Bill Priest and David Pearl will discuss the factors that have been driving global markets and explain why we feel that quality companies with steady dividend and earnings growth will become a much more significant contributor to returns in the months ahead. Click here for replay.
Bill Priest speaks with Steve Forbes about the prospects for economic growth, dividend payers versus dividend growers, and the 9% solution.
Epoch has been wary of financials, particularly large banks, since before the financial crisis. In the U.S., however, banks have recapitalized their balance sheets, reduced leverage, and have a greater level of transparency than in the past. While revenue growth will likely be slow for as long as the yield curve remains suppressed, some now have the ability to generate excess capital and return it to shareholders.
We are global equity investors with a distinct perspective on the long-term drivers of shareholder return.
Advantage from Perspective
Long-term investment success demands a focus on essential truths that are not always obvious. We focus on investing in companies with the enduring elements that create value: free cash flow and managements committed to providing positive returns to shareholders. Like the companies in which we invest, we are committed to transparency. This includes sharing our global market perspectives and insights that help drive our investment decisions.
Investors often view a company through the prism of accounting measures such as price-to-book value and price-to-earnings ratios. Epoch adopts a different approach. Earnings growth and dividends drive shareholder returns, and they come from a single source: cash flow. We focus on companies that are growing free cash flow and allocating it intelligently.
Reinvesting cash flows in internal projects or acquisitions is preferred when those actions will generate returns above the cost of capital. Otherwise, we believe company managements should return excess cash to shareholders through dividends, share buybacks or debt repayments.
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