past, Present,
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  Speaker 1: and Future of Dividend Growth Investing. Well, welcome, David. Thank
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  Speaker 1: you so much for joining us.
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  Speaker 2: So good to be with you, Barry.
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  Speaker 1: So let's start with first principles. Given the current environment
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  Speaker 1: with AI and semiconductors and tech, which tend not to
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  Speaker 1: pay dividends, why should investors care about dividends when really
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  Speaker 1: it's all about total return these days?
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  Speaker 3: Well, I don't think it's ever a matter of dividends
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  Speaker 3: versus total return.
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  Speaker 2: It's a way in which people get to total return.
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  Speaker 3: And I think that you bring up a great point
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  Speaker 3: that the big tech moment caused some people to believe
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  Speaker 3: they don't need dividends.
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  Speaker 2: They don't need value. They don't need valuation.
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  Speaker 3: We think that the way the dot-com tech moment ended
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  Speaker 3: is somewhat of a.
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  Speaker 2: Rebuttal to that thinking. It didn't end very well.
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  Speaker 3: We are in a moment in this AI period where
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  Speaker 3: some of the largest free cash flow generating companies in
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  Speaker 3: history are now negative free cash flow because the CapEx
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  Speaker 3: is so high.
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  Speaker 2: We don't want to make a call on how that's
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  Speaker 2: going to play out.
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  Speaker 3: We would just simply suggest that there's a different risk
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  Speaker 3: profile when companies are returning capital from free cash flow
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  Speaker 3: to shareholders, still profitable, still growing profits, healthy balance sheets.
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  Speaker 3: And by the way, there are some great dividend growers
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  Speaker 3: even within the AI world. Our ownership of Broadcom over
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  Speaker 3: a seven-year period is one of the most profitable investments
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  Speaker 3: we ever had. You can't really have the AI moment
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  Speaker 3: without data centers. Blackstone is one of the great dividend
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  Speaker 3: growers of the last decade. So it just takes the
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  Speaker 3: research to go find the right names that fit into
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  Speaker 3: the narrative.
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  Speaker 1: So let's stay with that point. What does it reveal
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  Speaker 1: about a company and its business when they're willing to
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  Speaker 1: consistently pay a dividend, consistently increase that dividend, what does
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  Speaker 1: that tell us that sometimes earnings reports might not catch?
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  Speaker 2: Well, the dividends don't lie, they're cash.
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  Speaker 3: And it's a line I've used many times over the
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  Speaker 3: last 25 years, Barry, is that there are plenty of
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  Speaker 3: people that their tax return shows an income that's lower
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  Speaker 3: than what they really make, but there's nobody whose tax
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  Speaker 3: return shows an income that's higher than they really make.
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  Speaker 3: People don't pay taxes on income they didn't make. A
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  Speaker 3: dividend is real, and it reflects something real. And in EBITDA,
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  Speaker 3: you have a lot of opportunities for, let's just say,
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  Speaker 3: not totally verifiable growth of company. And so free cash
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  Speaker 3: flow is pure. A dividend from it reflects management's confidence
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  Speaker 3: in the growth of the business. A slowing growth of
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  Speaker 3: dividend maybe reflects management's own view, but there's nobody who
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  Speaker 3: should have a better view of things. And you can
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  Speaker 3: trust their press releases if you want. You can trust
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  Speaker 3: the 10 Qs and what they say, but I really
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  Speaker 3: trust cash they put in my bank account.
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  Speaker 1: So let's distinguish between companies, especially mature businesses, that continue
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  Speaker 1: to grow their dividend and versus those companies that seem
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  Speaker 1: to be running out of ways to manage their cash.
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  Speaker 2: Well, and that's a very important distinction.
