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Madison Dividend Income

Strategy Overview

Madison Dividend Income is an actively managed, high-conviction strategy that aims to provide superior long-term returns while assuming lower-than-average risk. To pursue this goal, we employ a relative yield approach to build a high-quality portfolio of companies with attractive relative dividend yields and a long history of dividend payments.

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Key Facts

Benchmarks S&P 500 Index, Russell 1000 Value Index, Lipper Equity Income Funds Index
Strategy Inception November 2011
Positions 35-50
Investment Vehicles Separate Account
Mutual Fund
Active ETF

Experienced Management

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Fact Sheet
Commentary
Quarterly
Mutual Fund
Active ETF

Relative Yield and High-Quality Approach

Investment Process

The Madison Dividend Income strategy first screens for large cap stocks that have a dividend yield at least 1.1x the S&P 500. Using this “relative yield” as a valuation metric, an attractive candidate is a stock with a relative yield near the high end of its historical range and a long dividend-paying history with a consistent record of dividend increases. 

Once we identify high relative yield stocks, we then analyze a company’s business model, balance sheet, and cash flow profile to assess its ability to continue paying dividends. We want to find stocks that have low valuations with potential for valuation multiple expansion, while avoiding stocks that may have high dividend yields but face secular challenges.

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Defining Characteristics

Relative yield strategy

Buys stocks trading at the high end of their historic relative dividend yield range to capture above-market yield and growth potential.

Strong track record

Compounding steady dividends and minimizing downside risk have led to strong risk-adjusted returns.

High-quality

Extensive fundamental analysis focused on quality and a company’s ability to sustain and grow dividends.

Long-tenured management

Co-Portfolio Managers have over 65 years of combined investment experience.

Madison U.S. Equity Department

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Consider the investment objectives, risks, and charges and expenses of Madison Funds carefully before investing. Each fund’s prospectus contains this and other information about the fund. Call 800.877.6089 or visit madisonfunds.com to obtain a prospectus and read it carefully before investing.

Madison’s expectation is that investors in the strategy will participate near fully in market appreciation during bull markets and experience something less than full participation during bear markets compared with investors in portfolios holding more speculative and volatile securities. Therefore, the investment philosophy is intended to represent a conservative investment strategy. There is no assurance that Madison’s expectations regarding this investment strategy will be realized.

All investing involves risks including the possible loss of principal. There can be no assurance the portfolios will achieve their investment objectives. The portfolios may invest in equities which are subject to market volatility. Equity risk is the risk that securities held by the portfolio will fluctuate in value due to general market or economic conditions, perceptions regarding the industries in which the issuers of securities held by the portfolio participate, and the particular circumstances and performance of particular companies whose securities the portfolio holds. In addition, while broad market measures of common stocks have historically generated higher average returns than fixed income securities, common stocks have also experienced significantly more volatility in those returns.

Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only, and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which would lower performance.

The S&P 500® is an unmanaged index of large companies and is widely regarded as a standard for measuring large-cap and mid-cap U.S. stock-market performance. Results assume the reinvestment of all capital gain and dividend distributions. An investment cannot be made directly into an index.

The Russell 1000® Value Index is designed to track those securities within the broader Russell 1000 Index that FTSE Russell has determined exhibit value characteristics. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group.

The Lipper Equity Income Funds Index tracks the performance of funds that, by prospectus language and portfolio practice, seek relatively high current income and growth of income by investing at least 65% of their portfolio weight in dividend-paying equity securities. The Index is composed of the 30 largest funds by asset size in the Lipper investment objective category.