Advantus Strategic Dividend Income Strategy Delivers for Income-Seeking Investors

Maggie Jensen
Media Relations Consultant

St. Paul, MN, May 23, 2012 – The one-year-old Advantus Capital Management Strategic Dividend Income (SDI) strategy clocked an annual net return of 9.26 percent and a first quarter yield of 6.6 percent as of March 31, 2012.

Equity income strategies are becoming increasingly popular with retail, high net worth and institutional investors due to concerns over market volatility, low bond yields and the prospect of rising interest rates. Foundations and endowments (which typically pay out five percent of assets every year), and pension funds making net payouts are particularly challenged by the low yielding bond market environment and could benefit from a dividend income strategy.

The strategy’s objective is to provide high current income through investment in equity securities with growing dividends while targeting lower volatility than the broader equity market. It uses a value oriented process with a combination of bottom-up fundamental analysis and top-down quantitative strategies to manage inflation and volatility risk and to enhance income. The strategy has been tested during a highly volatile period in the market.

As of March 31, 2012, Advantus Capital Management’s SDI strategy:

  • returned 9.91 percent on a gross basis (9.26 percent net) since inception 4/1/11;
  • produced a higher net return than the S&P 500 Index (+0.72 percent) since inception;
  • experienced lower volatility (17.77 percent) than the S&P 500 Index (22.70 percent) since inception; and
  • produced a market dividend yield of 6.6 percent in 1Q 2012 compared to the S&P 500 Index market dividend yield of 1.9 percent.

“Given the investing landscape for the remainder of 2012, the lower volatility demonstrated during the first year in the strategy and the 6.6 percent yield at the end of the first quarter is reassuring,” said Joseph Betlej, CFA, vice president and portfolio manager, Advantus Capital Management.

Typically, the strategy’s assets are invested in common and preferred stocks of North American REITs, utilities, timber, oil and gas, infrastructure and other high yielding sectors. The preference is for mature, stable companies and a pattern of growing dividends. Dividend paying stocks can provide down side protection because the constant revenue stream can act as a buffer against market volatility. Real estate and commodity holdings inherently act as an inflation hedge.

Many dividend strategies generally overlook the REIT sector because of the expertise it takes to be successful there. Advantus taps this high dividend-paying sector through its seasoned staff that has invested in REIT debt and equity for over 18 years.

Advantus Capital Management, a subsidiary of Securian Financial Group, Inc., has more than $24 billion in assets under management including non security assets. Advantus Capital specializes in managing portfolios to achieve specific client objectives. Clients include public and corporate pension plans, foundations and endowments, and insurance general accounts. Clients can benefit from Advantus’ investment expertise across fixed income, dividend income, real estate securities and private placements, as well as its expertise in originating and servicing commercial whole loans.

More News