Brentview News & Insights

Heading into 2020 it was not uncommon to see metaphors for the forthcoming year as “the year of perfect vision.” However, as the year progressed it became apparent that visibility was anything but clear. For the fourth quarter Dividend Growth slightly underperformed the S&P 500, despite our strategy maintaining a lower beta position. On a gross of fee basis Dividend Growth was up 11.41% for the period versus 12.13% for the S&P 500. For the full year, Brentview returned 12.91% versus 18.39% for the S&P 500.

Many dividend investment strategies, both active and passive, often have minimum dividend yield requirements. This methodology eliminates a sizeable portion of their respective investible universes. For example, within the S&P 500 Index, stocks with a dividend yield1 less than 1.0%, represent 39% of the index constituents2.

Ever since March 2020 dividend investors have been seeking clarity from the companies that fall within the “dividend cutters and suspenders” categories. Historically, when a company falls onto the cutter list, they end up remaining in that category for a long time. As a result, dividend cutters are forced to revisit their business model and ideally correct course back towards dividend growth. More recently companies have been opting for a more temporary solution, suspending their dividend. The “suspender” category first occurred in the 2008 Financial Crisis and more recently during the Covid-19 pandemic.

Few stocks have tracked the realities and sentiment surrounding Covid-19 as closely as the travel and entertainment sectors. They have gyrated in price in sync with daily headlines, and good news has been unable to get any traction—until lately. The promise of vaccine distribution within months is stunning good news for the timeline of economic recovery.

“Investor sentiment changes,” said Hai Vu, portfolio manager for Brentview Investment Management. “That’s the one factor you can’t always capture in all these quantitative measures.”

“It’s pretty hard to poke a hole in this earnings report,” says Jim Boothe, CIO at Brentview Investment Management, a dividend-growth investor. “The weak area, [DirecTV,] even did better than expected. The wireless business was very strong, it had more than 1 million adds. If anything, this earnings report shows the sustainability of the dividend, which had a lot of investors concerned.”

The third quarter of 2020 was a strong quarter with the S&P 500 up 8.5%. While the quarter began with a bang, it seemed to end with a whimper as the month of September sold off by 3.9%. Despite the September weakness, the Nasdaq Composite was still able to post an 11% appreciation for the third quarter.

FLYING TODAY IS A different experience than it was just nine months ago. For one, you now have to stand 6 feet – or "one surfboard," if you're in San Diego – apart in the security line, and the only time you can take your mask off while in line is for the security agent to check whether your chin matches your ID.

Jim Boothe, chief investment officer of Brentview Investment Management, has held Apple shares since 2012 and said the company’s recent results show it is less dependent on the iPhone for growth. “It has become more of an ecosystem,” he said. “Customers are willing to pay for their quality, premium products.”

Lowe’s Co Inc (LOW.N) is expected to edge past rival Home Depot (HD.N) with what could be its biggest growth in quarterly same-store sales in at least a decade, benefiting from its exposure to customers ready to splurge on do-it-yourself home renovations.