Dividend Value Approach

A Focus on Smaller Company Investing with Lower Volatility

Our Dividend Value strategies serve the needs of clients who wish to benefit from Keeley’s expertise in small- and mid-cap value investing while attempting to mitigate the volatility typically associated with these asset classes. Over the full market cycle, dividend-paying stocks of smaller companies have historically outperformed similar-sized stocks that have not paid a dividend. We believe dividends reflect a company’s financial health—today and into the future—and that paying a dividend is generally a wise use of a smaller company’s free cash flow, unlike other potential uses.

However, not all dividend payers are equal. We use fundamental, bottom-up analysis to identify dividend-paying stocks that both trade below our assessment of intrinsic value and are supported by:
  • Positive and sustainable free cash flow
  • Strong franchises with effective management teams
  • Sound finances and healthy balance sheets

Dividend Value Approach


Approach
Process

Dividend Value Process Highlight

Once we have identified a potential addition to the portfolio, our Research Analysts evaluate the company from three perspectives:

  • Quality

    Seek advantages such as dominant market position, product patents or unique process/production

  • Timing

    Seek developments such as new product or management, change in dividend policy or upturn in industry cycle

  • Valuation

    Assess factors such as price/earnings relative to peers and to history, and cash flow/dividend yield