THE THREERs OF DIVIDENDS - Franklin Templeton Investments
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ClearBridge Dividend Strategy Portfolios
THE THREERs
OF DIVIDENDS
RISK MANAGEMENT With ClearBridge Dividend
Strategy Portfolios, investing
for income is elementary.
Go back to basics, targeting
dividend growth, risk
A time-tested management and total returns.
approach to managing
risk, with the goal
of reducing the
Portfolios’ volatility.
TOTAL RETURN RISING DIVIDEND
POSSIBILITY POTENTIAL
Income growth A disciplined
is an important process is used to
component of the identify high-quality
Portfolios’ total companies with
return and a key expectations of
to staying ahead increasing their
of rising costs. dividend payouts.
These materials are being provided for illustrative and informational purposes only. The information contained herein is obtained from
multiple sources that are believed to be reliable. However, such information has not been verified and may be different from the
information included in documents and materials created by the sponsor firm in whose investment program a client participates. Some
sponsor firms may require that these materials be preceded or accompanied by investment profiles or other documents or materials
prepared by such sponsor firms, which will be provided upon a client’s request. For additional information, documents and/or materials,
3Q 2021 please speak to your Financial Professional.
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
THE POWER
OF DIVIDENDS
Few investments offer the potential for a rising stream of income. Dividend yields (%)
As of September 30, 2021
Yet amid a host of uncertainties, ClearBridge Dividend Strategy
Portfolios have offered just that. Veteran portfolio managers 2.20 ClearBridge Dividend
Strategy Portfolios1
draw on over 80 years of collective investment wisdom to identify
companies committed to sound dividend increases over time. 1.37 S&P 500 Index1
1.52 10-Year U.S. Treasury2
The portfolio holdings have generated sound dividend yields compared with the benchmark
Dividend yields (%) as of September 30, 2021
ClearBridge Dividend Strategy Portfolios1 S&P 500 Index1 10-Year U.S. Treasury2
4
3
2
1
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
0
2016 2017 2018 2019 2020 2021
1 Source: FactSet. The characteristics for ClearBridge Dividend Strategy Portfolios and S&P 500 Index are stated as of dates for data shown and are subject to change at any time. Portfolio
characteristics for the ClearBridge Dividend Strategy Portfolios are based on a model portfolio, not an actual client account. The model portfolio is a hypothetical portfolio whereby the
portfolio characteristics are based on simulated trading and account activity of a client account invested in this strategy. The model portfolio assumes no withdrawals, contributions or
client-imposed restrictions. Portfolio characteristics of individual client accounts may differ from those of the model portfolio as a result of account size, client-imposed restrictions, the
timing of client investments, market conditions, contributions, withdrawals and other factors.
2 Source: U.S. Department of the Treasury.
Dividends and yields represent past performance. There is no assurance they will continue to be paid in the future. Past performance is no guarantee of future results. Yields are
subject to change and are not guaranteed. U.S. Treasury securities are backed by the "full faith and credit" of the U.S. government. Equity and fixed income securities are subject
to additional risks. U.S. Treasuries are direct debt obligations issued and backed by the full faith and credit of the U.S. government. The U.S. government guarantees the principal and
interest payments on U.S. Treasuries when the securities are held to maturity. Unlike U.S. Treasury securities, debt securities issued by the federal agencies and instrumentalities and
related investments may or may not be backed by the full faith and credit of the U.S. government. Even when the U.S. government guarantees principal and interest payments on
securities, this guarantee does not apply to losses resulting from declines in the market value of these securities.
Investors cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses or sales charges.
2
CAPITAL APPRECIATION:
THE FINAL VARIABLE
The Portfolios’ combination of ClearBridge’s equity strategies all start
dividends and capital appreciation with the same fundamental principle:
Select high-quality companies through
has added up to positive total rigorous research and analysis.
returns over the long term. Hersh Cohen
Co-Chief Investment Officer
A downside capture ratio of less than one may help temper volatility with the potential to foster long-term
capital growth Capture ratios pure gross of fees (%) as of September 30, 2021— Preliminary
Up
capture ratio 0.95 0.86 0.84 0.85 0.84
1-year 3-year 5-year 7-year 10-year
Down 1.11 0.94 0.95 0.93 0.89
capture ratio
Positive total return across long-term market cycles
Annualized rates of return (%) — Pure gross and net of fees, as of September 30, 2021— Preliminary
ClearBridge Dividend Strategy Portfolios — Pure Gross ClearBridge Dividend Strategy Portfolios — Net S&P 500 Index
35
30
30.00
25 26.82
23.18
20
15 15.99 16.90 16.63
14.01 14.13
13.35 13.33
10 11.40
10.07 10.05 10.83
5 8.18
0
1-Year 3-Year 5-Year 7-Year 10-Year
Source: Franklin Templeton. Past performance is no guarantee of future results. The strategy returns shown are preliminary composite returns, subject to future revision (downward or upward). Please visit
www.LeggMason.com for the latest performance figures. Investors cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses or sales charges.
