The Dividend Playbook: Hamlin Capital's Approach To Dividend Growth Investing

Welcome to dividend stockpile where we. talk about all things dividend income. investing related. Today we're joined by. Chris Dagnes, partner and equity. portfolio manager at Hamlin Capital. Management where he runs their equity. income strategy, the dividend focused. strategy that we'll be covering today. Hamlin Capital Management is a SEC. registered independent investment. advisory firm catering to high netw. worth individuals and institutions. Chris, welcome to the show. Thanks. Jeremy. Looking forward to a discussion. Yeah, excellent. So, um, I got. introduced to you through another person. and they said, "You absolutely have to. go talk to Chris. Um, after looking. through Hamlin, um, website, I love your. strategy and I definitely wanted to have. you on to be able to talk about it to. our audience. I think it was going to. fit really well." So, with that, can you. give a brief introduction to yourself as. well as a little bit about your company?. Uh, sure, Jeremy. So, I um, graduated. uh, Bucknell University in 1999. I did a internship at a money management. firm in 1997, the summer of 97. So that. gave me sort of an early uh look and. feel to the investing world and really. sparked my interest. And every. non-accounting class I took from then on. was was investing. Um so I went to to. work at Merryill. I was in the municipal. bond department in uh in banking, public. finance banking. Um and it was a brutal. couple of years. everything you hear. about investment banking is true. Uh and. after uh two years I was trying to think. about my next uh. steps. Um, in the meantime, uh,. something was happening in the markets. that helped me with those next steps and. that was the, uh, internet bubble and,. uh, proceeding, you know, crash. And,. uh, I got my first bonus at Meil Lynch. at a inopportune time. uh it was the. summer of 2000 and at the big firms like. that they don't want you sitting around. managing your money so they give you an. adviser to use uh and so they they had. given me an adviser and uh his. recommendation uh with that first bonus. which wasn't a lot of money but to me it. was a lot of money at the time uh was to. buy these five stocks and he told me. what the five were and um and he was the. expert and I thought that made sense. Uh, and it's all the names you would. have thought of from that time period. JDS, Unifase, and EMC and Cisco. Um,. well, within eight months, never has. anyone seen money evaporate like that. Uh, so my bonus uh was gone. Basically. 80% gone. And I really started to think,. uh, this I'm probably not the only one. this happened to. This is not pleasant. This is not fun. I don't want this to. happen to other people. and I'm going to. do something about this. And uh it was. around the same time that I got a uh. call from uh the firm I'm at now. Uh so. this was uh mid 2001 uh and Hamlin. Capital uh management. Um they uh they. reached out to me. Uh they reached out. to me because I had interned here at the. predecessor firm. So that was the firm I. had interned at in 1997. And so I had. contacts here. they knew who I was and I. thought um this is perfect because of. what just happened to me and I'm sure a. lot of others uh and I really want to be. a better investor and and learn uh the. nuts and bolts right away. So that's how. I really got into uh the business and uh. that was 24 years ago. Maybe just a. little bit about Hamlin Capital. So uh. Hamlan has two strategies uh and was. formed in. 2001 as I said uh those two strategies. are a high yield municipal bond strategy. and the dividend equity strategy that I. co-manage uh and and those are the only. two things we've ever done and and uh so. at the time in 2001 the firm was. overseeing maybe a little over 200. million in assets and these two. strategies. H we're about 50% in each uh of our. assets and they've grown sort of in lock. step almost by accident over the last 24. years. Uh so uh today we only do those. two things. We're sort of we would. consider ourselves specialists in these. two asset classes both income oriented. uh high levels of income from both. Um,. and you know, the concept. was that our clients, they have wealth,. but they didn't have necessarily money. to spend. And we were going to give them. access to that through investing. So. today, uh, we're overseeing a little. over $9 billion, still about 50% in each. of these two strategies. It seems like. your dividend strategy is very in line. with the way I approach things. So, I'm. really looking forward to digging in as. much as we can, talking about the. strategy, philosophy, um, kind of what. you look for, those types of things. Obviously, you guys have those two. strategies, and you kind of talked about. the things that were happening around. the the investing universe when you when. they started this, but what was it about. dividend investing that drew you to it?. And also, why did Hamlin decide to focus. on that? Yeah, well, there's some. there's some sort of softer intangible. reasons. I mentioned uh one that the. flexibility it provides to clients to. have some actual money to spend to. access your wealth. Um income. compounding income is a very powerful. force in investing. Uh there's something. really nice about uh keeping up with. inflation. Uh your purchasing power. keeping up with inflation and a dividend. strategy if done right allows that to. happen. Uh if you you know just think. about. history, inflation