| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
The ClearBridge Dividend Strategy delivered positive returns in Q4 2025 but underperformed the S&P 500 benchmark due to the market's continued concentration in mega-cap technology stocks. The managers maintain their diversified approach, limiting individual holdings to 3-5% and sector exposures to 15-20%, contrasting with the S&P 500 where the top four companies each represent 5-8% and technology broadly represents 46% including major tech companies outside the IT sector. While participating in AI through holdings like Alphabet, Broadcom, Meta, Microsoft and Oracle, the managers remain cautious about AI valuations, significantly reducing Oracle due to its risky business model shift toward capital-intensive data centers while maintaining Broadcom given its competitive positioning. The strategy trades at a meaningful discount to the market with a 19.8x P/E versus 24.7x for the S&P 500, and portfolio companies have grown dividends at 10% annually. Looking ahead, the managers expect continued AI focus but anticipate finding opportunities in overlooked areas as market concentration creates inefficiencies.
The ClearBridge Dividend Strategy maintains a diversified, value-oriented approach focused on dividend-growing companies trading at attractive valuations, deliberately limiting concentration risk while participating selectively in AI and other growth themes through disciplined position sizing and valuation-based security selection.
The managers anticipate the AI debate will carry over into 2026 and plan to continue participating in AI in a measured and disciplined way. As other investors focus myopically on AI, they expect to find additional idiosyncratic opportunities in overlooked corners of the market, believing these seeds will bear fruit in the years to come.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 7 2026 | 2025 Q4 | AAPL, ADP, APD, AVGO, GOOGL, ITX.MC, KO, LHX, META, MMC, MSFT, NESN.SW, NVDA, ODFL, ORCL, TEL, TMUS, UL, UNP, XOM | AI, Concentration, diversification, dividends, large cap, semiconductors, technology, value | - | AI will radically change lives, labor markets and the economy, but investors already ascribe trillions of dollars of value to AI-related enterprises while aggregate AI-related… |
| Oct 9 2025 | 2025 Q3 | AVGO, MMC, ODFL, ORCL | Artificial Intelligence, defense, Dividend Investing, inflation, valuation |
AVGO ORCL TEL LHX MARSH ODFL |
The strategy stresses dividend growth as an all-weather approach amid elevated valuations and market concentration. Flexible dividend policies allow participation in growth sectors like AI… |
| Jul 9 2025 | 2025 Q2 | AVGO, LHX, XOM | diversification, dividends, income, inflation, valuation |
LHX XOM AVGO |
The letter stresses dividend growth and valuation discipline in an environment of high market concentration and elevated multiples. ClearBridge favors high-quality companies capable of compounding… |
| Apr 5 2025 | 2025 Q1 | CVS, TEL | - | - | - |
| Jan 7 2025 | 2024 Q4 | MDLZ, MET, NVDA | - | - | - |
| Sep 30 2024 | 2024 Q3 | AMT, EIX, ENB, INTC, NVDA | - | - | - |
| Jun 30 2024 | 2024 Q2 | GOOG, META, SRE | - | - | - |
| Apr 20 2024 | 2024 Q1 | DIS, DTE, META, NVDA | - | - | - |
| Mar 1 2024 | 2023 Q4 | AAPL, AZN, GILD, MSFT | - | - | - |
| Nov 10 2023 | 2023 Q3 | APO, GILD, RTX, TMUS | - | - | - |
| Jun 30 2023 | 2023 Q2 | AAPL, COF, MSFT | - | - | - |
| Mar 31 2023 | 2023 Q1 | AAPL, BAC, JNJ, MET, MSFT, PFE, SAP, USB | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q3 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
DefenseThe team initiated a position in Curtiss-Wright, believing the company is entering a period where multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
Defense Budgets Aerospace Nuclear Submarines | |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth | |
InflationInflation has continued to be a persistent feature in Japan and has prompted changes in both corporate and consumer behavior. Importantly, inflation has fed through to corporate earnings and equity performance. Companies that have successfully passed on higher costs to consumers have benefited from improved operating margins. |
Inflation Corporate Earnings Operating Margins Consumer Behavior Cost Pass-through | |
ValuationAI-related companies continue to command premium valuations while other sectors remain reasonably priced. This valuation divide continues to guide investment activity, with the fund remaining wary of companies trading at exceedingly high valuations that imply exceptional multi-year earnings growth. |
Premium Divide Discipline Stretched Reasonable | |
