Ever heard of the Yield Dogs? Neither had Joyce Gordon when, as a young investment analyst in 1990, she was asked by a mentor, portfolio manager George Miller, to help him solve a problem.
“At the time, the analysts covering industries that paid good dividends each made their recommendations in a silo,” recalls Gordon, who was covering savings and loans companies. “He’d hear my idea to invest in a bank, then the utilities analyst’s ideas, then he’d listen to the phone analyst make another recommendation.”
But Miller wanted to compare dividend paying companies across industries so he could identify the best opportunities for the retirees and other income seekers who invested in his fund.
So the analysts compiled key metrics for each company and put them all on one page. They gathered in a conference room to debate the merits of each. Soon the group began meeting every two weeks and taking research trips together.
Thus were born the Yield Dogs, a group of dividend-focused portfolio managers and analysts whose name stands for “Dividends Ought to Grow.” Through the decades, as dividends have come in and out of favor with investors, the Dogs have continued to meet regularly. Today the group has expanded to more than 25, covering companies across all sectors and across global markets.
“Our mission has become more challenging,” Gordon says. “A great many of our investors need income from their investments, and we need many ideas to meet this challenge.”
Dividends are making a comeback
In fact, the past 18 months have been extremely challenging for the Yield Dogs and any other income-focused investors. The pandemic and global shutdown walloped many areas of the market that pay dividends in 2020, including airlines, hotels, energy and financials. In a spirit of caution — or, in some cases, facing questions of survival — companies suspended or reduced their dividends at historic levels.
In the U.S. alone, 242 companies cut or suspended dividends, nearly matching the total for the previous 11 years combined. In other. markets, particularly in Europe, government officials pressured or required some industries to suspend dividend payments during the crisis.
But the picture is brightening. With the rollout of COVID-19 vaccines and the reopening of economies, companies have begun to resume payments. As of May 31, 2021, 76 American companies had reinstated dividends.