Enhanced Dividend Income Portfolio
Moderate Growth and Income
CWP’s Enhanced Dividend Income portfolio (EDIP) is an equity portfolio made up of mega cap, high quality, blue chip stocks that is diversified across all 10 S&P sectors. The allocation is strategically designed to deliver income by tactically selling short-term covered calls against 30-60% of the underlying holdings to generate additional income.
Highlights of the portfolio include:
- CWP actively manages sector allocation and opportunities to participate in defensive and cyclical trends given the relevant economic cycle
- CWP screens for growth and value stocks that have a history of increasing dividends and possess strong fundamentals
- Designed to deliver an estimated annual cash flow of 5-6% gross of fees and commissions between dividend and option income, plus the potential for capital appreciation
- Unlike a systematic covered call program, CWP is not obligated to continuously cover each individual equity position and limit capital appreciation
- When one of the underlying stocks demonstrates strength or an increase in implied volatility, CWP managers identify that opportunity and sell call options tactically
- To deliver an additional 2-3% of annual income, the portfolio does not have to be covered 100% of the time.
© 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
3-year rating out of 28 option writing SMAs as of December, 31st 2016
The Morningstar Rating for separate accounts, commonly called the star rating, is a measure of a separate account’s risk-adjusted return, relative to other separate accounts in the same Morningstar Category. Separate accounts are rated from 1 to 5 stars, with the best performers receiving 5 stars and the worst performers receiving 1 star. Separate accounts are rated for up to three periods (three, five, and 10 years), and ratings are recalculated each quarter. The Morningstar Rating for separate accounts uses an enhanced risk-adjusted return measure, which accounts for all variations in a separate account’s monthly performance, with more emphasis on downward variation. Separate accounts are ranked against others in the same category and stars are assigned as follows: Top 10% 5 stars, Next 22.5% 4 stars, Middle 35% 3 stars, Next 22.5% 2 stars, Bottom 10% 1 star.