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Portfolio Update

Key Takeaways and More Fourth-Quarter Numbers

By Roger S. Conrad, on Feb. 26, 2017

With just a handful of our Portfolio holdings yet to report quarterly results, here are three takeaways to help guide us going forward.

First, operating margins and balance sheet strength remain at least as important for consistent dividend safety and growth as increasing revenue. And the good news is our best-in-class picks from a range of sectors score well on both counts.

The second key takeaway this earnings season is that revenue growth remains challenging across a wide range of dividend-paying groups. Even the big, dominant, asset heavy companies we focus on have relied on margin management to maintain profitability and balance sheet strength while growing dividends. And based on their guidance, that’s what we can expect in 2017.

The third takeaway from fourth-quarter results is that rising interest rates have had little or no impact on portfolio companies’ profitability so far. In fact, they haven’t moved share prices very much, either.

To be sure, debt is a substantial part of the capital structure for the majority of our Portfolio holdings. That’s because their revenue is mostly tied to cash-generating assets. But all our picks have made moves in recent years to extend maturities of existing debt, limiting the risk of having to refinance at an inopportune time and pay a higher interest rate.

To read how these takeaways play out for Lifelong Income Portfolio members, as well as read about their quarterly results, either log in or become a subscriber.

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