Investment Process

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The Matrix Advisors Dividend Fund seeks to generate good investment returns, consisting primarily of strong dividend income and the potential for capital appreciation by employing a highly disciplined Value-oriented philosophy rooted in the precepts of Graham and Dodd. The Fund’s overall investment goal is to generate high, safe and growing dividends, to appreciate capital, and to provide downside protection.

We believe that dividend income and Value can be found across the spectrum of the economy, so we will “go anywhere for value.” The strategy used by the Fund is a very conservative, large cap, “best ideas” strategy with an emphasis on current dividend income. The portfolio is concentrated with about 25-30 securities, but diversified across economic sectors and industries. It consists of common equities in large, stable companies with a demonstrated history of paying strong dividends and growing their dividends over time.

The underlying approach of the Fund is an actively managed, Value discipline with a primary emphasis on dividend income. We seek to identify stocks with strong dividend yields from companies whose strong businesses are trading inexpensively to our estimate of their Intrinsic Value, rather than just finding the numerically highest yields.

Our process involves both rigorous quantitative screening and then arduous qualitative research. First, we screen for mature, well capitalized companies that have paid dividends substantially higher than the S&P 500 yield with a history and expectation of dividend stability and growth, and that also trade at a discount to their Intrinsic Value. Second, we examine the company’s fundamentals, assessing the business’s ability to generate sufficient financial resources to fund a strong dividend and management’s commitment to pay it out to shareholders. Finally, we structure a select portfolio of these companies, diversify by sector and industry, assess and monitor the risk profile, and actively monitor for stock or company developments that meet our criteria for selling the position.

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