has averaged sort of. three three and a half percent over. time. Well, the S&P has grown its. dividend a little above 6% over time. Uh. so, you know, one way and a very obvious. way to keep up with that uh as you get. older, as you think about retirement,. would be to be invested in a dividend. type of strategy. That's very different. from a bond strategy where that income. stream is never going to grow. You hope. you get your income and principal back. Uh but you're not going to see that. income stream grow. It's a totally. different way of thinking about things. and thinking about the world. And this. is not a bond strategy, right? This is a. this is a income growth strategy. Uh and. you c you can have both. So those are. sort of soft reasons. But um the maybe. more obvious reason is that uh there's a. lot of data out there that suggests that. your chances of success in equaling or. beating the market over time by. investing in a dividend strategy or. higher. Uh dividend paying stocks have. generally outperformed non-payers over. the last hundred or so years and it has. been fairly consistent. So uh so this. seems like a very obvious thing to have. that sort of tailwind behind us when. working with clients and their money and. our own capital. Um you know put your. clients uh money in the path of good. fortune by investing in a dividend. strategy. Now why is this the case? You. know we we spent a lot of time thinking. about this. Why have have dividend. paying stocks outperformed over time?. And there seem to be two obvious. reasons. One is that they go down less. in a down market. There's a very. positive downside capture attribute to. this strategy. Now, why would that be?. Well, income is always positive. So the. stocks we invest in can go down along. with the market, but we're getting a. more tangible form of return that is. almost guaranteed to be positive uh in. our yield, right? So we have a tangible. piece of return, whereas investing in a. non-payer, you're just hoping to get a. higher stock price to have someone buy. you out at a higher level. and that can. work uh over various time periods and. and you can do great things investing. that way. Um but ours is going to be a. little bit more of a tangible return. So. so income is always positive even in a. down market. Makes us probably look. smarter than we are. Um and that's. that's very helpful. Uh they also go. down less in a down market because we. think there's less selling pressure on. what we own when stocks are going down. when the market is falling. and you know we have these events uh. over the last decade and we just had one. in April where stocks fell pretty. precipitously over a 30-day period. almost dropping 20%. and u dividend ETFs, dividend. strategies, they didn't go down as much. and that is because investors are. holding on to our stocks. Uh a lot of. them for income. They're living off of. the income that these companies are. generating for them. And just think. about all the good that holding does for. you because. investors, people can't help themselves. Uh it's very scary in a down market and. you can make a mistake. you can sell at. the wrong time and then you're not. assuming you need to get back in quickly. but you do uh and you can never guess. the bottom and you can never guess the. top. So what is that saying? You know. time in the market over timing the. market right? So a dividend strategy. keeps you in the market again making you. look smarter than uh you are. So the. downside capture very important this is. why dividend investing uh one reason we. think it has outperformed over time. Now. there's something else that uh is harder. to put a finger on, harder to. understand. Uh but what we have seen and. there's some data out there that. suggests this as well. Dividend paying. stocks, companies that pay out a lot of. their earnings in a dividend can grow. their earnings more consistently and. even faster over time. And that doesn't. make any sense because we've all been. taught reinvest more for faster growth. And that should be how it works. But in. practice, it doesn't seem to work that. way. And so that's sort of our core. hypothesis within this strategy is that. what's happening is that the dividend is. functioning as a governor on the capital. allocation process. It is imposing. discipline on a management team. and. management teams can make mistakes. It's. very hard allocating capital, deciding. what to invest in with whatever excess. cash they have. Buy back their stock,. pay down debt, reinvest into something. in the business, make an acquisition. A. lot of these are poorly timed. They make. an acquisition at the wrong time or more. often than not, it's not a great. acquisition. They buy back stock too. high. They're doing all these things. Well, uh, with a dividend, you've made a. commitment. You're trying to keep that. commitment. You're trying to grow it. over time. And so we think our. companies, the companies we get to. invest in have to make better decisions. And so that's really it uh long-winded. answer to your question of why. dividends. Uh but that is why we think. dividend strategies have generally. outperformed over over the very long. period. Yeah, those are absolutely great. um selling points if you will. Um I feel. very similar in my approach and why I. picked dividends. I I think that also in. addition to not wanting to sell off your. income makers like you don't you're not. going to sell your dividend stocks as. quickly because you're relying