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  Speaker 3: It's not just managing their cash, but it's growing their business. Look,
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  Speaker 3: there's no company that should never get to a point
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  Speaker 3: of cash flow productivity. When you're growing and you have
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  Speaker 3: infinite reinvestment opportunities where you're getting a higher return on
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  Speaker 3: invested capital than the investor can get, you should be
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  Speaker 3: continuing to reinvest your own cash. But eventually, there is
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  Speaker 3: no infinity of what a company can do with that cash.
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  Speaker 3: So what do they end up doing when they don't
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  Speaker 3: want to return it? They either just hold on to
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  Speaker 3: it and manage it in their own cash management vehicles.
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  Speaker 2: Apple's been doing this forever.
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  Speaker 3: So do you want Apple holding on to hundreds of
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  Speaker 3: billions of cash in their own cash management vehicles? or
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  Speaker 3: what really companies end up doing most of the time,
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  Speaker 3: CEOs are notorious for M & A. And I would
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  Speaker 3: suggest that most M & A is served to be
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  Speaker 3: vanity projects and capital destructive. Now, not all, there are
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  Speaker 3: some that have been very synergistic. But when you look
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  Speaker 3: at the kind of return on equity that is generated
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  Speaker 3: from the great dividend growers over time, when they mature
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  Speaker 3: to a point that they can do it, they're returns
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  Speaker 3: that are unlike anything we've ever seen in history.
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  Speaker 1: So I'm glad you brought up Apple, which has become
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  Speaker 1: very well known for a massive stock buyback program over
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  Speaker 1: the past 10, 15 years. How do you... compare the
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  Speaker 1: usage of free cash flow to either issue a dividend
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  Speaker 1: or to buy stock back. They're both return of capital
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  Speaker 1: to investors, but in a very different structure.
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  Speaker 3: The problem, Barry, is that more often than not, they're
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  Speaker 3: not a way to return capital to shareholders. How do
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  Speaker 3: you have record levels of share buybacks and yet more
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  Speaker 3: shares that exist now than did before all these share buybacks?
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  Speaker 3: The math is what it is. And so you have
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  Speaker 3: to look to net share issuance. And if they're doing
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  Speaker 3: share buybacks, the net share issuance should be negative.
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  Speaker 2: But why is it grown leaps and bounds?
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  Speaker 3: Because for the most part, I'm not picking on Apple here,
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  Speaker 3: any particular company, but across the spectrum, and Silicon Valley
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  Speaker 3: is notorious for this, share buybacks are executive compensation.
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  Speaker 2: They are not return of capital to shareholders.
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  Speaker 3: Now, where companies are reducing their share count, that is
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  Speaker 3: a way to return capital to shareholders.
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  Speaker 2: And I'm all for it as a both and.
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  Speaker 3: But my argument is that to the extent many investors
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  Speaker 3: need to go, they're retirement oriented, they're cash flow oriented,
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  Speaker 3: they need periodic income.
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  Speaker 2: You can't eat a stock buyback.
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  Speaker 3: And so there is still something that is just tangible
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  Speaker 3: about receiving the cash of it. But the other issue
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  Speaker 3: is share buybacks go first whenever a company runs into trouble.
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  Speaker 3: And dividends tend to be last because of that social
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  Speaker 3: contract that has been created by great dividend growers over
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  Speaker 3: long periods of time. So from the financial crisis of
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  Speaker 3: 08 to the COVID moment, we saw this. Share buybacks
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  Speaker 3: all but evaporated for the great dividend growers.
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  Speaker 2: And I can speak to the.
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  Speaker 3: Portfolio we manage. We had zero dividend cuts through that
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  Speaker 3: horrible period. So it isn't 100% immune from the risk,
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  Speaker 3: but it's far more immune from it than share buybacks.
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  Speaker 1: So I'm so glad you brought that up because the
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  Speaker 1: question always comes up, when is a dividend sustainable? So
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  Speaker 1: what measures do you look at? Is it free cash
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  Speaker 1: flow or growth rate or earning stability? Why not just
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  Speaker 1: buy the stocks with the highest dividend yield?
