BACK TO THE BOUTIQUE INVESTOR BLOG The Case for Dividend-Paying Stocks Thomas S. Forsha, CFA CO-CHIEF INVESTMENT OFFICER Is now the time to be adding dividend-paying stocks to your portfolio? With interest rates moving higher, and deflationary pressures subsiding, the key drivers of growth outperformance over the past decade appear to be stalling. What seems to be a longer-term shift may support value and higher quality dividend-paying companies versus speculative growth companies. The promise of a dividend check provides an additional dose of certainty for investors. According to Ned Davis Research, dividend-paying stocks in the S&P 500® tend to underperform non-payers in the months leading up to the first-rate increase of a tightening cycle, but in the years after the initial increase dividend payers have outperformed on average by a wide margin. While the past decade has been tough for dividend-focused investors, the best performance for dividend payers has historically been the period that followed the first fed funds rate increase. Source: Ned Davis Research, Inc. See NDR Disclaimer at www.ndr/copyright.html. For vendor disclaimers refer to www. ndr.com/vendorinfo/ With interest rates marching higher and the yield curve steepening, Ned Davis Research points toward the potential for the outperformance of value stocks during a rising rate environment. Will the yield curve steepen over the second half of the year as the Federal Reserve is able to successfully manage a soft landing for the economy, or will tightening prompt a recession causing the yield curve to collapse again? Either outcome is likely to prove favorable for the relative performance of value strategies. And historically, the average value stock tends to enjoy higher dividend income than the average growth stock. LEARN MORE ABOUT RIVER ROAD Past performance is not a guarantee of future results. Diversification does not guarantee a profit or protect against a loss in declining markets. Investing involves risk including possible loss of principal. There is no guarantee that these investment strategies will work under all market conditions, and each investor should evaluate their ability to invest for a long term, especially during periods of downturns in the market. The S&P 500 Index is a capitalization-weighted index of 500 stocks. The S&P 500 Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. This does not constitute investment advice or an investment recommendation. This represents the views and opinions of River Road Asset Management. It does not constitute investment advice or an offer or solicitation to purchase or sell any security and is subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader theme. Data is from what we believe to be reliable sources, but it cannot be guaranteed. River Road Asset Management assumes no responsibility for the accuracy of the data provided by outside sources.