INDUSTRY INSIGHT
YOUR FINANCES
SPONSORED CONTENT
How Will You
Replace Your Income
in Retirement?
T
oday, most retirement investors have saved through an
Employer Retirement Plan, usually a 401(k). The 401(k)s are
great for building a nest egg in your working years, but
when it comes time for living off that nest egg, how do you
go about it? Traditional portfolio management theory would point
to the “4 Percent Rule,” which states that you can safely withdraw 4
percent of your portfolio per year and have it last 30 years without
depleting your principal. The reality is, this rule doesn’t apply to
everyone. You may even require a much larger amount than 4% to
live on in retirement, especially in your “Go-Go” years where enhanced
living expenses, such as traveling, are highly important to you.
What if instead of relying on the price return of the stock market,
we focused on the dividend return of companies that have a strong
track record of growing dividend payments?
Dividend Growth investing can truly build wealth over time and
provide the income you need in retirement. At McKinley Carter
Wealth Services, we build such portfolios using criteria we call
Dividend Focus. In this portfolio, we focus on only those companies
that have a strong track record of rewarding shareholders with
increasing dividends and those that will likely continue to have the
ability to do so in the future. Our mission is to provide our clients with
the resources necessary to Invest in Their Good Life.
Visit our website for the full article on Dividend Growth Investing
(http://blog.mckinleycarter.com), including a case study analysis.
Who We Are…
• As fiduciaries – serving your best
interests and avoiding conflicts of
interest
• As financial strategists and
coordinators – helping you design
and take the actions needed to
take the best possible care of your
total financial situation
• As astute observers of
markets, politics, technology, and
demographics – helping you
assess the impact of global forces
on your assets, your community,
and your peace of mind
Dividend payments are far more predictable and reliable than a
stock’s return. It’s nearly impossible to predict what the stock price
of Johnson & Johnson will be next year, but it’s highly likely the
company will raise its dividend, like it has for the past 50 years.
At its core, a dividend is a distribution of a company’s profits to
shareholders. Dividends tell you the real story behind the profitability
of a business. Companies that consistently reward shareholders
through rising dividend payments are typically well-run, shareholder-
friendly, profitable businesses. Being able to consistently increase the
dividend suggests that the earnings of the company are relatively
stable.
Furthermore, if we’re able to identify Dividend Growers, we could
achieve outperformance and lower volatility. What good is superior
performance if you can’t sleep at night?
Historically, Dividend Growth stocks have shown to be less volatile
than non-dividend payers and have outperformed over the long run,
especially in down markets.
Far too many investors view risk as the day-to-day volatility of their
portfolio. While this is true, it’s also important to pay attention to
the other risk that sometimes goes unnoticed: Longevity Risk (a.k.a.
outliving your money in retirement). Stocks have a higher historical
return than bonds and provide you with a greater chance of Living
Your Good Life, if you can tolerate the added price volatility.
McKinley Carter
Wealth Services
100 Bradford Road, Suite 400
Wexford, PA 15090
724-940-4400
mc-ws.com
McKinley Carter Wealth Services, Inc. (“McKinley Carter”) is an SEC-registered investment adviser. For additional information about McKinley
Carter, including fees and services, send for our disclosure brochure as set forth on Form ADV using the contact information herein. Please read
the disclosure brochure carefully before you invest or send money.
This Industry Insight was written by Jonathan
Thomas, CMT.
Jonathan is a Financial Strategist in the Wexford office of
McKinley Carter, where he works primarily with individuals
and families to attain their financial goals. He particularly
enjoys investment management and has a penchant for
asset allocation, equity research, and technical analysis.
He uses his expertise to help clients identify their financial
goals and needs, and designs appropriate financial
investment strategies.
NORTH ALLEGHENY
❘
SUMMER 2018
19