Growth and Income

The Growth and Income strategy seeks to maximize the growth in principal value of your account by a focus on growing the income stream that it generates.

This is accomplished primarily by investing in a diversified portfolio of high quality, dividend paying operating companies. Investors utilizing the growth and income strategy must be willing to accept a moderate level of short-term volatility in the principal value of their portfolio. By blending Growth and Income with the Capital Preservation and Income strategy, risk and reward can be optimized to meet the specific objectives and risk tolerance of the client.

In order to achieve the strategy’s objectives, we take a principles-based approach to equity investing. The principles that guide our investment philosophy are: 1) Quality, 2) Value, 3) Diversification, and 4) Patience.


We define a quality stock to be one that pays and grows its dividend, while not taking excessive risks with its balance sheet. The payment and growth of the dividend demonstrates both the financial and operational strength of the company, and the importance the company’s management puts on sharing the success of the business with its shareholders. Companies that pay and grow dividends are proven to be much more judicious in the allocation of capital, and therefore enjoy above market rates of return in the long-term. As the credit bust of 2008 demonstrated, companies with highly levered balance sheets that take on significant credit risks are a recipe for disaster. We stay away from such situations at all times.


While it is essential to invest in quality, everything has its price. We only purchase a stock if we believe that it is trading at a discount to our estimate of its fundamental value. We typically use the dividend yield of a stock to estimate valuation in keeping with our income-oriented approach. We commonly target a 2% to 4% dividend yield for investing in operating companies, depending on the economic sector of the business. As with paying and growing dividends, research has shown that cheaper shares enjoy market beating returns in the long-run.


It is often said that diversification is the one free lunch in investing, and we wholeheartedly agree. In order to minimize the risk to your portfolio, we spread your investment over a number of individual companies and sectors, avoiding the vulnerability inherent in over-concentration. Ideally, we invest no more than ten percent in any individual stock and twenty percent in any single economic sector such as utilities, healthcare, or technology. With proper diversification, significant adverse events to an individual company or sector cannot compromise the overall integrity of the portfolio, as was the case with people who put all their money in Enron or dot com stocks back in the early 2000s.


When we make an investment, it is for the long-term – we give it the time needed to work so long as we continue to have faith in the company. If we ever lose faith in a company, we liquidate the position immediately. Otherwise, we will gladly continue to accumulate shares if valuations remain attractive. If a position appreciates above the diversification guidelines described above, we may sell a portion of it to bring it back within desired limits. By and large, we avoid wholesale changes in investments and overall investment posture. This avoids transaction costs and tax liabilities that detract from portfolio performance. Research has shown that investment funds with low investment turnover tend to enjoy the highest returns.

By blending Growth and Income with the Capital Preservation and Income strategy, risk and reward can be optimized to meet the specific objectives and risk tolerance of the client.

By adhering to these principles at all times, we are able to maximize the long-term growth in our customers’ capital and their income generating power. While short-term volatility is inherent in any equity investment, our income/quality/value-centered approach greatly reduces the long-term risk to your investment portfolio by avoiding the pitfalls that have historically led investors to lose significant amounts of money in the stock market: buying low quality companies at any price, paying too much for good ones, over-concentrating investments in individual companies and sectors, and constantly churning their accounts.