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  Speaker 3: Well, the sustainability of the dividend is a very different
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  Speaker 3: question than why not buy the ones with the highest yield,
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  Speaker 3: because the highest yield often could be a very imminent
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  Speaker 3: dividend cut. What I refer to as accidental high yielders.
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  Speaker 2: It's just math, right?
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  Speaker 3: You have a 4% yield, $ 100 stock price.
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  Speaker 2: You're getting $ 4. 00.
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  Speaker 3: And then the stock goes down to 50, you're still
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  Speaker 3: getting four bucks, but now it's 8%.
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  Speaker 2: Did you really get anything better? No. Did you lose 50%
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  Speaker 2: of your value? Yes. That's not what we want.
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  Speaker 3: We want the yield going higher because the dividend's going higher.
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  Speaker 3: And so there's a big difference between a high yielder
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  Speaker 3: and a dividend grower. Now, what do we look to?
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  Speaker 3: You mentioned three or four quantitative metrics. The answer is
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  Speaker 3: all the above and then some. But where I just
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  Speaker 3: simply do not believe this can be quantitatively done exclusively
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  Speaker 3: or passively is in that qualitative element of when a
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  Speaker 3: company wants to pay the dividend, not when they've been
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  Speaker 3: dragged into doing it. So there is a cultural propensity
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  Speaker 3: to grow the dividend. Some C-suites do not like it,
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  Speaker 3: and we want to avoid those.
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  Speaker 2: Some where you have heavy founder ownership.
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  Speaker 3: I think of a company like Lamar Advertising or Enterprise
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  Speaker 3: Product Partners, which is still heavily owned by the family
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  Speaker 3: that started the company. They're receiving just billions of dollars
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  Speaker 3: of dividends each year.
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  Speaker 2: They want to keep growing those dividends.
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  Speaker 3: So we like those stories where the alignment of management
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  Speaker 3: and shareholder is there.
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  Speaker 1: So you mentioned the stock that got cut in half
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  Speaker 1: and it appears the dividend yield has doubled when in
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  Speaker 1: reality it's four bucks either way. That's a classic yield trap,
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  Speaker 1: a classic dividend trap. What are the warning signs investors
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  Speaker 1: should be aware of when, hey, this looks like it's
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  Speaker 1: high yield, but really it's a dividend cut waiting to happen?
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  Speaker 3: Well, one of the issues I believe has been a
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  Speaker 3: career saver, a career maker for me, Barry. You, of course,
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  Speaker 3: were a prolific writer at the time of the financial crisis.
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  Speaker 3: I sold Citigroup stock at $ 51 a share when they
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  Speaker 3: announced they weren't cutting their dividend in October of 2007.
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  Speaker 3: And it went to 97 cents and so I don't
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  Speaker 3: want to confuse everyone if they're looking at charts now
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  Speaker 3: reverse stock splits have confused everything but I'm talking in
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  Speaker 3: 2007 numbers this stock really did go down 99 percent
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  Speaker 3: as you know so why did I sell the stock
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  Speaker 3: at 51 dollars and then spend the next few years
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  Speaker 3: bragging to clients we did Because they said, we're not
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  Speaker 3: cutting the dividend, but we just.
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  Speaker 2: Borrowed $ 10.
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  Speaker 3: 5 billion from the Saudi Arabians and Kuwaitis at, I
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  Speaker 3: think it was a 10% coupon on the debt. Borrowing
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  Speaker 3: from your credit card to pay your bills is not
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  Speaker 3: how a dividend gets sustained, as you and I know.
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  Speaker 2: Citi was a great example.
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  Speaker 3: So you have to look to the qualitative realities of
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  Speaker 3: the business. And when a company's at $ 4 and they're
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  Speaker 3: growing it for 20 years, then they stop growing it.
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  Speaker 3: but they haven't cut it yet. That's a warning sign.
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  Speaker 3: When the rate of growth slows, that's a warning sign.
