BENEFIT FROM AN INNOVATIVE WAY TO INVEST IN DIVIDEND STOCKS
Positive stock market returns come from two sources: price appreciation and dividends. Unfortunately, many investors tend to focus on one or the other and miss out on other potential opportunities.
Fortunately, Global X’s family of equity dividend ETFs, which is sub-advised by Guardian Capital LP (“Guardian”), brings together a focus on both price appreciation and dividend yield in their investment strategies. Guardian’s goal is to outperform the market in both price appreciation and dividend yield through:
1. Yield Carry: Guardian targets 1-2% of additional yield per year over the relevant index.
2. Stock Selection: Finding the right stocks across all industry sectors to actively position the portfolio through all market cycles.
GUARDIAN’S GPS INVESTMENT APPROACH
Guardian’s GPS investment approach focuses on three key fundamental drivers: Growth of dividends, Payout of cash flow and Sustainability of the payout profile. Having a portfolio of stocks that offers a combination of these three factors is the core of what makes the GPS strategy such an effective way to invest in dividend stocks.
Guardian’s GPS investment approach focuses on three key fundamental drivers: Growth of dividends, Payout of cash flow and Sustainability of the payout profile. Having a portfolio of stocks that offers a combination of these three factors is the core of what makes the GPS strategy such an effective way to invest in dividend stocks.
Different Types of Dividend Stocks
Paying attention to both dividend yield and dividend growth ensures that opportunities can be captured along the growth spectrum, from lower-yielding, high-growth companies in sectors such as technology, all the way through to mature, slower-growing companies in sectors such as utilities and telecoms. Eligible stocks fall into three different dividend stock categories: Dividend Achievers, Dividend Growers and Dividend Payers.
The GPS Stock Selection Process
Guardian’s Toronto-based team is a recognized leader and technological innovator in the dividend stock investing landscape. Led by Srikanth Iyer, Managing Director and Head of i3 Investments, the team utilizes a hybrid approach to investing in equity markets that combines a systematic stock selection discipline with a team-refined approach to portfolio construction and risk management.
Through rigorous quantitative research, Guardian has discovered a set of intuitive fundamental criteria (see table below) for evaluating and comparing dividend-paying stocks. All stocks in each global sector are ranked on a daily basis. This quantitative screen can be applied to the dividend stock universe of any geographic sector.
The highest-ranked stocks comprise the BUY list. Lower-ranked stocks may be designated as SELLs and will likely be sold from the portfolio, or avoided completely. Guardian’s experienced team of portfolio managers use the stock rankings as the primary driver of buy/sell recommendations for the portfolio but ultimately make the final decision on what stocks will be added or removed from the portfolio.
| Growth | Efficiency | Credit Risk | Valuation | Payout | Validation |
| Sales Growth | Return on Capital | Debt Levels | Price/Book | Dividend Yield | Stock Performance |
| Cash Flow Growth | Profit Margins | Interest Coverage | Price/Sales | Payout Ratio | Stock Volatility |
| Earnings Growth | – | – | Price/Cash Flow | Dividend Growth | – |
| Earnings Revisions | – | – | Price Earnings | Earning Quality | – |
| – | – | – | EV/EBITDA | Payout Sustainability | – |
GPS helps investors access the full breadth of the target dividend stock universe and allows them to capitalize on different market growth cycles. Guardian believes this should lead to superior risk-adjusted returns when compared to traditional dividend strategies, and to the broader stock market.
GLOBAL X OFFERS TWO ETFS THAT USE THE GPS STRATEGY
| ETF Name | Ticker | Management Fee* |
| Global X Active Canadian Dividend ETF (formerly Horizons Active Cdn Dividend ETF) | HAL | 0.55% |
| Global X Active Global Dividend ETF (formerly Horizons Active Global Dividend ETF) | HAZ | 0.65% |
Global X Actively Managed ETFs
• Experienced Portfolio Management
• Higher Income Potential
• Focus on Outperformance
About Guardian Capital LP (www.guardiancapital.com)
Guardian Capital LP is one of Canada’s leading asset managers and has been managing institutional assets since 1962. In partnership with Global X Investments Canada Inc., it has successfully implemented its “GPS” approach that focuses on three key fundamental drivers: Growth of dividend payout; payout of cash flow; and sustainability of the payout. Having a portfolio of stocks that offers a combination of these three factors gives Guardian an excellent track record and future in dividend investing.
DISCLAIMERS
Commissions, management fees, and expenses all may be associated with an investment in products (the “Global X Funds”) managed by Global X Investments Canada Inc. The Global X Funds are not guaranteed, their values change frequently and past performance may not be repeated. Certain Global X Funds may have exposure to leveraged investment techniques that magnify gains and losses which may result in greater volatility in value and could be subject to aggressive investment risk and price volatility risk. Such risks are described in the prospectus. The Global X money market funds are not covered by the Canada Deposit Insurance Corporation, the Federal Deposit Insurance Corporation, or any other government deposit insurer. There can be no assurances that the money market fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the Funds will be returned to you. Past performance may not be repeated. The prospectus contains important detailed information about the Global X Funds. Please read the relevant prospectus before investing.
Certain statements may constitute a forward-looking statement, including those identified by the expression “expect” and similar expressions (including grammatical variations thereof). The forward-looking statements are not historical facts but reflect the author’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking statements. These forward-looking statements are made as of the date hereof and the authors do not undertake to update any forward-looking statement that is contained herein, whether as a result of new information, future events or otherwise, unless required by applicable law.
This communication is intended for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase investment products (the “Global X Funds”) managed by Global X Investments Canada Inc. and is not, and should not be construed as, investment, tax, legal or accounting advice, and should not be relied upon in that regard. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies. These investments may not be suitable to the circumstances of an investor.
All comments, opinions and views expressed are generally based on information available as of the date of publication and should not be considered as advice to purchase or to sell mentioned securities. Before making any investment decision, please consult your investment advisor or advisors.