on that. income but also you have the people who. are trying to go from the high growth. names into some kind of safety and they. tend to fall into your stable dividend. pairs. So there's like like a market um. I don't know what the word but it's some. kind of like floor if you will on how. low the dividend stocks will go because. people want that safety. They want that. higher yield in addition to everyone. that's just holding on to their um. stocks already. So it's like a double. benefit. Um if you're relying on the. income, you don't want to sell the asset. that's giving you that income. So to. your point, it gives a little bit more. um stableness to you know there's large. sell-offs like we've like we've seen. So. and going to your point about capital. allocation, a lot of these companies. will decide to do buybacks when their. stocks at all-time highs or they'll make. an acquisition because they feel like. they have all this extra money when that. other company they're acquiring is. probably selling at a premium. And so to. your point, having a dividend policy in. place forces them to be very specific on. how they spend their their extra. resources to make sure it will grow the. grow the business in a responsible way. So I think those all those points are. right on in my book. The dividend is a. stabilizer and it provides a shock. absorber. Yeah, that is what we often say. Yeah,. that's perfect. So, um, during that. discussion, you were talking about. buybacks, and I know there's this. ongoing debate between which is better,. um, a company buying back their stock or. paying out a dividend to their. shareholders. A lot of people are in the. buyback camp saying it's more tax. efficient. Um, you know, because the. company's not taxing them tax, you know,. all that stuff. But buybacks when they. happen, you still have to sell your. shares to to make income. So what is. your view on the debate between buybacks. and dividends? I think I know the. answer, but can you kind of give us both. sides of it? Yeah. Well, um your point. is well taken on being more tax. efficient because a dividend is forced. on you. A buyback is not. However, uh if. you're living off of your c uh then at. some point you need to access it. And so. in that case we generally think uh tax. neutral um and tax neutral really. starting in. 2003. So that's when uh the tax law was. changed so that dividends were then. taxed at your marginal tax rate. So in a. way or dividends are taxed at their own. ordinary income rate versus your. marginal tax rate. So historically. dividends were actually taxed um at your. marginal tax rate. Uh, and it wasn't. until 2003 that we got the 15% dividend. tax and cap gains long-term were brought. down to 15%. That went up a little bit. with Obama and and the Obamacare uh tax. on top of that. But the fact that they. are equal and even cap gains and. dividends to us. um means tax really shouldn't come into. this equation. Uh so then it comes down. to what is better for the company. Now,. we are not necessarily opposed to a. share buyback if the company has plenty. of cash. Uh we don't want it just. sitting on the balance sheet. Um so a. buyback could make sense. What you said. is very important. Companies have a poor. history of timing it. Uh so if there's a. way to make that buyback um a little. more formulaic in terms of let's do more. when the stock price falls. Uh let's be. out there in the market supporting the. stock price versus chasing it higher. But unfortunately companies have a long. history of chasing it higher. Now as a. dividend investor there's one great. positive about a buyback. It reduces the. share count. And so when we receive our. dividends per share, if they reduce the. share count, the company can grow the. dividend per share uh potentially even. more and without increasing the absolute. level of dividends. In other words, if a. company is buying back 5% of their. stock, they can raise the dividend 5%. and never increase the amount of cash. they're paying. That's that's great for. that company because hopefully they're. also growing their free cash flow and. they're priming the statement the free. cash flow statement for future dividend. growth. Uh so so we like that aspect but. I would generally come back to the fact. that the dividend is a. commitment. It is a governor on the. capital allocation process and since. that is why we think this works over. time uh a buyback does not do that. um. uh management can put it on, take it. off, they can stop buying back their. stock. You have no control over that. Yeah. Uh whereas a dividend, you do have. some control because that company does. not want to cut that dividend. They know. what happens to their stock if they do. They're going to try to manage the. business around it and around growing it. over time. And these are all things that. are not on their minds during a buyback. So, uh, that's generally why we're more. favorable to dividend. We think the. buyback does not impose the same. discipline. Um, and management is not. focused on buying back stock when their. stock price falls the way they are. focused on continuing to pay that. dividend. I mean, even in April of this. year, we had a handful of our companies. in the portfolio announce a dividend. increase. And, you know, we'll see how. many companies were buying back more of. their stock. Um but uh companies tend to. sit on that cash when things are. uncertain out there and April brought a. lot a lot of uncertainty. That's for. sure. Um