From Nuveen Investments

Chart Talk

The What, Why and How of Dividend Growth Investing

A Unique Market Environment of Higher Returns Coupled With Low Volatility

The most recent 5-year time period experienced a 3.7% higher annualized return with 11.8% lower risk than the long-term historical average.

The Benefit of Dividend Growers in Volatile Markets

With the likelihood of rising market volatility growing, investors could benefit with dividend growers.

Will the Next 3 Years Look the Same

History shows since 1926 that 90% of the time there are more than just 1 negative quarter over a 3-year time frame. Therefore, a focus on the downside may help preserve capital when the markets do turn negative

Frequency of Negative Market Quarters by Decade

Since 1930 no other decade has experienced as few negative quarters as the 2010s.

Don’t be Afraid of Down Months - Invest for the Long Term

Why you shouldn’t fear negative months – a long-term approach yields a 7.4% annualized return.

Rising Rates: Returns by Dividend Policy

While the likelihood of additional Fed interest rate hikes is continually changing based on the market environment, dividend growers have outperformed in past periods of rising rates.

How Different Dividend Payers React to Rising Rates

Regardless of the market’s reaction to rising rates, dividend growers have provided better upside and downside capture than dividend yielders.

Rising Rates: Their Effect on the Market and Dividend Payers

Dividend growth (rather than focusing on yield) might be the better option when rates rise.

What an Inverted Yield Curve Has Meant to Equity Investors

Historically, dividend growers have outperformed when the yield curve has inverted, as well as during subsequent recessions.

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Not All Stocks are Being Valued the Same

Relative to the S&P 500, dividend paying companies are trading near their largest discount over the past 5 years. On the contrary, non-dividend payers are trading near their largest premium relative to the index.

Dividends are a Powerful Driver of Returns in Global

Dividends have contributed more than just yield to total return.

Number of Dividend Growers vs. Cutters

Historically after a recession the number of S&P 500 Index companies that grew or initiated their dividend generally increased and the number of companies that cut or eliminated their dividend decreased.

Focusing Only on Companies with Long Dividend Growth Histories Has Limitations

Only 25% of the dividend paying companies in the S&P 500 have increased their dividend for at least 10 years.

Past History of Dividend Payment Doesn’t Always Tell the Whole Story

Focusing on company fundamentals may help identify dividend cutters, as well as opportunities for dividend growth.

The Case for Diversification Across the Dividend Yield Spectrum

No single dividend yield category leads in all markets, and the top performers change over time. Investing broadly across a wide range of yields may help reduce risk in an overall portfolio.

A Sole Focus on Higher Yielders Reduces Sector Diversification Opportunities

42% of the dividend paying companies in the S&P 500 currently yield below the Index.

Global Stocks and Dividend Yields

Dividend yields in all major developed markets are above their long-term averages with yields of some countries being nearly 15% higher than their 20-year average.

Dividend Yields of International vs. U.S. Stocks

Dividend yields of international stocks have on average been more than 50% higher than dividend yields of U.S. stocks since 2008.

Dividend Growers Outperform 100% of the 10-Year Rolling Time Periods

In both up and down markets, dividend growers have outperformed 100% of the 10-year rolling time periods.

High-Quality Companies Withstood Market Drawdowns

During drawdowns of 7% or greater, high-quality companies have typically outperformed the S&P 500 Index over the last 10 years.

Risks and Other Important Considerations

This information should not be relied upon as investment advice, recommendations, offers or solicitation of any particular security, asset class, fund, strategy, or investment product. Investing entails risk, including the possible loss of principal. There can be no assurance that any investment or asset class will provide positive performance over any period of time. Dividend yield is one component of performance and should not be the only consideration for investment. Dividends are not guaranteed and will fluctuate. Equity investments such as large-cap stocks are subject to market risk or the risk of decline in response to adverse company news, industry developments, or a general economic decline. Investments in small- and mid-cap companies are subject to greater volatility. Non-U.S. investing presents additional risks such as the potential for adverse political, currency, economic, social or regulatory developments in a country including lack of liquidity, excessive taxation, and differing legal and accounting standards. Past performance does not guarantee future results.

The statements contained herein reflect the opinions of Santa Barbara Asset Management, LLC (“Santa Barbara”) as of the date written. Certain statements are forward looking and/or based on current expectations, projections, and information currently available to Santa Barbara. Such statements may or may not be accurate over the long-term. While we believe we have a reasonable basis for our comments and we have confidence in our opinions, actual results may differ from those we anticipate. We cannot assure future results and disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. Statistical data was taken from sources which we deem to be reliable, but their accuracy cannot be guaranteed.

Santa Barbara Asset Management, LLC is a registered investment adviser and an affiliate of Nuveen, LLC.

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