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Performance Through Quality. The Haverford Quality 250 contains
only high-quality companies, those A-rated in accordance with Standard & Poor’s
Earnings and Dividend Ranking System. These multinational companies
are leaders within their respective industries that exhibit stability
in difficult times and achieve higher growth over full economic cycles.
Characteristics that typically define high-quality companies include:
• A history of superior growth and stability in both earnings and
dividends.
• Strong balance sheets, with lower long-term debt-to-total-assets
ratios.
• Well-designed business models and management processes that deliver
exceptional profit margins and returns on invested capital.
• Management that exhibits greater capital control and is keenly focused
on maximizing shareholder value.
Stability Through Dividends. The future return of a stock depends heavily
upon the cash flows generated by the underlying business. A company’s
current dividend payment and dividend growth are direct and tangible reflections
of that cash flow. As a result, dividends and dividend growth provide
a strong foundation for a stock’s total return potential.
• Regular dividend payment stabilizes a stock’s valuation
closer to the company’s intrinsic value.
• Dividends are a financial commitment by management – the consistent
and timely payment of dividends requires a strong capital discipline
and leads to better capital allocation decisions.
• Haverford’s Quality 250 process results in a portfolio with an above-average
dividend yield.
• Numerous historical studies show higher-yielding portfolios consistently
produce above-average returns with below-average risk.
• Higher-yielding portfolios also provide significant relative performance
advantages in declining markets.
The Haverford Quality 250 benefits from the synergies of a higher
yield and superior growth.
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