yeah, so the other thing I. don't really care for in buybacks is the. company will announce like a huge. buyback, but there's no guarantee that. they're actually going to do it or when. they're going to do it. You hear these. examples of, you know, $80 billion. buyback authorization yet they're. authorizing. It doesn't mean they're. actually going to do it and they're not. going to do it at the best price. They're going to do it whenever they. feel want feel like it. And so again,. with your dividend, they've made the. commitment to every month or every three. months, whatever their policy is to pay. out that cash to their shareholders. That's tangible money that we can decide. to reinvest in the company if we want,. reinvest it in a different company or. use the money to to live and to fund our. lifestyle. So I think the dividend. strategy is much more stable than. relying solely on buybacks. Dividends. have rarely been cut over the course of. history. Yeah. And uh if you were to. chart the buyback line, it would look. very different. Yeah, for sure. So,. looking at your strategy, um what I've. seen online and I talked to you about um. it looks like you guys are more focused. on the dividend growth side of dividend. investing. There's some other fund. managers and other investors out there. that focus on the high current dividend. yield. They're not too worried about the. dividend growth. um can you kind of um. state your case of why you feel like. dividend growth is the more appropriate. um policy than a high dividend yield?. You know, to answer this question,. um I would tell you we are a very much a. hybrid. uh and we want yield and growth. Uh. there is plenty of data out there that. suggests that the higher the dividend. yield, the better the returns up to a. point. Okay,. the highest yields do not tend to. outperform. So there is a group of. yields uh and we like to cut it up into. quintiles of dividend yield. So. quintiles one through five. Quintiles. four and five would be the highest. grouping of yields. And what you will. see over time is that it's not the. highest but the second level down has. shown the best returns. So quintile 4. quintile 4 uh there is some small. portion probably the low end of quintile. 5 but quintile 4 is where you find a lot. of highquality companies uh where maybe. they're a little more maybe they're. cheaper than they've been over history. their yields have risen a little bit,. but their yields are not too high. because once you get into quintile 5, uh. you have to deal with what we call the. yield traps. Uh now, some people call. those value traps. Well, it's the same. thing. Yield trap is even harder because. you think you have the yield support and. so you're willing to hang out and. continue to receive the payment, but. what you don't realize is that that. company may need to cut that dividend. Uh and the yield is telling you that. So. in quintile 4,. uh in in sort of that the the lower. grouping of yield, uh you can have both. you can have pretty decent dividend. growth and pretty decent yield and that. is where we exist. So we we want to. balance dividend growth is extremely. important. Uh companies that are growing. their dividend are likely growing their. cash flows, their revenues and this is. an equity strategy and so you want. companies to be growing. Uh it is. certainly one way to avoid the yield. trap is to actually have topline growth. And it doesn't need to be double digits,. you know, low single digits or or. higher. And if companies can leverage. that into mid to high singledigit. earnings growth, then they can continue. to grow their dividends over time. So um. so we're very focused on that. As I said. earlier, uh we love to see dividend. growth keep up with the rate of. inflation. Companies that can do that we. think are very valuable. They probably. have a very good business model. Um and. uh investors might be willing to pay up. for that. So uh so we just like the. blend. We like a decent. yield and we like a strong level of. dividend growth. One thing I like to do. is I like to add the yield and the. dividend growth rate. This is a very simple thing to do. And. uh if you can get a 3% yield and six or. 7% dividend growth, if you can get that. number to 10% or above, that's usually a. pretty good recipe. Um I have become a. little more negative over the last five. or 10 years on the higher yields. I. think the market has become more and. more efficient, more discerning, has. figured things out. when stocks yield. today, if a common stock has a big. yield, you know, call it 5% or or. higher, uh, it does not believe in the. sustainability of that dividend. There's. something wrong. Company doesn't always. even know there's something wrong. U,. they may be about to get a call from. their rating agency that says, uh,. you're we're going to downgrade your. debt. Your rating is going down. and. they may decide yikes we have to cut the. dividend uh because we need to get the. leverage to a level that they are not. going to cut our rating. That can happen. very quickly to a company or there could. be a regulatory issue that is coming at. them in whatever sector they're in. financial healthcare and investors are. figuring it out and realizing that that. dividend is not going to be money good. for the next five or 10 years and so the. yield is going up. So, I think you just. need to be you need to be more and more. careful in terms of having a too high of. a yield. Um, you know, REITs and MLPS. are a little bit