Schafer Cullen International High Dividend ADR Value Equity

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Strategy

International High Dividend ADR

Investment Strategy

  • 30-45 undervalued non-US equities with a focus on developed economies
  • Growing earnings & dividends
  • High current dividend yield (target of above 4.5%)
Strategy AUM
$3.70bn (Sep 30, 2021)
Holdings
30-45
Benchmarks
MSCI EAFE
Inception Date
Jun 30, 2005

Strategy Attributes

The International High Dividend Value ADR portfolio gives investors a way to participate in the long-term upside potential of international equities while at the same time providing greater than average downside protection, given dividend yield support. While the foreign markets provide considerable upside potential, they are also exposed to additional political and currency risk. We believe the combination of low P/E, high dividend yield and dividend growth should offset this risk and reduce the overall volatility of the portfolio.

We select international stocks that combine the following:

  • Low P/E Discipline
  • High Dividend Yields
  • Strong Dividend Growth
  • The strategy invests in undervalued, non-US equities that offer ADRs with above average earnings growth and dividend yields (targets 4.5%+).
  • With a focus on developed economies, this concentrated portfolio of 30-45 stocks is diversified across all sectors of the market.

Investment Process

The Schafer Cullen investment team relies heavily on fundamental research as part of its investment selection process. Because the firm has a disciplined value investment philosophy, a rigorous review of company fundamentals vs. industry peer and the overall market is an important part of the investment process.

Jim Cullen, Portfolio Manager

Screen for Value:

  • Screen universe of ADRs and Canadian Stocks With +3% Yields For:
    • Low P/E Ratios
    • High Dividend Yield
    • Long-term DPS Growth
    • Long-Term EPS Growth
  • Sector and Industry Inflection Points

Fundamental Research:

  • Attractive Valuations
  • Dominant Company Characteristics
  • Catalysts for Price and EPS Appreciation
  • Superior Dividend Policies
  • Stable Macroeconomic and Geopolitical Environment

Portfolio Construction:

  • Approximately 35-45 holdings
  • No more than 30% in any one sector at cost
  • No more than 15% in any one industry at cost
  • No more than 5% in any one stock at cost
  • Generally, no more than 20% in any one country at cost
  • Top 10 holdings typically represent 35 – 40%
  • Approx. 90% in ADRs
  • Continual Portfolio Upgrade

Sell Discipline:

  • Price objectives reached
  • Earnings growth not realized
  • Deteriorating fundamentals
  • Tax reasons
  • Changes in dividend policy
  • Overvaluation
  • Change in Market Thesis
  • Portfolio Upgrade

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