Dividend-Paying Bank Securities
Famed money manager Peter Lynch advised that investors should invest in industries that they understand best. Cutler Capital Founder Mel Cutler and President David Grenier know the banking industry better than any other industry. Mel founded two banks and David worked in the banking industry for 17 years.
Another reason they are focusing on dividend-paying bank securities, is because of the impact that dividends can have on total returns.
Dividends Impact on Total Returns
During the past 30 years, dividends have accounted for nearly a third of the total return of the S&P 500, according to Standard & Poor's. In addition, dividends reduce downside risk. If $10,000 were invested in the S&P 500 in 1972, today it would be worth $208,972 if all dividends were reinvested and only $74,547 if dividends were not reinvested. Past performance is no guarantee of future performance.
View Chart: Effects of Compounding Dividends
Dividends: Favorable Tax Status
Also, because of recent changes in the Federal tax code, instead of paying taxes on dividends at their income tax rate, most investors can now pay at a rate of only 15%. As a result, stocks with dividends are more attractive, and more companies are offering dividends.
About Cutler Capital Management
Cutler Capital Management, LLC is a growth & income manager that specializes in blending convertible securities with Real Estate Investment Trusts and dividend-paying equity securities. Our strategy generates significant income from interest and dividends, and has the potential for capital appreciation. Historically, Cutler has generated equity-like returns without the risk associated with traditional equity investments.
Cutler Capital currently manages two private investment funds to meet the differing investment goals, tolerance for risk and investment timelines of our clients. In each case, capital from like-minded investors is pooled and invested in a diversified group of convertible securities, REITs and dividend-paying bank stocks.
For performance information and other key features about Cutler's private investment funds please register here.
Private investment funds advised by Cutler Capital Management LLC are not offered or sold to the public. Funds are accessible only to investors who are considered " qualified clients" within the meaning of Rule 205-3 under the Investment Advisers Act of 1940, as amended, who receive a confidential private placement memorandum issued by the fund and who ultimately become parties to the operating agreement governing operation of the fund.
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