different and there's. different tax treatments and uh. different ways that they trade alongside. interest rates, but common stocks. Uh,. generally when their when their yields. get too high, it's a it's a warning. flag. Um, you know, it's a it's a. temperature reading that something's not. right with the patient. Yeah, that that. makes a lot of sense. And to your point,. there's so much information out there. and there's so many investors and. different things that the market picks. up on things pretty quickly and they're. always looking ahead, you know, 6 months. to 12 months to see what they think the. picture is going to look like at that. time. So, a lot of the times the market. is ahead of the company news like you. said. Um, so when you have a a stock. that, you know, used to be in the 3 and. 4% but now it's in the five and six%. yield, is the market telling you, hey,. something's not right here and you. really need to take a better look at it. So, it sounds like um you guys follow or. at least um like the idea of what they. call the chowder rule where if you add. the current yield plus a 5-year dividend. growth rate, 10 to 12 is about the the. number you want to look for to find that. perfect balance between the dividend. growth and the current yield. I think. that's um yeah, I think that's I didn't. know the name of the rule. Uh I uh but. it's something I've always used. So. yeah, ve very much um you know a fan of. thinking that way and and trying to do. that. Yeah. Um so I don't know if he. this person Chowder came up with the. rule or if he just coined it, but yes,. your current yield plus your 5-year. dividend growth needs to be around 12%. for your middle of the road dividend. companies. Utilities can be a little bit. lower. Um and of course your high. growth. So if the yield is only 1%,. you're going to want a much higher. growth to make up for the lower. dividend. But like that equals 10 to 12. is like the sweet spot in according to. this rule. So seems to be a very common. strategy even if you don't call it the. chatter rule and it probably has a long. history of proving right. So it kind of. goes back to your point where you know. something in the 3 to 4% range that's. growing you know 7 to 8% a year is like. that perfect balance. So I guess with. that um let's dig into your your funds. equity strategy a little bit. So. obviously I know there's certain things. you can and cannot talk about but can. you give us like a high level um on what. your strategy looks for when it looks. for dividend companies? The most. important thing investing in a dividend. strategy is sustainability of the. dividend. So everything we do revolves. around ensuring that that dividend is. stable, sustainable, it's going to grow. over time. uh that that is the key and. so there are certain key metrics we look. for just a starting point uh to put our. portfolio together. Um you know by by. the way our our portfolio uh 25 to 30. holdings pretty concentrated. We'll. invest in any sector. We're mostly large. and midcap, but you know, we're we're. willing to generally look everywhere for. this key criteria uh which um are you. know there's really five things we're. thinking about. Number one is. yield. I mentioned we are on the higher. yield but not too high yield. So we. generally try to double the yield of the. S&P uh when we make a initial. investment. The S&P today yields 1.4% 4%. or so, uh, which is, you know, very low. historically over the last 50, 60 years,. uh, tends to be more like a two and a. half to three, but today it's 1.4. And. that is very important when identifying. your universe. As we said, too high of a. yield could be a problem. Uh, two times. the yield, high twos, 3%, that's a. that's a pretty good starting point for. for us. Uh, second criteria, dividend. growth. Companies have to be focused on. it. It has to be a very important part. of their capital allocation philosophy. uh we want to see a path to dividend. growth to keep up with the rate of. inflation or more. Um we we've done you. know better than that over time. Uh last. couple years it's been more like high. singledigit dividend growth but it's got. to at least keep up with the rate of uh. inflation. So that's our starting point. dividend yield dividend growth and then. uh sustainability. So the third thing. we're very focused on is the balance. sheet uh low debt. I already sort of got. into that a little bit. The problem that. can happen there if your debt is. elevated. So, uh low debt uh a number of. our companies in our portfolio are uh. you know net cash positive. They they. don't have debt uh or they have more. cash than debt. Yeah. So, we generally. target less than two times on a net to. evida leverage ratio. Um and uh or less. than 50% net debt to capital. There's. there's a couple things we look at, but. generally the idea is low debt. Uh and. then uh dividend coverage. Uh the fourth. thing, dividend coverage. So very. important, we focus on cash flow, free. cash flow. So how is a dividend paid? It. is paid out of cash. Uh there should be. plenty of cash generated in a year to. pay that dividend. And and we like to. see excess. So even more than the. dividend generated in a year. uh a ratio. we think about is one and a half times. free cash to dividend coverage. If you. can maintain that uh then you have. plenty of cash to do other things to. help grow the business which I've. already said is extremely important uh. to um pay down some debt, make an. acquisition,. um weather a