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  Speaker 3: So we look to the free cash flow, the business model,
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  Speaker 3: the competition that's come in, the investment thesis, it requires
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  Speaker 3: fundamental research. It is true, the Procter & Gamble's, the
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  Speaker 3: Exxon Mobil's, the McDonald's, the Johnson & Johnson's, they've managed
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  Speaker 3: to a payout ratio, a balance sheet, a cash flow
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  Speaker 3: that's enabled them to continue growing through thick and thin.
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  Speaker 2: Other companies are too tight.
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  Speaker 3: They're paying out 90% already and there's no margin for error.
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  Speaker 3: So we have to take that a little more seriously.
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  Speaker 3: But this is why I believe it requires some active management.
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  Speaker 2: We've done it well over the years.
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  Speaker 3: A lot of people that really are invested in this
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  Speaker 3: have done well with it, but it isn't foolproof.
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  Speaker 2: General Electric cut their dividend. AT & T cut their dividend.
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  Speaker 3: But there were clear warning signs those were coming for
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  Speaker 3: those paying attention.
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  Speaker 1: So I like the example of Citigroup, and you and
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  Speaker 1: I can swap war stories over lunch. But you raise
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  Speaker 1: a really interesting question. A company consistently paying dividend, if
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  Speaker 1: purchased at the wrong time, or even more importantly, the
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  Speaker 1: wrong price can be a total disaster. How do you
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  Speaker 1: think about valuation and price when you're making a purchase
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  Speaker 1: of a dividend stock?
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  Speaker 3: Well, it's interesting that a lot of people's valuation metric,
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  Speaker 3: which is very important to us, both for margin of safety,
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  Speaker 3: but also just because we think total expected return is
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  Speaker 3: relevant to entry price. People with a calculator should be
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  Speaker 3: able to verify that I'm right about that. What you
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  Speaker 3: pay matters for your total expected return. So the PE
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  Speaker 3: ratio is the most common and people can use forward
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  Speaker 3: or backward and people look at CAPE and you can
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  Speaker 3: look at price to cash flow, you can look at
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  Speaker 3: price to book. I think all these valuation metrics matter,
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  Speaker 3: but why is dividend yield itself not a valuation metric,
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  Speaker 3: its own historical dividend yield? So there's companies we own
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  Speaker 3: right now that have a 2% dividend yield and they've
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  Speaker 3: been growing it like crazy. And yet they've historically had
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  Speaker 3: a three and a half percent dividend yield. It's just
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  Speaker 3: that the stock price is so high. You know, it
• 13:01
  Speaker 3: pained me, Barry, to sell Walmart about a year and
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  Speaker 3: a half ago.
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  Speaker 2: I'd owned it my whole career. We made a fortune.
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  Speaker 3: Walmart went public the year before I was born and
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  Speaker 3: grew the dividend every year of my life. They didn't
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  Speaker 3: do anything wrong. They just happened to go up 60
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  Speaker 3: percent in one year in stock price. And what had
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  Speaker 3: been a three and a half percent dividend yield on
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  Speaker 3: average for decades was now one and a half percent,
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  Speaker 3: basically an S & P 500 level yield. So from
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  Speaker 3: a valuation metric, we sold the stock. Same with Broadcom.
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  Speaker 3: You know, the stock was up 16 times yesterday. They
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  Speaker 3: had grown the dividend 14% per year for eight years
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  Speaker 3: in a row, but the yield got to be 1%.
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  Speaker 3: So we use the yield as a valuation metric itself.
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  Speaker 1: So we're recording this the day the book comes out,
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  Speaker 1: August 25th, 2026. And this is an era of relatively
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  Speaker 1: sticky inflation. We've seen 10-year inflation. rates and yields come
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  Speaker 1: up to almost 5%. We haven't had a recession in
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  Speaker 1: a while. We certainly haven't had a major bear market
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  Speaker 1: in a while. But I'm curious, how do dividend yielding
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  Speaker 1: stocks and how do dividend growth stocks do in the
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  Speaker 1: sort of environment of rising interest rates and high inflation?
