New Schwab Dividend-Focused Strategy Offers Income and Growth
SAN FRANCISCO -- May 29, 2013
With investors focused on the importance of generating income for today’s
needs while growing their nest eggs for the future, Charles Schwab has
introduced ThomasPartners™, a dividend income-focused money management
strategy newly available for Schwab retail clients and its independent
Registered Investment Advisor (RIA) clients.
Last December, Schwab acquired the Wellesley, Massachusetts, money management
firm, which uses a growth-oriented investment portfolio to generate dividend
income streams. At the heart of the ThomasPartners approach is equity
investments in companies that, even in down markets, have consistently paid
their shareholders regular dividends and have generally grown those dividends
year over year. According to ThomasPartners research*, between 1973 and 2012,
stocks that grew or initiated a dividend had an annualized performance of
13.32 percent versus 7.41 percent for non-dividend payers.
Ninety percent of respondents to a recent Schwab survey** say that having
consistent monthly income in retirement is very important, while 83 percent
are interested in seeing their retirement income grow over time, and 78
percent say 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 key goals for investors:
*Dependable income every month
*Income growth every year
*Capital appreciation over the 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. I found that typical strategies could deliver one or
the other but not both,” said Gregory N. Thomas, senior vice president and
chief investment strategist of ThomasPartners. “The concept for ThomasPartners
was born when I realized that I wasn’t alone in my search.”
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. ThomasPartners also offers significant value to investors.
For retail investors, the ThomasPartners strategy has an investment minimum of
$100,000 and pricing starts at 90 basis points per year (.90 percent).
Over the 10-year history of its dividend portfolio as of March 31, 2013,
Thomas Partners has provided investors:
*Dividend income: A 10-year track record of generating income from an
*Dividend income growth: Dividend income stream growth from approximately
$24,000 to nearly $75,000 on a $1 million portfolio***
*Total Return Growth: Cumulative portfolio returns of 143.27 percent
While 55 percent of respondents to Schwab’s survey say 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 percent say that their
broker or financial advisor has raised the topic of stock dividends as part of
a retirement income plan, and just 14 percent of people have brought up this
topic proactively themselves.
According to Thomas, the value of a dividend income growth strategy goes
beyond retirement investing, “For many people, the need for income, safety and
growth becomes more prominent as they approach retirement, but our approach of
focusing on dividend-paying stocks may be appropriate for anyone looking for
dependable income with potentially less volatility through market swings.”
Schwab’s survey also found that 89 percent of investors consider it very
important to have an investment strategy in place to help guard against market
The launch of ThomasPartners is the latest addition to Schwab’s line-up of
advised solutions joining Schwab Managed Portfolios™-Mutual Funds, Schwab
Managed Portfolios™-ETFs, Windhaven Portfolios™, Schwab Private Client™,
Managed Account Select and Managed Account Connection and Schwab Advisor
Network®, which connects investors who have complex wealth management needs to
local independent investment advisors. Total assets under management in
Schwab’s advised solutions stood at more than $135 billion as of April 30,
About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial
services, with more than 300offices and 8.9million active brokerage
accounts, 1.6million corporate retirement plan participants, 895,000banking
accounts, and $2.11trillion in client assets as of April 30, 2013. Through
its operating subsidiaries, the company provides a full range of securities
brokerage, banking, money management and financial advisory services to
individual investors and independent investment advisors. Its broker-dealer
subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and
affiliates offer a complete range of investment services and products
including an extensive selection of mutual funds; financial planning and
investment advice; retirement plan and equity compensation plan services;
compliance and trade monitoring solutions; referrals to independent fee-based
investment advisors; and custodial, operational and trading support for
independent, fee-based investment advisors through Schwab Advisor Services.
Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing
Lender), provides banking and lending services and products. More information
is available at www.schwab.com and www.aboutschwab.com. (0513-3739)
Follow us on Twitter: @charlesschwab
Read our blog: Schwab Talk
Portfolio management is provided by ThomasPartners, Inc. (“ThomasPartners”), a
registered investment advisor and an affiliate of Charles Schwab & Co., Inc.
