Schwab Launches Addition to Advised Solutions

Charles Schwab brought out a dividend income-focused money management strategy from ThomasPartners for independent registered investment adviser (RIA) clients.

In December, Schwab acquired ThomasPartners, in Wellesley, Massachusetts. The money management firm uses a growth-oriented investment portfolio to generate dividend income streams. The firm’s approach is equity investments in companies that, even in down markets, have consistently paid shareholders regular dividends and have generally grown those dividends year over year.

According to research conducted by ThomasPartners, stocks that grew or initiated a dividend had an annualized performance of 13% versus 7% for non-dividend payers between 1973 and 2012.

Ninety percent of respondents to a Schwab survey conducted in April said that having consistent monthly income in retirement is very important, while 83% are interested in seeing their retirement income grow over time, and 78% said it’s very important that the value of their retirement portfolio increases over the long term. The ThomasPartners dividend growth strategy seeks to meet three goals for investors:

Dependable income every month;

Income growth every year; and

Capital appreciation over the years.

ThomasPartners provides a disciplined approach through diversified equity holdings to help mitigate the risk of overexposure to any specific asset category or industry. The strategy uses rigorous selection criteria and actively monitors and manages its portfolio holdings to maintain broad exposure to domestic and international common stocks across a range of equity asset categories.


10-Year Track Record 

As of March 31, ThomasPartners’ dividend portfolio has provided investors dividend income, dividend income growth and cumulative portfolio returns of 143% over the past 10 years.

“When I decided to retire, I knew I wanted two things from my investment strategy: dependable, regular income and the opportunity to grow annual income in pace with inflation,” said Gregory N. Thomas, senior vice president and chief investment strategist of ThomasPartners. “I found that typical strategies could deliver one or the other but not both.”

While 55% of respondents to Schwab’s survey said that dividend stocks or capital gains account for at least a portion of their retirement income plan, additional findings suggest that people don’t traditionally think about stock dividends as a retirement income strategy. Only 26% say that their broker or financial adviser has raised the topic of stock dividends as part of a retirement income plan, and just 14% of people have brought up this topic themselves.

According to ThomasPartners, the value of a dividend income growth strategy goes beyond retirement investing. The need for income, safety and growth becomes more pronounced as people approach retirement, but the approach of focusing on dividend-paying stocks may be appropriate for anyone looking for dependable income with the potential for less volatility through market swings, Thomas said.

Schwab’s survey also found that 89% of investors consider it very important to have an investment strategy in place to help guard against market volatility.

More information about the ThomasPartners dividend income strategy is here.