Dividend Income Fund
An income solution that employs a relative yield and high-quality approach to mitigate risk while pursuing an above-market dividend yield.
Investment Strategy
The objective of the Fund is to produce current income while providing an opportunity for capital appreciation. To pursue this objective, the Fund invests in equity securities of dividend-paying companies with a market capitalization of over $1 billion. The Fund’s portfolio managers will identify investment opportunities by screening for companies that generally have a dividend yield greater than the S&P 500 Index, a strong balance sheet, and a dividend that has been maintained and which they believe is likely to increase. Portfolio companies will generally trade on the high side of their historical relative dividend yield.
Portfolio Management
Why Madison Dividend Income Fund
- High-conviction portfolio of high-quality, above-average dividend yield stocks (typically 35-50 stocks).
- Relative yield strategy; buys stocks trading at the high end of a historic dividend yield range.
- “All-weather portfolio” with a focus on risk management.
- Emphasis on Dividend “Aristocrats.”
- Long-tenured management.
Key Highlights (As of Wednesday November 27, 2024)
Class A | Class Y | Class I | Class R6 |
|
NAV |
30.37 | 30.39 | 30.37 | 30.38 |
Change($) |
0.01 | 0.01 | 0.01 | 0.01 |
YTD(%) |
14.77% | 15.03% | 15.13% | 15.19% |
Ticker |
MADAX | BHBFX | MDMIX | MADRX |
Inception Date |
05/29/20 | 12/18/86 | 08/31/20 | 02/28/22 |
Expense Ratio |
1.16 | 0.91 | 0.81 | 0.73 |
|
Morningstar Overall Among 1084 Large Value funds |
1.1x
Fund invests in stocks with dividend yields 1.1x the S&P 500
2.7%
dividend yield1
37
holdings1
$152.6M
net assets1
Commentary
We wrote last quarter about the attractive investment opportunity in dividend stocks as many market participants were focused elsewhere on more expensive Technology holdings and the excitement surrounding artificial intelligence. Our view was that the rotation away from dividend stocks and into Technology stocks since the end of 2022 created an attractive opportunity to own high-quality above-average dividend stocks at below-average valuations. We maintain that view as many dividend stocks continue to trade at historically cheap valuations compared to the broad market.
Performance
Average annual returns, %
Portfolio Highlights
Top Ten Fund Holdings (As of 10/31/24)
AUTOMATIC DATA PROCESSING |
4.26% |
BLACKROCK INC |
3.65% |
MORGAN STANLEY |
4.23% |
MEDTRONIC PLC |
3.65% |
NEXTERA ENERGY INC |
4.22% |
TEXAS INSTRUMENTS INC |
3.52% |
FASTENAL CO |
4.14% |
CME GROUP INC |
3.44% |
HOME DEPOT INC |
3.77% |
JOHNSON + JOHNSON |
3.44% |
Documents and Other Information
The Morningstar Rating™ for funds, or “star rating”, is calculated for funds with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics, and may not indicate positive performance. Ratings may vary by share class.
1 Data as of September 30, 2024.
Performance quoted represents past performance. Past performance does not guarantee and is not a reliable indicator of future results. Investment returns and principal values will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than that shown.
Net Asset Value (NAV) is the amount per share you would receive if you sold shares that day. Change refers to the amount (in dollar terms) that the value of the share price changed from the previous day’s close of trading. The Year-to-date (YTD) return is the net change in the value of the fund’s share price (in percentage terms) at NAV from January 1 to the current date shown above. Expense ratios are as of each fund’s most recent prospectus. For more detailed information on performance, including returns for the most recent month-end or quarter-end, view Performance.
Investment returns assume all distributions are reinvested and reflect all applicable fees and expenses. Benchmark index returns assume all distributions are reinvested. Indexes are unmanaged and, therefore, have no fees. Investors cannot invest directly in an index.
Investment returns reflect fee waivers without which they would have been lower and net expenses higher. The investment adviser waived 0.10% of its annual management fee and 0.05% of its services fee for Class Y shares from June 29, 2012 through May 31, 2020. Prior to March 1, 2012, the Dividend Income Fund was known as the Balanced Fund. The Balanced Fund pursued different strategies for achieving its investment objective and, therefore, the Fund’s historical performance prior to March 1, 2012 may not be relevant to current (and future) investors.
An investment in the Fund is subject to risk and there can be no assurance the Fund will achieve its investment objective. The risks associated with an investment in the Fund can increase during times of significant market volatility. The principal risks of investing in the Fund include equity risk, capital gain realization risks to taxpaying shareholders, growth and value risks, special risks associated with dividend paying stocks, foreign security and emerging market risk, depository receipt risk, interest rate risk, and market risk. More detailed information regarding these risks can be found in the Fund’s prospectus.
The S&P 500® Index is a large-cap market index which measures the performance of a representative sample of 500 leading companies in leading industries in the U.S.
The Lipper Equity Income Funds Index tracks the performance of funds that, by prospectus language and portfolio practice, seek relatively high current income and growth of income by investing at least 65% of their portfolio weight in dividend-paying equity securities. The index is composed of the 30 largest funds by asset size in the Lipper investment objective category.
The Russell 1000® Value Index is a large-cap market index which measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group.
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