Endowment Portfolio

The Endowment strategy was originally designed by DCM to produce a generous stream of income for charitable organizations and to keep that income going up every year – even when the organizations were spending all of the income. While working with people who are living on their assets in retirement, we found that they could enjoy these same benefits and with less volatility than other approaches producing similar returns.

Endowment portfolios can use taxable or tax-free bonds in combination with any of DCM's three Rising Dividend Management Styles: Cornerstone, Capital Builder, or Income Builder.

Endowment - Cornerstone

A portfolio designed specifically with retirees and charitable endowments in mind. Investors in this management style benefit from generous income that increases over time.

Allocating a significant portion (40% to 60%) of a client's assets to DCM's Cornerstone stocks and the balance to DCM's Preservation of Capital style creates our Endowment - Cornerstone portfolio. Far more than a simple allocation between stocks and bonds, Endowment produces significant returns with reduced volatility and a generous, growing stream of income. For trusts, foundations, and retirees, the ability to spend all of the income produced each year and maintain confidence that the principal and the income it produces each will continue growing makes Endowment more than suitable. The threat of inflation makes an approach that generates ever-growing income a requirement.

Over the last several years, dividends for our Cornerstone stocks have been growing in excess of 10% each year. So, while the interest and dividends from DCM's Endowment-Cornerstone portfolios have been running around 5% of the principal, the income from the total portfolio has also been growing depending upon how much of the portfolio is allocated to equities, by 3% to 6% each year.

Endowment - Capital Builder

A management stlye that balances the returns found in growth stocks with the more dependable returns from fixed income securities.

Endowment - Capital Builder's primary objective is to earn a generous total rate of return by investing in a combination of common stocks, bonds, and cash equivalents. Selection of this investment objective implies a desire to assume a level of risk less than that of common stocks and slightly greater than that of bonds. Each client's portfolio manager will allocate assets among stocks, bonds, and cash equivalents based on the relative attractiveness of each at different points in time. Shifts in the asset mix are made in response to changes in the business cycle, interest rates, and the economy. Dividend and interest income will comprise an important part of the total return of the portfolio.

Endowment - Income Builder

A management style producing a high level of dividend and interest income yet seeking continuous increases in both the income produced and the value of the principal.

Companies owned in the equity portion of this portfolio pay out exceptionally high proportions of their earnings as dividends. Income Builder's secondary objective is to own companies who regularly increase those dividend payments. When combined with DCM's Preservation of Capital management style for the fixed income portion of the portfolio, the income generated (interest and dividends) begin to approach that of a pure bond portfolio.

Endowment - Income Builder makes an appropriate choice for clients needing to maximize income today and for years into the future.