Rising Dividends
- Asset Allocation Ranges Equity 95-100%: Asset Allocation Ranges Cash 0-5%
- Style: Rising Dividends
- Anticipated Turnover: 20-25%
- Investment Approach: Qualitative-Fundamental
- Approximate Number of Holdings: 40-60
OFI Private Investments Inc., a subsidiary of OppenheimerFunds, Inc., offers a diverse range of tailored investment products and services, including separately managed accounts as well as program and investment management services to 529 college savings and prepaid plans. As part of an organization with 50 years of financial industry experience, OFI Private Investments helps high net worth individuals, institutions and nonprofit organizations work toward their financial goals.
Investment Strategy
OFI Private Investments Rising Dividends style’s investment strategy seeks to construct a portfolio using dividend-paying securities, capitalizing on the fact that 43% of the long-term appreciation of stocks has come from dividend income. We believe this is increasingly important as companies in general move to higher payout ratios as dividend yields return to higher historical levels. Our objective is to deliver an equity portfolio that offers a growing income stream over time and price appreciation through equity exposure. We maintain the consistency of our risk profile by being fully invested at all times (less than 5% cash) and by having broad portfolio exposure to most of the major economic sectors of the market.
Our investment approach uses traditional fundamental research to identify attractive stocks and a disciplined quantitative framework to understand the risk inherent in both the individual stocks and the overall portfolio. Our investment process focuses on bottom-up stock selection. We narrow the universe of securities by identifying those companies that we believe have a steady, consistent dividend stream (indicating reasonable payout ratios) and the potential for increasing those dividend streams over time. This subset of securities is sorted into one of 10 major economic sectors. We then focus on relative expectations within each of the 10 sectors and not across sectors. Next, we analyze the past 10 years’ worth of historical data. Emphasis is placed on free cash flow analysis. In addition, we analyze earnings-per-share growth, price-to-earnings multiples, price-to-book value multiples, profit margins and return on equity. We then apply traditional fundamental, company-specific research and analysis, to derive a forecast of earnings, valuation change and dividend rate.
Stock positions may be trimmed or sold when there are negative developments that relate to a material deterioration in company fundamentals and/or whether the safety of dividend streams comes into question.Additionally, stocks are sold if the manager believes that positive earnings news and future growth are reflected in the stock’s price or superior investment alternatives present themselves.
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Top 10 Holdings
| Security Name | % of Assets |
|---|---|
| Exxon Mobil Corp. | 2.60 % |
| McDonald's Corp. | 2.30 % |
| QUALCOMM Inc. | 2.20 % |
| JPMorgan Chase & Co. | 2.19 % |
| Merck & Co Inc | 2.13 % |
| Bank of New York Mellon Corp. | 2.04 % |
| Johnson & Johnson | 1.90 % |
| Chubb Corp. | 1.83 % |
| Occidental Petroleum Corp. | 1.82 % |
| Schlumberger Ltd. | 1.80 % |
1. Top 10 Holdings are current as of 12/31/09, are based on a representative account managed within the strategy included in the composite, are subject to change, do not constitute a recommendation by OFI Private Investments of any of the positions and may vary by account. The specific securities identified are not representative of all of the securities purchased, sold or recommended for advisory clients. It should not be assumed that an investment in the securities identified was or will be profitable.