downturn, right? So maybe. the economy slows a little bit. Maybe. there's nothing wrong with your business. or your company. it's just a macro. slowdown. Uh and companies that have. well-covered dividends are going to are. going to get through that. Um and then. the last thing, uh just a sort of all-in. quality metric would be returns on. equity. We we like to see that over a. fiveyear average period in the low teens. or higher. So that's what we're looking. for. We're. screening all the. time, you know, a Russell 1000 type of. universe. We include uh ADRs in there. and sort of a little bit of everything. And uh the great thing about what we do. is there's not thousands of companies. that meet that that criteria. There's. maybe there's 200 250. Maybe it got to. 300 in April, mid April. Um you know, so. we have a list of companies then uh from. which to do the real work on and that. that is what I spend most of my time. doing. So, uh, I love, uh, coming on the. a podcast like this and telling everyone. what we do and how we do it. But I am. spending the vast majority of my day on. the phone with companies, uh, reading. filings, presentations, K's and Q's,. talking to experts, talking to formers,. and trying to figure out if we're. investing in good businesses. You know,. are these highquality businesses that. have obvious growth drivers that do. something different that are competitive. uh have nice competitive. differentiation, real competitive. advantages that will allow them to grow. their market share, and that have. management teams that are maniacally. focused on returning cash back to. shareholders. That those are the things. I'm looking for. We love a simple. business, easy to understand, uh and we. like to be buying it at a valuation that. is not excessive. we hope to be buying. it at a discount to what we think it's. worth. Uh, and we're lucky again, we get. to use a dividend discount model. You. know, valuing a company is not easy. But. when you have something as tangible as a. dividend stream to value it on, we. actually have a price target, usually. that makes a lot of sense. Um, you know,. what is the yield going to be in the. future? What should it be? Well, we have. a lot of history on that. What are they. going to grow their dividend? Well, we. sort of have an idea of that. uh and we. come up with a valuation and uh we like. to buy stocks at discounts to what we. see their fair value. So that's it. That's how it all comes together. We're. in just about every sector. Uh we're. sort of sector agnostic. Uh we try to be. as diversified and balanced as we can. amongst end markets and sectors because. we are concentrated by by position. Yeah, there's absolutely so much. valuable information you just shared. even for someone building out their own. individual portfolio. A couple points. that I wanted to reiterate is quality is. so important. If you're doing any kind. of research on individual company and. you're deciding not to do the ETFs, you. really need to understand your company. You really need to find the quality. companies that can sustain that. dividend, grow that dividend, they have. the cash flow, they're in a competitive. ad um part of the market where they they. have a chance on and continue to grow. and to continue to compete. Uh there's. so many people that have been invested. in companies who are on the decline, but. they just love that that yield. You. really do need to look at the. fundamentals if you're going to be an. individual stock investor. I think one. of the biggest things I look for, you. know, quality in general is what I look. for, but it's the debt ratios that I. really concerned with because when a. company has income coming in or cash. coming in, they have, you know, limited. choices what they can do. Pay down debt,. pay it out to you, buy backs, you know,. so make an acquisition. if their debt. servicing is so high that they're. focused 100% on just repaying that debt,. you know, the dividend is not safe. And. so that's always one thing I really. focus on is a very low debt or. manageable debt depending on the. industry to really make sure that, you. know, they can sustain paying me as an. owner and they don't have to cut that. off in order to pay the debt. So I think. that's really good. 25 to 30 companies. is typically, you know, the sweet spot. when it comes to diversification. Once. you get much farther over that, if as. long as you're properly diversified. among segments, you don't really gain a. lot of um safety by going over that, but. you have to be really confident in those. names if you're only doing the 25 to 30. Um so doing that extra homework, it. really does make a difference. And it. sounds like that's what you guys are. focused on. Yeah, I think that's right. I mean, you know, there's been a lot of. studies over time that say, uh, you can. you can buy 15 to 20 companies and be. very diversified. Uh, and we're, you. know, we're we're believers in that. Uh,. there's no need to overlap the end. markets. Uh, but if you have this key. criteria, you should prevent a lot of. mistakes. Uh, and if you've been doing. this a long time, you sort of have the. pattern recognition of what can go wrong. and what does it look like. Uh, and so. having that history and seeing where. there are problems and companies that. ended up having to cut their dividends,. uh, it's rarely a surprise to us when it. happened and uh, just having that. history. I think that that allows us to. avoid some some real mistakes. Yeah,. absolutely. As