The Wall Street Journal and other national publications have interviewed Arbor Wealth Firm Founder and Principal Margaret R. McDowell, ChFC, AIF regarding Arbor Wealth’s utilization of dividend-paying investments in client portfolios.  Is this, we wondered, the face of future investing.

Question: Why do you think Arbor Wealth’s emphasis on income investments is attracting attention from national publications?

Arbor Wealth: We have a reputation for investing in securities that provide income, and that’s a recognizable investing niche. We’ve been interviewed several times by the Wall Street Journal, by Jane Bryant Quinn for AARP, and by Investment Advisor Magazine. 

Question: Is this investment philosophy a national trend?

Arbor Wealth: It is now. We began focusing on income generation and dividend-payers many years ago.  It’s only recently become a buzzword in the investment advisory industry.

Question:  Why do you rely so heavily on income producing instruments for your clients?

Arbor Wealth: This is my 18th year in the investment advisory industry. There have been long stretches during my career, and during our nation’s economic history, when the S&P was flat. 

So we decided long ago that if you are going to put your hard-earned capital into the market utilizing our services, we’re going make sure you receive a tangible reward from your investments. Since most of our clients are nearing or in retirement, these dividends amount to a virtual “paycheck.” You get systematic, periodic income, whether the market rises or slumps. 

Question:  What about growth?

Arbor Wealth: We endeavor to grow our client’s principal while they’re receiving income. When markets are not accommodative, however, they still get paid.

Generally, we find that most of our clients fall into two camps. There are clients for whom income is the primary objective and growth is secondary. Then there’s the growth with income contingent: clients who don’t have a regular need for income and prefer that the growth of their assets take center stage. 

In any case, our portfolios are custom-created to suit our clients’ objectives. So we have the ability to tailor the portfolios in either direction.

Question:  How do you choose which companies to invest in?

Arbor Wealth: Ideally, we look for global leaders that command dominant market share. It varies for each investor, but generally, we employ a defensive investing style to protect our clients’ assets, owing largely to their risk tolerance and age.

We like companies that have historically increased their dividends, and whose share appreciation has also risen over the years. You get that combination … you can come out ahead of the game.

Question: Why not just purchase a broad index?

Arbor Wealth: An index approach forces you to take the laggards with the leaders, which diminishes your return. When you are 25 years old, that’s not so damaging. When you are 55, it’s a concern. You must be selective when choosing investments in order to make any significant headway.

Question:  Do you rely solely on equities?

Arbor Wealth: Not at all, although our dividend bench is deep. We also like MLP’s, telecommunications, REIT’s, utilities and selective bonds. 

Question:  How long will the income trend last?

Arbor Wealth: Ten thousand American “boomers” are retiring daily for the next 17 years, many without enough savings. Longer life expectancies will require many investors to use their investment portfolios as an income engine.

Arbor Wealth Management, LLC, a “Fee-Only” Registered Investment Advisory Firm, will host “Income Generation: Making Your Portfolio Pay Monthly” at 10 a.m. Feb. 27 in the Arbor Wealth Conference Room. Firm Founder and Principal Margaret R. McDowell, ChFC, AIF, will lead an investment presentation featuring “Income with Growth” and “Growth with Income” strategies for investors. Ms. McDowell, who has been interviewed by the Wall Street Journal on Arbor Wealth’s investments in dividend-payers, explains how Arbor Wealth creates systematic, periodic income for clients from stock dividends and coupon payments from bonds. Ms. McDowell will also provide insights on expected 2013 market trends. Refreshments will be served. Please call 850-608-6121 to reserve seating. Arbor Wealth specializes in portfolio management for investors with $250,000 or more of investable assets.