Meet the Team: ClearBridge US Equity Income

In this Q&A session we dive into the world of dividend investing with our expert portfolio managers from ClearBridge Investments. Michael Clarfeld CFA, John Baldi and Peter Vanderlee CFA share their insights on the philosophy, process, and key attributes of the FTF ClearBridge US Equity Income Fund.

John Baldi: The investment philosophy of the FTF ClearBridge US Equity Income Fund (the Fund) is to build a diversified portfolio comprising high-quality companies. These companies should possess the ability to consistently increase their dividends in a sustainable manner.

John Baldi: In the Fund, we look for companies that offer an attractive upfront yield. However, it's important to note that we're not solely fixated on having the highest yield. What really sets our strategy apart is the combination of this upfront yield with robust and sustainable dividend growth over time. The compounding effect of dividend growth is where the true power lies, ultimately generating increasing income for the portfolio.

Peter Vanderlee: The investment process begins by identifying companies that are typically leaders within their respective sectors. These companies typically possess strong balance sheets, ample cash reserves, or manageable levels of debt. We also prioritise companies that generate significant free cash flow and exhibit a strong track record of dividend payments. We follow these companies closely over time, waiting for the right valuation opportunities to arise before making an investment.

Peter Vanderlee: We believe in owning companies that are leaders in their industries, boasting superior balance sheets. Importantly, we seek out management teams that view investors as partners and demonstrate prudent capital allocation. This includes allocating funds toward dividend increases, stock buybacks, and reinvestment in the business. These attributes ensure a company's long-term competitiveness and ability to consistently raise dividends.

Michael Clarfeld: Discipline and judgment are at the core of our approach. We maintain a strong, unwavering view of our investment goals and how to achieve them. When assessing potential investments, we prioritise having a high degree of conviction and a deep understanding of the business. Experience and judgment, which we've gained through navigating various market conditions, are critical in making informed decisions and managing risk effectively.

Michael Clarfeld: We want investors to understand that our approach is centered on building a portfolio of high-quality companies with sustainable dividend growth potential. This is achieved through a disciplined investment process, a focus on prudent capital allocation, and a commitment to minimising risk. It’s the compounding effect of this dividend growth where the true power lies, ultimately generating increasing income for the portfolio.