FEES: Pure gross of fee returns do not reflect the deduction of any expenses, including transaction costs. Net performance includes the deduction of a 3.0% annual wrap fee, which is the maximum anticipated
wrap fee for equity and balanced portfolios. Actual fees vary. For fee schedules, contact your financial professional, or if you enter into an agreement directly with Legg Mason Private Portfolio Group (LMPPG),
refer to LMPPG’s Form ADV disclosure document. Returns reflect the reinvestment of dividends and other earnings. All performance is reported in U.S. dollars. To obtain specific information on available
products and services or a GIPS® Report, contact your Franklin Templeton separately managed account sales team at (800) 822-8464. ClearBridge Investments, LLC claims compliance with
the Global Investment Performance Standards (GIPS®). GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the
accuracy or quality of the content contained herein. Management and performance of individual accounts may vary for reasons that include the existence of different implementation practices and model
requirements in different investment programs.
3
DIVERSIFY YOUR
SECTOR EXPOSURE
Our actively managed Portfolios include Our focus over the past several years
broad exposure to well-known names has been on the attraction of companies
with the ability to pay a rising stream of
across a wide variety of sectors. These dividends. This approach has been a good
high-quality stocks offer the potential for way to get more income than was
attractive dividend yields. available on risk-free alternatives.
Michael Clarfeld, CFA
Portfolio Manager
Dividend growers
Company dividend increases3
8 9.3 34 7.1
out of 55 % Average out of 59 % Average
increase
2020
companies
2Q21
companies increase
reporting increase reporting increase3
The top 10 portfolio holdings:
Account for Average 10 years Average 31 years in
1 31% of 2 consecutive raising 3 paying dividends
the Portfolio 1 dividends consecutively
Dividends with a strong history
Top 10 holdings as of September 30, 2021
Consecutive
5-year Paid dividend years of
% of Dividend dividend consecutively raising
Name4 Ticker4 Sector4 portfolio4 yield (%)4 growth (%)4 since5 dividends5
Microsoft Corp MSFT Information Technology 5.65 0.79 8.79 2004 17
Apple Inc AAPL Information Technology 4.66 0.60 9.30 2012 1
Raytheon Technologies Corp RTX Industrials 3.40 2.29 -5.40 1972 0
Bank of America Corp BAC Financials 2.90 1.77 27.23 1993 12
Comcast Corp-Class A CMCSA Communication Services 2.69 1.72 12.30 2008 4
Williams Cos Inc WMB Energy 2.46 6.28 -5.12 1974 5
PPG Industries Inc PPG Materials 2.40 1.55 7.77 1972 6
Blackstone Inc BX Financials 2.35 2.60 11.66 2007 1
Home Depot Inc HD Consumer Discretionary 2.23 1.96 20.30 1987 34
Johnson & Johnson JNJ Health Care 2.22 2.56 5.96 1972 20
* On April 3, 2020, Raytheon Technologies completed an all-stock merger of equals transaction between Raytheon Company and United Technologies Corporation trading under the
symbol RTX. Dividend information prior to April 3, 2020 reflects data for United Technologies Corporation (UTX).
3 Source: ClearBridge. For 2020, only stocks that were held in the portfolio for the entire year were included.
4 Source: FactSet. Past performance is no guarantee of future results. Portfolio characteristics are based on a model portfolio, not an actual client account. The model portfolio is a
hypothetical portfolio whereby the portfolio characteristics are based on simulated trading and account activity of a client account invested in this strategy. The model portfolio assumes
no withdrawals, contributions or client-imposed restrictions. Portfolio characteristics of individual client accounts may differ from those of the model portfolio as a result of account size,
client-imposed restrictions, the timing of client investments, market conditions, contributions, withdrawals and other factors.
