Dividend Select Commentary – 3Q21
As we approach fall and head into the fourth quarter of 2021, we are particularly pleased with the results of the Argent Dividend Select strategy. The portfolio outperformed its benchmark, the Russell 1000® Value Index for the third quarter. The strategy’s relative outperformance over longer time horizons is likewise impressive, beating the index over the trailing three, five, ten and fifteen-year periods (net of fees). Our Argent Dividend Select strategy is designed to create a “sleep at night” portfolio, investing in companies with high quality, investment-grade balance sheets, attractive cash flows and positive dividend growth. One metric we particularly watch is our “downside capture ratio,” which measures our performance relative to the market when the market drops. A ratio less than 100 is what we are after, and since inception our downside capture ratio is 85%. So far, so good.
On September 14, Argent celebrated a milestone–our 23rd year in business! In honor of our birthday, we thought it might be fun to take a look at where the S&P 500® Index and dividends were at the end of September 1998. On September 30, 1998, the S&P 500 closed at 1017, somewhat shocking when one considers that the closing price on the last day of September, 2021 was 4307. That is a 323% increase in 23 years! Another incredible comparison is with dividends. The quarterly dividend for the S&P 500 back then was $3.96. Today, the quarterly dividend is $15.29. That’s an increase of 286%!
Even more exciting is how much you would have earned if you invested $1,000 in the S&P in 1998 and held it until the end of the third quarter of 2021. Assuming you reinvested all of the dividends, you would have a little over $6,600 at the end of the third quarter of 2021, for a gain of $5,600. This is a return on investment of over 550% as illustrated in the chart above. This exercise confirms two important investment axioms–that investing in the long term works, and that the power of compounding is remarkable.
We are open for business and welcome your interest in Argent Capital. In addition, if you like our market letters, we hope you will pass them on to friends. We have four successful equity strategies–Large Cap U.S., Small Cap U.S., Dividend Select and Mid Cap U.S.
Scott Harrison, CFA
PDF Version: Market Overview 3Q21
Performance results are net of fees. Past performance is no guarantee of future results. This is supplied as supplemental information to the composite disclosures presented later in this document. The information provided in this report should not be considered a recommendation to purchase or sell any particular security. You should not assume that investments in any securities were or will be profitable. A list of stocks recommended by Argent in the previous year is available upon request. Views expressed herein represent the opinion of the portfolio manager as of the date above and are subject to change.