Select DSIP Portfolio, 4th Quarter 2021 Series
The Select DSIP Portfolio is based on the Diversified Stock Income Plan (DSIP). This plan was created to capitalize on a rising dividend strategy and is comprised of 70 stocks that are regularly reviewed
and compiled after a thorough analysis by Well Fargo Advisors.
Portfolio Selection Process
- Begin with the 70 stocks that comprise the DSIP list. The objective of this list is to provide
a diversified universe of industry-leading companies whose consistent dividend growth can
potentially help offset the wealth eroding effects of inflation.
- Choose a portfolio that focuses on companies that:
- Have a solid financial condition
- Have attractive current dividend yields
- Are believed to have the potential to continue to raise dividends yearly
- Purchase an approximately equally weighted portfolio of 25 stocks with the best overall ranking.
The Importance Of Dividends
Investing in dividend-paying stocks is a time-tested strategy that provides an attractive
combination of income and capital appreciation potential. Dividend distributions can offer more
than just an income boost, they can potentially help to offset losses in down markets. Additionally,
reinvesting dividends has the potential to be a powerful strategy in an investor’s portfolio.
Dividends have had a significant impact on stock performance, contributing nearly half of
the stock market’s total return. According to Ibbotson Associates, dividends have provided
approximately 40% of the 10.30% average annual total return on the S&P 500 Index from 1926
through 2020. Of course, past performance is no guarantee of future results. The S&P 500 Index
is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance.
The index cannot be purchased directly by investors.
Why Invest In Companies With A History Of Growing Dividends?
Quality | Companies that have been able to consistently grow their dividend have a tendency
to be higher quality compared to those of the broader market in terms of earnings quality and
leverage, in our opinion. A company’s ability to reliably increase its dividend for years, or even
decades, can be an indication of its financial strength or discipline.
Buffer Against Market Volatility | Dividend growth companies may be attractive to investors
looking for disciplined companies that can endure difficult market and economic environments.
These companies typically feature healthy balance sheets and consistent cash flows that provide
plenty of capital to effectively operate their business and fund a growing dividend.
Address the Potential Risks Associated with Rising Rates | Unlike high dividend yield
strategies which tend to be concentrated in companies from certain sectors that could come under
pressure during periods of rising rates, dividend growth strategies tend to be more diversified and
able to provide increased exposure to sectors that could become more desirable with improving
economic activity and rising rates.
This unit investment trust seeks to provide an attractive stream of income and to reduce volatility
and modify risk through diversification and rising dividends. There is no assurance the objectives
will be met.
| Not FDIC Insured Not Bank Guaranteed May Lose Value
You should consider the portfolio's investment objectives, risks, and
charges and expenses carefully before investing. Contact your financial professional
or call First Trust Portfolios, L.P. at 1.800.621.1675 to request a prospectus,
which contains this and other information about the 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, such as an economic recession and the
possible deterioration of either the financial condition of the issuers of the equity securities or the general condition of the stock market.
This portfolio contains Real Estate Investment Trusts (REITs), which are 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 securities of foreign issuers, which are 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.
Large capitalization companies may grow at a slower rate than the overall market.
As the use of Internet technology has become more prevalent in the course of business, the trust has become more susceptible to potential operational risks through breaches in cybersecurity.
The COVID-19 global pandemic has caused significant volatility and declines in global financial markets, causing losses for investors. The development of vaccines has slowed the spread of the virus and allowed for the
resumption of “reasonably” normal business activity in the United States, although many countries continue to impose lockdown measures. Additionally, there is no guarantee that vaccines will be effective against emerging
variants of the disease.
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.
Although this unit investment trust terminates in approximately 15 months, the strategy is long-term. Investors should consider their ability to pursue investing in successive portfolios, if available. There may be tax
consequences unless units are purchased in an IRA or other qualified plan. There is no assurance the objectives of this portfolio will be achieved.
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. 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.
First Trust Portfolios L.P. is the sponsor of this portfolio and not an affiliate of Wells Fargo Advisors. Units are
available through Wells Fargo Advisors.