Dividends and yields represent past performance, and there is no assurance they will continue to be paid in the future. Diversification does not guarantee a profit or protect against loss.
5 Source: Dividend history of individual companies. Researched by Legg Mason, Inc. Consecutive years of rising dividends are based on calendar year, ending in December 31, 2020.
4
Remaining holdings as of September 30, 2021
Dividend 5-year dividend
Name4 Ticker4 Sector4 yield (%)4 growth (%)4
American International Group AIG Financials 2.33 0.64
American Tower Corp AMT Real Estate 1.90 19.32
Apollo Global Management Inc APO Financials 3.43 11.04
Becton Dickinson and Co BDX Health Care 1.35 4.69
Boston Properties Inc BXP Real Estate 3.62 8.56
Broadcom Inc AVGO Information Technology 2.97 50.74
Cisco Systems Inc CSCO Information Technology 2.68 9.21
Coca-Cola Co KO Consumer Staples 3.18 3.89
Ecolab Inc ECL Materials 0.92 6.52
Edison International EIX Utilities 4.78 6.66
Enbridge Inc ENB Energy 6.63 11.22
JP Morgan Chase & Co JPM Financials 2.20 14.37
Linde PLC LIN Materials 1.41 6.92
Mastercard Inc-Class A MA Information Technology 0.49 17.75
Merck & Co Inc MRK Health Care 3.46 7.16
Metlife Inc MET Financials 3.05 3.94
Mondelez International Inc-A MDLZ Consumer Staples 2.23 13.09
Nestle Sa-Spons ADR NSRGY Consumer Staples 2.10 -
Nextera Energy Inc NEE Utilities 1.92 12.24
Northrop Grumman Corp NOC Industrials 1.68 12.18
Nxp Semiconductors NV NXPI Information Technology 1.05 -
Oracle Corp ORCL Information Technology 1.29 13.30
Otis Worldwide Corp OTIS Industrials 1.07 -
Pfizer Inc PFE Health Care 3.60 5.25
Pioneer Natural Resources Co PXD Energy 2.25 115.75
PNC Financial Services Group PNC Financials 2.40 17.71
Procter & Gamble Co PG Consumer Staples 2.38 4.50
Public Service Enterprise Group Inc PEG Utilities 3.32 4.51
Sempra Energy SRE Utilities 3.43 7.94
Texas Instruments Inc TXN Information Technology 2.12 21.83
Travelers Cos Inc TRV Financials 2.28 6.21
Union Pacific Corp UNP Industrials 2.08 13.15
United Parcel Service-Cl B UPS Industrials 2.24 5.80
UnitedHealth Group Inc UNH Health Care 1.38 19.14
US Bancorp USB Financials 2.89 10.48
Verizon Communications Inc VZ Communication Services 4.65 2.01
Visa Inc-Class A Shares V Information Technology 0.57 17.98
Vulcan Materials Co VMC Materials 0.86 15.68
Walt Disney Co DIS Communication Services 0.52 -9.13
Waste Management Inc WM Industrials 1.52 7.05
Zoetis Inc ZTS Health Care 0.49 20.11
Dividends and yields represent past performance, and there is no assurance they will continue to be paid in the future.
Dividend income may be taxed either as ordinary dividends or qualified dividends. For more information, please seek advice from a tax professional.
5
The managers of ClearBridge Dividend Strategy Portfolios draw on
decades of experience to identify companies committed to paying
consistent and growing dividends over time.
Focus on dividends
The Portfolio’s investment process reflects the managers’ belief that consistent dividend pay-outs have
long signaled quality companies with strong balance sheets and healthy cash flows, and these are the
kind of companies that have withstood multiple market cycles.
1. Idea generation
• Targets an initial investment universe comprising large U.S. companies, typically with market
capitalizations over $3 billion
• Focuses on companies that offer meaningful dividend yield
2. Fundamental analysis
• Performs proprietary analysis on companies across all market sectors
• Conducts traditional fundamental research with the goal of answering the question, “Can this
company grow and sustain its dividend?”
• Focuses on quality companies with dominant market positions and a solid dividend history
3. Portfolio construction
• Uses bottom-up stock selection to construct a primarily large-cap portfolio that is diversified across
sectors
• Leverages combination of stock selection and portfolio construction that seeks to manage risk in down
markets
4. Risk management
• Constantly monitors and evaluates each individual security as well as the overall portfolio as part of
the risk management process
• Re-examines positions when the fundamental or valuation case changes and/or cyclical shifts alter
the industry’s attractiveness
The S&P 500® Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. Benchmark returns
are not covered by the report of independent verifiers.