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  Speaker 1: How do they do during recessions and bear markets?
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  Speaker 3: Well, when you have a beta that is about 0.6
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  Speaker 3: to the market, you naturally have less sensitivity by definition
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  Speaker 3: to the market itself. The only two stocks in the
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  Speaker 3: Dow that were up in 2008 were Walmart and McDonald's,
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  Speaker 3: which were two of the great dividend growers of the
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  Speaker 3: last 50 years.
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  Speaker 2: They tend to be much more defensive.
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  Speaker 3: However, I will also point out that in terms of
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  Speaker 3: the offense against inflation, there is no inflation there. if
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  Speaker 3: oil prices aren't going higher, if cheeseburgers don't cost more,
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  Speaker 3: if soap and towels and Pepsi soda pop doesn't cost more.
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  Speaker 3: So there's an inerrant inflationary benefit and the fact that
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  Speaker 3: the dividend growth has always in every calendar year been
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  Speaker 3: higher than whatever the growth of prices are, the inflation rate.
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  Speaker 3: If you're getting a portfolio that's growing dividends from 6%
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  Speaker 3: to 9% and inflation is somewhere between 2% and 5%,
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  Speaker 3: then you are, by definition, beating inflation in that cash flow.
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  Speaker 3: That is, to me, a very important element of the
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  Speaker 3: portfolio itself. Whether or not we go into recession, I
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  Speaker 3: think that this speaks to the sort of all weather nature.
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  Speaker 3: There's offense and defense involved in dividend growth. The last
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  Speaker 3: time we had a bad market that was long term,
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  Speaker 3: not just the 30 days of COVID or the five
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  Speaker 3: days of Liberation Day.
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  Speaker 2: But you recall very well, both.
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  Speaker 3: Dot com that lasted two and a half years from
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  Speaker 3: 2000 to the financial crisis. The market drop was 18 months.
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  Speaker 3: And in that period, the S & P was up
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  Speaker 3: from 2000 to 2009, zero percent. Most dividend growth portfolios
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  Speaker 3: would have been up somewhere in the range of 7%, 8%
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  Speaker 3: per year. So I think that it is a very
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  Speaker 3: good time to be looking at it. Now, what's a
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  Speaker 3: fair question is, hey, but how much did I lose
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  Speaker 3: in opportunity cost?
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  Speaker 2: The 2009 to 2026 bull market, S & Ps compounded 15%
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  Speaker 2: a year.
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  Speaker 3: It doesn't do me any good to make 3% or 4%
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  Speaker 3: in your stupid dividends while I'm missing that. The fact
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  Speaker 3: of the matter is about half of those years, dividend
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  Speaker 3: growth has done better than the market.
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  Speaker 2: Half of them, not as much.
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  Speaker 3: But it's right there in the same range in a
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  Speaker 3: screaming bear market for the index, a screaming low volatility
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  Speaker 3: period where the yield of the S & P is
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  Speaker 3: at the lowest it's ever been.
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  Speaker 1: Really, really interesting. One of the criticisms I've heard that
• 16:57
  Speaker 1: made about dividend growth investing is sometimes investors confuse receiving
• 17:03
  Speaker 1: cash with creating wealth. Classic example is buying a stock
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  Speaker 1: right before the dividend issuance. And when it goes ex-dividend,
• 17:12
  Speaker 1: the price falls by the amount of dividend issuance. that
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  Speaker 1: gets paid. Tell us what this criticism misses. What's the
• 17:20
  Speaker 1: mistake there?
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  Speaker 2: Yeah.
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  Speaker 3: When people do that, they fail to understand how markets work.
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  Speaker 3: It's almost like a treasury secretary thinking he can buy
• 17:30
  Speaker 3: 30-year bonds and the bond market won't figure out how
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  Speaker 3: these things work.