Both versions of the ThomasPartners Dividend Growth Strategy are available
through the Schwab Managed Account Connection® (“Connection”) program. Please
read Schwab’s disclosure brochure for important information and disclosures
relating to Connection and Schwab Managed Account Services™. Schwab makes
available other equity strategies in its managed account programs that focus
on dividend-paying stocks, including strategies that are managed by firms that
are unaffiliated with Schwab.
*Source: ThomasPartners research with data from the CRSP® 1962 U.S. Stock
Database. ©2012 Center for Research in Security Prices (CRSP). Includes all
publicly traded U.S. companies with market capitalization of at least $1
billion (in today’s dollars), adjusted historically for inflation. Beginning
in 1972, membership in each dividend classification is set as of December 31
for each year, and then held constant for the next 12-month period. Dividend
Growers and Initiators include stocks that initiated or increased their
dividend during the previous 12 months. No-Change stocks are those that
maintained their existing per-share cash dividend over the previous 12 months.
Dividend Cutters and Eliminators are companies that lowered or eliminated
their dividend at some point in the previous 12 months. Dividend Non-Payers
are companies that did not pay a dividend at any time in the previous 12
months. The average return is the compound annualized average return for the
**The survey was conducted by Koski Research among a geographically dispersed
U.S. panel of 1,000 people ages 55-75 with $250,000 or more in assets from
April 20 to April 26, 2013. Margin of error is approximately +/- 3.1%.
***Based on a hypothetical $1 million initial investment on 3/31/03. Income
growth during certain periods may have been flat or negative.
Past performance is not indicative of future results; the value of investments
and the income derived from them can go down as well as up. Future returns are
not guaranteed, and a loss of principal may occur.
Please refer to ThomasPartners Form ADV, Part 2A, for more information.
Diversification strategies do not ensure a profit and do not protect against
losses in declining markets. Investments in managed accounts should be
considered in view of a larger, more diversified investment portfolio.
There are risks associated with any investment approach, and the
ThomasPartners Dividend Growth Strategy has its own set of risks. First, there
are the risks associated with investing in dividend-paying stocks, including
but not limited to the risk that stocks in the strategy may reduce or stop
paying dividends, affecting the strategy’s ability to generate income. Second,
investor sentiment could cause dividend-paying equities to fall out of favor
or price earnings multiples to compress. Please discuss this and other
potential risks with your Financial Consultant prior to investing.
The composite and index information shown above is based on historical
performance, does not account for taxes, and assumes reinvestment of
dividends. Additionally, the composite and index returns are total returns,
not just price-only returns. The ThomasPartners Dividend Growth Strategy
Composite income shown is a combination of the annualized dividend yield at
each indicated point in time and the returns earned on the strategy since the
inception date. The dividend yield is the last dividend paid divided by the
price of the stock on that pay date, which is then annualized. There is no
guarantee that a stock will continue paying a dividend in the future, or that
the yield will remain the same or increase, as cash dividends and stock prices
change over time.
The ThomasPartners Dividend Growth Strategy as shown is not available for
direct investment, and it includes accounts from the ThomasPartners Dividend
Growth K-1 Generating and Dividend Growth Non-K-1 Generating versions of the
strategy. Actual performance of these two versions of the strategy may vary
from that of the overall Dividend Growth Strategy Composite. Please note that
there are material differences between the indexes shown, including potential
differences in holdings and in how each calculates dividend yield.
ThomasPartners believes that although the S&P 500® Total Return Index does not
seek dividend income as a primary objective, it is a suitable proxy for the
The NASDAQ U.S. Broad Dividend Achievers Index TR (DAATR) comprises
U.S.-accepted securities with at least 10 consecutive years of increasing
annual regular dividend payments. The S&P 500 Total Return Index is a commonly
recognized, market-capitalization-weighted index of 500 widely held equity
securities, designed to measure broad U.S. equity performance. Indexes are
unmanaged and cannot be invested directly.
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