Inside the Fine Art of Getting Paid to Own Stocks

The dislocations in markets last year created a fleeting opportunity to buy stocks that pay big dividends on the cheap. Sorting through which companies had the wherewithal to weather the pandemic and keep the payments flowing was not an easy feat, however, given the unprecedented economic shutdown and uncertainty about how long the virus would affect various types of businesses.

Joining this week’s “What Goes Up” podcast to discuss his process for evaluating dividends – in normal times and crazy times – is Chris D’Agnes, a portfolio manager at Hamlin Capital Management, an income-focused investment advisory firm that oversees about $4.8 billion in separately managed accounts and an equity mutual fund. 
 
Some highlights of the conversation:

“You don't want to be stuck in a yield trap, some call it a value trap. A yield trap is worse. It's the same as a value trap, except you're getting paid while you're getting killed. So you feel better about it, but it's a problem. And then of course there's the accidental high yielder and the accidental high yield, and you want to own it because that yield will compress back over time because the stock is just being thrown out. So how do you find that accidental yield? There are very few episodes in one's career like last March, where the S&P drops 34% in three or four weeks. In fact, it's never happened. March was just different than anything we've ever faced, but the process for selecting stocks, that doesn't change.”

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