{"date":"2020-10-23T00:00","headerImageUrl":"https://structuredproducts-ch-pub-uat.leonteq.com/product-news/product-homepage-banner/leonteq-structured-products-dividendenadel-product+homepage+banner.jpg","subTitle":"Tracker certificates on DividendenAdel indices","windowTitle":"DividendenAdel","category":"investment-themes","title":"Concentrated substance","body":"
From the investment philosophy to the stock market index<\/h3>\n
The starting pistol for two special tracker certificates was fired on 10 January 2020, when Leonteq opened the door to investment in the \"DividendenAdel\". Behind this title is a sophisticated strategy based on the long stock market experience of Christian W. Röhl. The experienced investor and author (\"Cool bleiben und Dividenden kassieren\", roughly translating as \"Stay cool and pocket dividends\") is convinced of the importance of sustainable payout quality for investment success. He has therefore defined four criteria for the systematic selection of equities that have earned the right to be \"ennobled\", as it were. The tried-and-tested approach was applied to an index methodology at the start of the year. To be included in the DividendenAdel indices calculated for Germany and Switzerland, an equity must first meet certain criteria in terms of liquidity and market capitalisation. All the companies that make it past the tradeability filter then go through the actual selection process.<\/p>\n
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\"Magic square\"<\/h3>\n
Alongside continuity, the payout ratio, yield and growth of the dividends are also put on the test bench. The first of these criteria is only considered met if a company has managed at least ten years in a row without cutting its dividend. For the payout, the method stipulates that the distribution (smoothed over three years) is between 25% and 75% of the profit achieved. That means companies should not be parsimonious, but at the same time not overdo the spending sprees either. \"If too much is paid out, there might soon not be any money for investment,\" explains Christian W. Röhl. Equities whose payouts do not attract an average interest rate of 1% (in both historic and indicative terms) are eliminated. Here the innovative thinker has deliberately set a low bar. For Röhl, the long-term total return is more important than the short-term income. The \"magic square\" is rounded off by the dynamism and momentum of profit sharing. There must have been at least three increases in the dividend within ten years. The most recent payout must also be above that of the previous year. \"Anyone paying a higher dividend is looking to the future with optimism, thereby sending a strong signal to the capital markets,\" explains Christian W. Röhl.<\/p>\n
Long-term outperformance<\/h3>\n
It is hardly surprising that the coronavirus pandemic is making it anything but easy for companies to remain faithful to a sustainable dividend policy. The new benchmarks were consequently unable to escape the market sell-off that ensued shortly after their launch. Nevertheless, they have since made up some ground on the market as a whole again. The tracker certificate on the DividendenAdel Schweiz Index has almost returned to its CHF issue price. The latest setback was in any case insufficient to change the long-term outperformance of the strategy on a historical simulation (see graph). At the beginning of October, Christian W. Röhl carried out the first scheduled rebalancing process for both indices. Significant changes were made in Germany, with only six companies managing to keep their places. \"At the moment Switzerland is living up to its reputation as a cradle of stability when it comes to dividends as well,\" the responsible expert says.<\/p>\n
Chart: DividendenAdel Schweiz Index vs. SMIC Index (20 years/indexed to 100)<\/h3>\n