Manager Views

Meeting the demand for income and growth
Mackenzie Saxon Dividend Income Fund

Like many Canadians you’re probably thinking about retirement, and that immediately raises obvious questions about income. In fact, Hovig Moushian, Lead Manager, Mackenzie Saxon Dividend Income Fund, says generating a reliable income stream in retirement is something more and more Canadians are dealing with. “Demographics are changing rapidly and our aging population is hungry for yield,” says Moushian. “They’re looking for retirement income, and dividend stocks can work very well for them.”

But investing for dividend income isn’t as straightforward as it might appear. This is because when a company unexpectedly cuts its dividend it can damage your portfolio. The key is to invest in companies that produce a sustainable dividend payout. To do that Moushian adopts a broad strategy that is designed to create a secure income stream while reducing risk.

To build a dependable income flow, Moushian looks for companies with a demonstrated ability to pay higher dividends over time. He also follows a value-investing strategy which involves finding good dividend-paying companies that are trading below what the company is valued at, but with the potential to rebound. And while most funds are limited by what they can invest in, Moushian is free to invest in small, medium and large companies. This gives him a deeper dividend pool to invest in.

It’s an approach that is time-tested, and on May 31, 2012, the fund had outperformed its peer index over the past 10 years with an average annual return of 9.8%, compared to 7.1% for the Morningstar Canadian Dividend & Income Equity Peer Index. “Our investors have come to expect good performance over the long term,” says Moushian. “That’s where we’re focused, and the results have been quite positive.”