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  Speaker 1: I just had that conversation earlier today. I'm like, aren't
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  Speaker 1: you the world's biggest issuer of debt? How is a
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  Speaker 1: tiny announced buyback going to do anything to the long
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  Speaker 1: end of that?
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  Speaker 2: But go on.
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  Speaker 3: But of course, our treasury secretary was himself a global
• 17:48
  Speaker 3: macro trader. And the mentality you bring up about trying
• 17:51
  Speaker 3: to arbitrage dividend payments is something that short-term traders would
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  Speaker 3: do as well. So it's a fine mentality for traders,
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  Speaker 3: but it's a silly mentality in terms of the long-term
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  Speaker 3: impact in macroeconomic reality. It doesn't arbitrage anything to go
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  Speaker 3: buy a dividend when markets are pricing in those realities.
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  Speaker 3: And the algorithmic nature of things can pick up on
• 18:15
  Speaker 3: it ahead of time, etc. You're not buying the timing
• 18:19
  Speaker 3: of receded dividend. You're buying the company's underlying growth. You
• 18:22
  Speaker 3: can't fool the fundamentals. So I would argue, Barry, that
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  Speaker 3: non-dividend investors are doing this far more than dividend investors.
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  Speaker 3: That fundamentally, most people that right now believe, I want
• 18:33
  Speaker 3: to buy the market because there's someone else who thinks
• 18:36
  Speaker 3: the market's going to do well. I want to buy
• 18:37
  Speaker 3: NVIDIA because there's someone else who thinks NVIDIA.
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  Speaker 2: Is going to do well.
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  Speaker 3: Even if it's not fully self-conscious, the portfolio strategy of
• 18:46
  Speaker 3: many investors today is dependent on what they think other
• 18:49
  Speaker 3: people will do. Dividend growth investing says I'm isolated to it.
• 18:53
  Speaker 3: I don't even really need to look at the prices
• 18:55
  Speaker 3: on my screen that much. I believe in the companies
• 18:59
  Speaker 3: executing growing profits and growing what they return of that
• 19:02
  Speaker 3: to me over time. And all these other arbitrage things
• 19:07
  Speaker 3: day by day, week by week, or in some cases,
• 19:09
  Speaker 3: nanosecond by nanosecond are irrelevant to the long term value creation.
• 19:15
  Speaker 3: And so you look at a company like McDonald's that
• 19:18
  Speaker 3: has literally created, with reinvested dividends, 400,000% return. You look
• 19:26
  Speaker 3: at a company like Simon Property Group, it's the most
• 19:30
  Speaker 3: profitable for investor REIT ever concocted. After going through a
• 19:35
  Speaker 3: couple 60% drawdowns with COVID and financial crisis and so forth.
• 19:40
  Speaker 3: This long term compounding of capital results in a mathematical
• 19:44
  Speaker 3: thing where old guys like you and me wake up
• 19:47
  Speaker 3: one day and companies that we bought a couple of
• 19:49
  Speaker 3: decades ago are returning 50%, 100% per year of what
• 19:56
  Speaker 3: we paid for the stock to us in dividend. And
• 19:59
  Speaker 3: that's for nothing other than just your normal market return
• 20:02
  Speaker 3: level compounding. And yet your return on original cost from
• 20:07
  Speaker 3: Procter Gamble, Johnson & Johnson, Coca-Cola, Exxon, these types of companies,
• 20:13
  Speaker 3: is massive. Blackstone only went public at the time of
• 20:16
  Speaker 3: financial crisis. I bought it in 2011. We're getting 30%
• 20:21
  Speaker 3: per year on what I paid for the stock in dividends.
• 20:25
  Speaker 3: So the math of this transcends trying to gain the system.
• 20:30
  Speaker 1: And our final question, for someone who wanted to build
• 20:33
  Speaker 1: a dividend growth portfolio, What sort of rules would you
• 20:37
  Speaker 1: give them for selecting holdings, determining position sizes, reinvesting dividends?
