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Richard Bernstein Advisors Global Dividend Kings®, Series 29

The Dividend Attraction

Investors today are challenged to find attractive sources of income for their portfolios. This reality, coupled with the closing of the gap between dividend and U.S. government bond yields, (see Chart 1) has prompted many investors to consider the potential benefits of taking a yield approach to equity investing. For investors who were intimidated by events during the global financial crisis, the simplicity and transparency of an approach that has the potential to provide both income and capital appreciation may be attractive.

A Key Component of Total Return

Historically, dividends have made up a significant portion of stock market total return. According to Ibbotson Associates, dividends have provided approximately 41% of the 10.16% average annual total return on the S&P 500 index, from 1926 through 2017.

Global Demographics

The number of people aged 65 or older is projected to grow from an estimated 524 million in 2010 to nearly 1.5 billion in 2050, with most of the increase in developing countries.1 With more investors spending more years in retirement, we believe demand for dividend income will increase. Two-thirds of all investable assets will soon be controlled by older households concerned with income and wealth preservation.2

A Global Approach to Dividends

Diversification is one of the principal advantages of global investing. Because global markets often follow different cycles than the U.S. markets, investing globally may provide gains when domestic markets are flat or declining. Consider that in 13 of the 30 calendar years from 1986 to 2015, the MSCI World ex USA index outperformed the S&P 500 Index. It is important to note that diversification does not guarantee a profit or protect against loss.

By investing a portion of your portfolio outside the U.S., you may significantly expand your investment choices and participate in the long-term growth potential of foreign companies. The International Monetary Fund, in its October 2018 release, forecasts a global growth rate of 3.7% for 2018 and 3.7% for 2019. Its estimate for the U.S. is 2.9% for 2018 and 2.5% for 2019.

In addition, dividend yields have typically been higher overseas, as shown in Chart 2. It is important to note that there can be no assurance that companies will declare dividends in the future or that, if declared, they will remain at current levels or increase over time.

1 World Health Organization
2 ;McKinsey

Reasons to Consider Dividend-Paying Stocks:

  • Interest rates remain low
  • Key component of total return
  • Global demographics and diversification


The Richard Bernstein Advisors Global Dividend Kings® Portfolio is a unit investment trust (UIT) focused on total return through a combination of dividend income and capital appreciation. The stocks are selected for the trust by Richard Bernstein Advisors (RBA) using a comprehensive process and held for approximately two years. A UIT is an investment vehicle which consists of a professionally selected unmanaged portfolio of securities which are held for a predetermined period of time. The value of the units of the trust will fluctuate each day with the value of the underlying securities; therefore it is possible to lose money by investing in the trust. There can be no assurance that the trust objectives will be achieved. In addition, 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.

RBA Portfolio Selection Process

RBA's’s quantitative techniques seek income in a risk-controlled process. This process seeks to gain yield while seeking to eliminate the highest-yielding stocks, which tend to be the most susceptible to dividend cuts. This helps to reduce the risk of the portfolio and may protect the yield.


A Disciplined Approach To Yield

RBA starts with the companies listed on the MSCI ACWI index. This index captures large and mid-cap representation across 23 developed and 24 emerging market countries. The index covers approximately 85% of the global investable equity market.

From this universe, RBA then screens for companies that have increased their trailing 12- month dividend each year for the previous 5 years. Sspecial dividends are not included. The highest yielding stocks are removed, as they tend to be most susceptible to dividend cuts. This screening process generally results in 200 to 500 stocks.

RBA then uses a proprietary optimization method to weight the stocks. This final step attempts to reduce the volatility of the overall portfolio, while maximizing the yield. Thus, the strategy attempts to reduce risk in two ways: First, RBA screens for consistent dividend growth. second, RBA uses a proprietary weighting method which strives to reduce overall portfolio volatility. From the initial universe of over two thousand, the resulting optimally weighted portfolio consists of less than 100 names. The trust will invest in U.S. listed securities of domestic and foreign companies, American Depository Receipts (ADRs) or Global Depository Recepits (GDRs) of foreign companies, and foreign listed securities.

Richard Bernstein Advisors, LLC
RBA is a registered investment adviser focusing on longer term investment strategies that combine top-down, macroeconomic analysis and quantitatively-driven portfolio construction, utilizing Mr. Bernstein's widely recognized expertise in style investing and asset allocation.
The firm's Chief executive and Chief investment officer, Mr. Bernstein has over 35 years' experience on Wall street, including most recently as the Chief Iinvestment Strategist at Merrill Llynch & Co. RBA acts as sub-advisor for mutual funds and also selects portfolios for income-oriented Unit Investment Trusts sponsored by First Trust Portfolios L.P. Additionally, RBA runs exchange-traded fund asset allocation portfolios and in separately managed accounts and is the index provider for two exchange-traded funds. rba has approximately $9.5 billion in assets under advisement as of September 30, 2018.


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 advisor 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.

Risk Considerations:
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.

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.

An investment in a portfolio containing equity securities of foreign issuers is subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting foreign issuers.

Because the portfolio is concentrated in companies headquar tered in Europe, the portfolio may present more risks than a portfolio which is broadly diversified over several regions.

This UIT is a buy and hold strategy and investors should consider their ability to hold the trust until maturity. There may be tax consequences unless units are purchased in an IRA or other qualified plan.

The value of the securities held by the trust may be subject to steep declines or increased volatility due to changes in performance or perception of the issuers.

Certain of the securities in the portfolio are issued by Real Estate Investment Trusts (REITs). Companies involved in the real estate industr y are subject to changes in the real estate market, vacanc y rates and competition, volatile interest rates and economic recession.

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 cyber security.

The information in the prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
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The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
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