You're watching...
Clearbridge Advisors Senior Portfolio Manager Hersh Cohen on the benefits of dividend-paying stocks.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
-- -- a portfolio manager whose fund is returning five and a half percent year to date.
What is Hersh Cohen co manager of the Legg Mason clear average equity income builder.
Doing right now because less important -- year to date really because the S&P is up 8% year to date would be your three year performance which is up 14%.
What is it's a compound it exactly so let's talk about.
It at as you sit down and you look at all of your top holdings of these are names that are very familiar -- to a lot of our viewers because many of -- might happen in their portfolios.
What you do to make the secret sauce of combining them make that return.
I don't of the secret sauce is a lot of hard work finding those companies that that have the and a free cash flow to pay eight continued rising stream of dividends that's our number one consideration.
Is the business model make it sustainable -- you don't wind up with General Motors or Kodak or something that can kill you so you.
One great companies with great franchises have the ability to raise -- history every ability to raise a dividend on a consistent basis -- not as easy -- you think they.
Are you you are dividend -- obviously have been a dividend -- level could when you hear Dennis -- talking about the you know apple and then of course what what are possible tax changes would be made in the future in Washington DC.
Does that change your outlook on how you pick a stock if dividend taxes go higher.
No but it it it wouldn't be good on I think it's not a good thing however the dividend story has been a good.
Been a good story that really forever and that the stock market.
In the 1950s when you cut tax rates marginal tax rates of of 70% plus dividends were still raised.
Every year by companies now admittedly most people didn't pay the highest marginal tax rate but here's here's the question I would -- is that.
What is better than a rising stream of dividends even with a higher tax you know I'm not sure that's a given that we're gonna have.
The 39%.
-- -- for work.
Where else is one going when ten year treasuries or -- when Munis.
Are in a way -- -- -- account money market but in -- stock because you get some type of return better than what I don't accept that money market is supposedly a dollar and a dollar audience you have to be careful stocks can go down as what was up well and we're gonna get people teaser here because you're gonna name a whole bunch of stocks coming I was gonna give you those but.
Looking at say for example a name that you -- right now that you would add to as far as positions are concerned what would that be -- Dollars insurance would be one travelers is the best run.
Property and casualty company in the business we think.
Managing risk spreading risk around they don't penalize -- point 8% giving -- two point 8% they raise it they -- we're expecting another big dividend increase this year.
They -- -- shares the balance sheet just -- his most important they came through this whole financial debacle.
With whip -- with their balance sheet completely.
Intact in -- selling below book value.
Kimberly-Clark is another one that's it's a great -- great company diapers and -- facial tissue toilet tissue and sold.
4% current yield we're expecting I thought it would come today but it will be next week probably not a not a dividend increase probably I'm guessing.
6% yields 4% currently -- dividend is going up every year for four decades what why would you not want -- -- -- giving you -- sort of the flashing light the Kimberly-Clark's dividend it may probably be raised next week she's got eight billion in assets under management coming up he's going to name more stocks.
We're perfectly for a but he's in the studio with us and -- -- at -- or.