I've I always tell. people, if you're going to do individual. stocks, you have to be able to put the. work in and the time to keep up on them. Now, dividend investing is not a. day-to-day type of thing, but you at. least need to look at the the quarterlys. and the yearlies, look at some. commentary, read what the management is. saying to really understand. And once. you get over, you know, 30 to 40, even. some people 50 um stocks, it's really. hard to keep up with them all. So, you. have to make a decision. Do you have the. time and do you have the understanding. and do you have the ability to really. dig into some of these companies you're. investing in? And if not, it's perfectly. fine. and go with a dividend ETF or hire. a company like yourself to run a fund. for you. Um, but you really need to make. the effort if you're going to go with. individual stocks. So many times people. have gotten burned um because they don't. really know what they own. Yeah, we're a. team of we're a team of five here on the. equity team focused 100% of our time on. the 25 to 30 stocks in the portfolio and. the 10 to 15 that are trying to get into. the portfolio. Uh and I agree it would. be hard to do uh have a lot more names. uh with uh even with our with our. expansive team. Yeah, it makes a huge. difference. So I guess with that um what. does your company offer when it comes to. individual investors or how can someone. work with you? Uh yes. So uh we're. accessible uh through a couple of uh. areas. Um we manage separate accounts. Uh you can go to our website uh at um. www.hemlcm.com and uh contact us through. there. Just reach out to us through. there. Uh we offer a uh mutual fund in. this strategy that anyone can you know. look up on Morning Star and that's. accessible versus uh at you know Schwab. Fidelity and a lot of different places. So th those are those are sort of the. the main ways to access our management. Okay. Awesome. Can you talk to us about. some maybe some of the current holdings. in in your strategy? Um if you can give. specific names that'd be great, but just. a couple just to give people an idea of. what you guys feel is a a good quality. company. You know, one one good example. of a Hamlin type stock is a company. called Old Republic. This is a Chicago. based property and casualty insurance. company that is just under a 10 billion. market cap and has been around a really. long time, but still so few actually. know it. Uh, but Old Republic has been. growing its dividend for 44 straight. years. It still yields over 3%. They just raised their dividend a couple. of months ago, 9% for the year. Um, so. Jeremy, we can do that chowder role. Uh,. 9 plus 3 is 12. That seems pretty good. Yep. Uh, Old Republic is big within. commercial auto. That is what they are. most well known for. Uh, but they're. also the number three title insurance. company in the country. H um they uh you. know if you if you think that the. housing market could improve at some. point that's going to acrue to the title. insurance companies as turnover picks. up. So that could be a impetus uh for. the stock price to go a little bit. higher. Uh but that dividend is. extremely well covered. They are a cash. return machine right now. So, Old. Republic in the last 12 months just did. something around a billion3 of free cash. flow while the regular dividend only. costs them about 280 $290 million. I. just mentioned that's at a that's at a. 3% yield. Oh, and by the way, they're. buying back a lot of stock because a. billion3 minus 280 290 is a lot of. excess cash flow. Yeah. Uh so they've. been buying back a significant amount of. stock which means that their dividend. per share is going up but their absolute. dividend payment has barely been going. up uh as business has been quite strong. within insurance over the last couple. years especially within their commercial. auto line. Um so uh that is that is um. that is a company we still like. It. still trades at 11 and a half times. earnings um and so we think reasonably. valued. Uh they also just paid a $2. special. So uh as I said, this company. is a cash flow return machine right now. The CEO, Craig Smitty, is uh doing a. great job. They have a very sort of. entrepreneurial culture for such an old. company that's been around 100 years. Um. so, you know, that's that's sort of a. company we own and and um have owned for. a long time. Maybe another example, a. company called Lamar, Lamar Advertising. So, uh, this is. a advertising. It's a billboard company. This company owns 150,000 plus. billboards all over the US, mostly on. highways uh, and roadways. Uh, they also. own something around 5,000 digital. boards. So, you have an analog board and. a digital board. as well. Uh 5% yield. here. Uh at a pretty attractive, we. think uh price to FFO level and a very. strong balance sheet. A company that has. been run by the Riley family. Sean Riley. is the CEO. I think his grandfather. started the company. It used to be a. radio company. I mean, um so, uh we. love, you know, familyrun situations. like this. Uh but even this again, very. entrepreneurial in how they run, uh this. business, which which we like. Um the. interesting thing here is just how. irreplaceable these assets are. You. cannot just put up a billboard. Yeah. Uh. there are lots of rules and regulations. um around where a billboard goes and. they own them. Uh so the other thing you. can do with a billboard is you can. transition it from analog to digital. Now you can't do that with all of them. Uh there are rules and regulations. around that too. uh but there is. something like 25 30% of their. billboards over time that they will be. able to transition to digital and when. you do that uh you get to charge more. because instead of having one advertiser. on there for a month you might have many. uh and so immediately the revenue per. board uh pretty quickly pays the capex. of putting that digital board up uh just. a good business because it is getting. harder and harder to capture through the. eyeballs. Um, and what's great about. Lamar is it's mostly local advertising. 