Occasionally, when I’ve had the privilege of sitting in for Doug Kass’s Doug Kass’s Daily Diary at TheStreet, I’ve shared with readers updates for Tematica’s Thematic Leaders model portfolio. The Thematic Leaders model portfolio is set at the start of each year and reflects the crème of the crop, best thematically positioned companies for the coming year for each of our thematic investing themes at Tematica Research. After much thought and more than a few requests, we’re going to share some of the leaders for another Tematica portfolio — Thematic Dividend Leaders.
Thematic Dividend Leaders is a very different model portfolio than Thematic Leaders. The starting universe for Dividend Leaders begins with companies that have increased their annual dividends for at least 10 years. And to be crystal clear, that means no skipped dividends. From there we then use our investment themes as an overlay, to identify the best thematically positioned and the intersection of those criteria leads us to each Thematic Dividend Leader.
When done right thematic investing identifies structural changes in the marketplace, including those across the shifting landscapes of economics, demographics, psychographics, technology, government mandates and other areas. Companies positioned to capitalize on these structural shifts see a pronounced revenue, earnings and cash flow tailwind. That tailwind tends to produce a powerful combination of EPS generation and stock valuation multiple expansion thereby driving what many investors are searching for — alpha. And from a dividend investors’ perspective, those thematic tailwinds bode rather well that companies that have a track record for increasing their payouts will continue to do so.