Select DSIP Portfolio, 3rd Quarter 2019 Series
Regardless of the market environment, we believe dividends should be considered an important ingredient in an investor's overall investment plan. One way to seek to accomplish this goal is to buy
a portfolio of companies with the potential to pass on a portion of their earnings to investors in the form of regular dividend increases.
The Importance Of Dividends
A company’s ability to consistently pay — and increase — dividends is an important sign of that
company’s financial strength. Therefore, we believe investors who are seeking dividends through their
investments should look for well-managed and financially sound companies with the potential to
deliver solid returns. Companies that choose to reward stockholders with greater dividends (and many
companies don’t) can give investors the potential to increase capital and produce attractive total returns
over time. Of course, past performance is no guarantee of future results.
In the opinion of Wells Fargo Advisors, this strategy of investing may allow for the accumulation
of wealth over several years, while also seeking to provide capital preservation.
Dividends have had a significant impact on stock performance, and have provided approximately
42% of the 9.99% average annual total return on the S&P 500 Index, from January 1926 through
The chart below shows that dividend growers in the S&P 500 Index have outperformed even the
highest-yielding companies in the index over the last 30 years.
This investment seeks to:
- Provide an Attractive Stream of Income.
A portfolio of stocks believed to
have the potential to regularly raise dividends offers investors the potential for a growing income
stream. Because companies are selected for this portfolio based on their potential to not only pay
dividends, but also their ability to increase them, this strategy can provide a natural inflation hedge.
Rising dividends have also demonstrated an ability to cushion the fall of stock prices, especially in
a rising interest rate environment.
- Reduce Volatility and Modify Risk.
The Select DSIP Portfolio helps counteract
volatility through diversification. The portfolio includes companies across various market
capitalizations and sectors of the economy. Any stock inevitably is subject to general price
fluctuation, but diversification can help smooth out overall portfolio returns. In addition, dividend
payments may enhance the investment’s total return. However, diversification does not guarantee
a profit or protect against a loss.
| Not FDIC Insured Not Bank Guaranteed May Lose Value
You should carefully consider the portfolio's investment objectives,
risks, charges and expenses before investing. Contact your Financial Consultant
or call First Trust Portfolios at 1.800.621.1675 to request a prospectus, which
contains this and other information about this portfolio. Read it carefully
before you invest.
An investment in this unmanaged unit investment trust should be made with an understanding of the
risks involved with owning common stocks. The value of the securities held by the portfolio may be
subject to declines or increased volatility due to changes in performance or perception of the issuers.
There is no guarantee that the issuers of the securities included in the portfolio will declare dividends
in the future or that, if declared, they will either remain at current levels or increase over time.
There may be tax consequences unless units are purchased in an IRA or other qualified plan. There are
fees and sales charges associated with this investment. There is no assurance the objectives of this
portfolio will be achieved.
While the life of this portfolio is 15 months, this strategy offers the best potential when participants
invest over many years, so investors should consider their ability to pursue investing in successive
portfolios, if available.
This portfolio contains a real estate investment trust, which is subject to additional risks, such as changes in the real estate market, vacancy rates and competition, volatile interest rates and economic recession.
The portfolio contains a foreign-issued security, which is subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control
restrictions impacting foreign issuers.
An investment in a portfolio containing small-cap and mid-cap companies is subject to additional risks, as the share prices of small-cap companies and certain mid-cap companies are often more volatile than
those of larger companies due to several factors, including limited trading volumes, products, financial resources, management inexperience and less publicly available information.
As the use of Internet technology has become more prevalent in the course of business, the trust has become more susceptible to potential risks through breaches in cyber security.
While Wells Fargo Advisors has carefully evaluated and approved the securities in this portfolio, it may choose for any reason not to recommend any or all of the
securities for another purpose or at a later date. This may affect the value of your units.
Wells Fargo Advisors is the trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo
Advisors Financial Network, LLC, members SIPC, separate registered broker-dealers and non-bank
affiliates of Wells Fargo & Company.