Dividend yield is a financial ratio that shows how much a company pays out in dividends. Dividend yield is determined by dividing a stock’s annual dividends per share by the current market
price per share.
The Up Capture ratio measures the manager’s overall performance to the benchmark’s overall performance, considering only quarters that are positive in the benchmark. An Up Capture Ratio
of more than 1.0 indicates a manager who outperforms the relative benchmark in the benchmark’s positive quarters.
The Down Capture ratio is the ratio of the manager’s overall performance to the benchmark’s overall performance, considering only quarters that are negative in the benchmark. A Down
Capture Ratio of less than 1.0 indicates a manager who outperforms the relative benchmark in the benchmark’s negative quarters and protects more of a portfolio’s value during down markets.
Past performance is no guarantee of future results.
Diversification does not ensure a profit or protect against loss.
SEASONED
MANAGEMENT
Diversified sector exposure Dedicated to seeking income Seasoned active management
Our actively managed Portfolios An independent, active approach gives Veteran portfolio managers draw
include broad low-turnover exposure portfolio managers the freedom to on over 90 years of collective
to well-known names across a wide pursue companies with rising dividends. investment wisdom.
variety of sectors.
• A well-established, global • Over 50 years of experience • Long-tenured portfolio
investment manager focusing building portfolios for clients managers provide strong
on proprietary research and seeking income solutions, high leadership in a centralized
fundamental investing active share or low volatility investment structure
“ClearBridge Dividend John Baldi Michael Clarfeld, CFA
Managing Director, Managing Director,
Strategy Portfolios may Portfolio Manager Portfolio Manager
be a solution for risk-averse
investors who are looking
for additional income from
a seasoned management
Peter Vanderlee, CFA Diane Keady
team that looks to take Managing Director, Managing Director,
Portfolio Manager Portfolio Manager
measured risks.”
Peter Vanderlee, CFA
To find out more about how you
may be able to enjoy an income
stream from the ClearBridge
Dividend Strategy Portfolios, contact
your financial advisor
or visit www.LeggMason.com.
Active share is a measure of the percentage of stock holdings in a manager’s portfolio that differs from the benchmark index.
6
leggmason.com At Franklin Templeton, everything we do has a single focus: to deliver better client
outcomes.
• We have deep expertise across equity, fixed income, alternatives, multi-asset
solutions and cash strategies.
• We offer an unmatched range of specialist investment managers, consisting of
more than 1,300 investment professionals.
• Over 70 years of experience in identifying opportunities and delivering investment
solutions to clients.
What should I know before investing?
All investments involve risk, including loss of principal, and there is no guarantee that
investment objectives will be met. Investments may be made in small- and mid-cap
companies, which involve a higher degree of risk and volatility than investments in large-
cap companies.
While most investments are in U.S. companies, investments may also be made in ADRs
and other securities of non-U.S. companies in developed and emerging markets, which
involve risks in addition to those ordinarily associated with investing in domestic
securities, including the potentially negative effects of currency fluctuation, political and
economic developments, foreign taxation and differences in auditing and other financial
standards. These risks are magnified in emerging markets.
Limited investments also may be made in non-dividend-paying stocks that are not expected
to pay a dividend in the near future. The manager may hold significant portions of portfolio
assets in cash equivalents while waiting for buying opportunities.
Franklin Templeton, its affiliates and its employees are not in the business of providing tax or
legal advice to taxpayers. These materials and any tax-related statements are not intended or
written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of
avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related
statements, if any, may have been written in connection with the “promotion or marketing” of
the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable
law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances
from an independent tax advisor.
Separately Managed Accounts (SMAs) are investment services provided by Legg Mason
Private Portfolio Group, LLC (LMPPG), a federally registered investment advisor.
Client portfolios are managed based on investment instructions or advice provided by
the following Franklin Templeton-affiliated subadvisor: ClearBridge Investments.
Management is implemented by LMPPG, the designated subadvisor or, in the case of
certain programs, the program sponsor or its designee.
Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of
any particular investor, and does not constitute, and should not be construed as, investment advice, a forecast of future events, a
guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement
account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should
consult their financial professional.
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