80% of uh their business is local, only. 20% national. And you know, if you're a. real estate agent in town or a dentist. in town or a. lawyer, you're trying to get in front of. your potential. customers, there's not a lot of ways to. do it anymore. Yellow pages are gone. Local TV, uh, people aren't really. watching linear TV anymore. So the. billboard is becoming more and more. important. So uh been a very nice. dividend growth story over the last. couple years. Still at a 5% yield uh. with with uh we think reasonable. valuation. So um that that's a another. one in a portfolio that we like. Yeah, I. really love both of those. Um I own ORI. right now and I've owned Lamar in the. past. So um those definitely have been. on my radar as well. Uh I I love Lamar. because you know all the metrics when it. comes to them is just like fantastic. Like it's amazing how good a quality. they are. Um and to have that high of a. dividend is really something quite. impressive. And I believe that they're. um set up as a REIT. So they I think. they own the land that the billboards. are on as well. And those are usually in. the prime locations where to your point. you can't get those spots anymore. So. they have a real competitive advantage. in my mind. You know your stuff Jeremy. They are uh they transition to a REIT. 2013 or 14 something like that. Um and. uh they own uh they own the land under. those boards. That is uh that is how. that works or they they lease the land. under the boards. They own the actual. physical structure of the boards. Um and. those are like 100-year leases. So yeah,. that that's generally how that works. Because billboards have been around so. long, a company like Lamar is going to. have their prime locations already. And. you know, to your point, you just can't. pop a billboard wherever you want. So. there's definitely some, you know,. competitive advantage that they have. So. it's definitely something to look into. So I appreciate you getting those names. kind of put a name to the strategy, if. you will, so people can do research. Um,. not necessarily those two holdings. because, you know, you have to do your. own research and have your own. conviction, but that just gives you an. example of the type of quality that. Hamlin looks for when they're building. other portfolios. So I really appreciate. you being able to give us some details. Um, so you mentioned it earlier. um. people go to your website. Are you on. any other kind of social media or any. other ways for us to follow you as well. as Hamlin? I mean, as you mentioned, I. uh I'm on X. Uh I'm not that active a uh. poster, but every once in a while I will. share some thoughts uh generally related. to what we do uh and dividend investing. um uh you know, more more macro dividend. investing. Uh so that that's uh that's. really it. You can you can find us on. LinkedIn and various other formats or. just go to our website. Awesome. Well, I. really appreciate all your insights on,. you know, how to think about a dividend. strategy, how you guys are implementing. it in your your funds and in your. strategies and give us little bits of. insight on someone who professionally. does this day in and day out of the. types of companies to really look for if. you want to focus on quality sustainable. dividend growth companies. So, Chris, I. really appreciate coming on. Thanks for. for having me. Hopefully uh it came. across that uh you know this is this is. what I do. This is all I do. This is all. we've ever done as a firm. Uh we think. about dividend strategies. uh day and night uh for the last almost. 25 years now here at Amlund and uh we're. um you know we're we we think we're sort. of specialists in in this type of. strategy and uh and we think it's a. all-w weather strategy. Um, you know, it. sort of makes sense for for for just. about everyone. My most of my family is. invested here and uh they have big. dividend portfolios and uh it's just uh. what we believe in. Yeah. And you know,. obviously I've been dividend investing. for a long time and so when I was. researching your fund, it's like every. single thing that you listed as one of. your qualities you look for is exactly. what I look for. So it's like a perfect. fit for my style of dividend investing. So everyone definitely go check them. out. Check out their website. Check out. their strategies. see if one works for. you. Not a recommendation, but it. definitely you have a very strong um. plan in place on what to look for for. dividends and you guys have been doing. it for a long time. So, everyone check. out Hamlin, see if it works for you um. and ask any questions you have. If you. want to put comments down, I'll make. sure that it gets back to Chris and we. can get an answer for you or you can. follow them on social media and um go to. their website. All right, Chris, thanks. again. Really appreciate your time. I. see you next time. Great. Thanks,. Jeremy. Thank.