Kevin Simpson is navigating this inflationary environment by targeting companies that use free cash flow to raise dividends.
DIVO includes roughly 25 to 30 large-cap, blue chip stocks that have a history of raising dividends and, more importantly, increasing earnings to support those dividends, according to the portfolio manager.
Simpson said he is interested in stocks such as Devon Energy that are raising dividends for shareholders using free cash flow, in addition to a more usual fixed dividend.
Devon Energy said earlier in 2022 that it's earmarking up to half its free cash flow to return to shareholders.
It has a 3.3% dividend yield.