The uncertainty over the direction of U.S. interest rates, coupled with the general downturn in emerging markets that’s been fueled more recently by the decline in oil prices, has made things difficult over the past couple of years for those who invest in dividend-paying stocks.
But David Ruff, portfolio manager of the Forward Select EM Dividend Fund, has still managed to do well by continuing to find unique dividend cases across the emerging markets spectrum. Emerging markets as an asset class has been “unloved,” Ruff said, and the dividend space has definitely underperformed. “But our approach of finding special stories has really worked for us and now, if you look at valuation metrics and growth metrics at the company level, many emerging market companies, even in Russia – have good growth prospects,” he said.
Ruff and his co-portfolio managers have always focused on seeking out well-run companies where dividends are a high priority and where management is careful and committed to the business and its growth. The team analyzes potential investments quantitatively—looking at dividend history over time and the potential for future dividend growth, among others—and, more importantly, qualitatively, by spending good time with management.
“We spend a lot of time on the road. We’re big believers in this because it helps us uncover opportunities that don’t pop up on Bloomberg screens,” Ruff said. “Traveling helps us find companies that are off radar but have an unusual dividend story, and it enables us to meet management face-to-face.”