• 20:43
  Speaker 1: And then the big question, when, if ever, do you sell?
• 20:48
  Speaker 3: Well, I think that the answers to how to select
• 20:51
  Speaker 3: the names is to be diversified. I personally own in
• 20:56
  Speaker 3: between 30 and 35 companies, generally speaking, in our portfolio.
• 20:59
  Speaker 3: So we'll have companies that are 4% of the portfolio
• 21:02
  Speaker 3: at purchase and some that are 1.5% and 2%. We
• 21:06
  Speaker 3: don't go lower than that because we want it to matter.
• 21:08
  Speaker 3: We don't go higher than that at purchase because we're
• 21:10
  Speaker 3: trying to stay diversified. But you don't need a 70, 80,
• 21:14
  Speaker 3: 100 company portfolio to be diversified.
• 21:16
  Speaker 2: 30 names is plenty well diversified.
• 21:18
  Speaker 3: And by the way, you're not gonna find 80 names
• 21:21
  Speaker 3: in the S & P 500 that are growing their
• 21:23
  Speaker 3: dividend anymore. So that's how much the culture's changed is
• 21:27
  Speaker 3: you want conviction, you want concentration.
• 21:29
  Speaker 2: But you want diversification.
• 21:32
  Speaker 3: And then again, the characteristics that matter are quantitative, cash flow, leverage,
• 21:39
  Speaker 3: growth of earnings, the qualitative side. Is the business model defensible?
• 21:46
  Speaker 3: Is there a durability to what they're doing? And then
• 21:49
  Speaker 3: that cultural propensity to grow the dividend. As far as
• 21:53
  Speaker 3: the issue about when to sell a name, there is
• 21:56
  Speaker 3: always the bad side. We've had to sell names for
• 21:59
  Speaker 3: bad reasons. The thesis has changed. Something is broken. Something
• 22:03
  Speaker 3: on a risk reward basis is unattractive. We want to
• 22:06
  Speaker 3: get out of it. So I mentioned I sold Citigroup
• 22:08
  Speaker 3: before they cut the dividend. We sold BP when the
• 22:11
  Speaker 3: oil spill was going on because I just didn't believe
• 22:14
  Speaker 3: that the Obama administration and other regulators were going to
• 22:16
  Speaker 3: end up letting, you know, there was just too much
• 22:18
  Speaker 3: political heat around a name like that. So you see
• 22:21
  Speaker 3: things like that from time to time. But then there's
• 22:24
  Speaker 3: a really good reason to sell sometimes. And I mentioned
• 22:27
  Speaker 3: Walmart before, Apollo, Broadcom. These are names we sold just
• 22:31
  Speaker 3: because they did so well that the opportunity cost was
• 22:34
  Speaker 3: now we needed to move from what had become a 1%
• 22:37
  Speaker 3: yield to a new name at a 3%.
• 22:39
  Speaker 2: Or 4% yield.
• 22:40
  Speaker 3: And so those are the sell disciplines we bring to
• 22:42
  Speaker 3: the process, Barry.
• 22:44
  Speaker 1: Really, really interesting stuff. So to wrap up, If you're
• 22:47
  Speaker 1: interested in a portfolio that more or less keeps up
• 22:51
  Speaker 1: with the broad index, but tends to do much better
• 22:55
  Speaker 1: during downturns, consider a dividend growth portfolio. You have to
• 22:59
  Speaker 1: be aware of yield traps. You have to be aware
• 23:02
  Speaker 1: of things look like they're high yielding when in reality,
• 23:06
  Speaker 1: it's just their price coming down. Have a set of
• 23:08
  Speaker 1: quantitative rules to help you both select and manage the
• 23:12
  Speaker 1: portfolio and But recognize that this continues to be an
• 23:16
  Speaker 1: ongoing source of both income and wealth creation. I'm Barry Ritholtz.
• 23:22
  Speaker 1: You're listening to Bloomberg's At The Money.