| 2025 Q2 |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 9, 2025 | Fund Letters | John Baldi | AVGO | Broadcom Inc. | Information Technology | Semiconductors | Bull | NASDAQ | AI, cash flow, dividends, growth, infrastructure, semiconductors | Login |
| Oct 9, 2025 | Fund Letters | John Baldi | ORCL | Oracle Corp. | Information Technology | Systems Software | Bull | NYSE | AI, cloud, enterprise, growth, Margins, recurring revenue, Software | Login |
| Oct 9, 2025 | Fund Letters | John Baldi | TEL | TE Connectivity Ltd. | Information Technology | Electronic Components | Bull | NYSE | AI, Automation, Connectivity, dividends, growth, Industrials, Sensors | Login |
| Oct 9, 2025 | Fund Letters | John Baldi | LHX | L3Harris Technologies Inc. | Industrials | Aerospace & Defense | Bull | NYSE | Aerospace, backlog, cash flow, Defense, dividends, growth, Security | Login |
| Oct 9, 2025 | Fund Letters | John Baldi | MARSH | Marsh & McLennan Cos. | Financials | Insurance Brokers | Bull | NYSE | Brokerage, cash flow, defensive, dividends, growth, Insurance, Quality | Login |
| Oct 9, 2025 | Fund Letters | John Baldi | ODFL | Old Dominion Freight Line Inc. | Industrials | Trucking | Bull | NASDAQ | dividends, Industrials, Logistics, Margins, recovery, Transportation, Trucking | Login |
| Jul 9, 2025 | Fund Letters | John Baldi | LHX | L3Harris Technologies, Inc. | Industrials | Aerospace & Defense | Bull | NYSE | backlog, cashflow, Defense, Margins, valuation | Login |
| Jul 9, 2025 | Fund Letters | John Baldi | XOM | Exxon Mobil Corporation | Energy | Integrated Oil & Gas | Bull | NYSE | cashflow, energy, Margins, Production, valuation | Login |
| Jul 9, 2025 | Fund Letters | John Baldi | AVGO | Broadcom Inc. | Information Technology | Semiconductors | Bull | NASDAQ | AI, cashflow, semiconductors, Software, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | AAPL shares rose in 4Q25 following better-than-feared iPhone 17 sell-through trends and stronger Services momentum. The company reported that early adoption of its on-device AI features exceeded internal expectations, particularly in North America and Europe, where attach rates for Pro models remained elevated. Wearables also returned to growth, helped by new health features and improved battery life. |
| ADP | New positions were initiated in Automatic Data Processing |
| APD | We also took advantage of situations in select existing holdings to significantly increase our positions in Air Products |
| AVGO | During the quarter, we initiated a below-average weight position in leading semiconductor and infrastructure software company Broadcom. Broadcom's ongoing transformation from a provider of custom ASICs to a full rack-scale solutions vendor, including scale-up networking, marks a significant improvement in its strategic positioning compared to earlier in the year. This strategic evolution has been validated by recent product launches, such as the Scale-up Ethernet solution, and committed orders from major customers like Anthropic. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| ITX.MC | Inditex, the global fast fashion leader, performed well in Q4 as its products within Zara are resonating with consumers. |
| KO | The multiples of technology stocks should be quite a bit lower than the multiples of stocks like Coke |
| LHX | L3Harris is a global aerospace and defense company. We believe it is well positioned to benefit from growing investment in next-generation missile defense and national security programs that require advanced propulsion, satellite systems and low-Earth orbit tracking capabilities. These efforts represent a large and expanding market opportunity that could support faster revenue growth over the coming years. In addition, as warfare increasingly involves low-cost drone threats, L3Harris's strengths in sensing and counter-drone technologies position it well to address a critical and evolving defense need. We were able to initiate the new position during the quarter at an opportunistic entry point following recent share price weakness. |
| META | On January 9, Meta Platforms unveiled a new agreement with Vistra—the largest generator of competitive electricity in the United States—as well as with TerraPower and Oklo. The announcement builds on Meta's agreement last year with Constellation Energy and positions the company to become one of the largest corporate purchasers of nuclear-generated electricity in the United States. |
| MMC | We added global insurance broker Marsh & McLennan Companies Inc. (MMC), as well as specialty chemicals manufacturer Eastman Chemicals Co (EMN). Marsh strikes us as a quintessentially good business trading at a reasonable valuation – a relatively rare combination with broad market indices trading near all-time highs. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| NESN.SW | We see now as an opportune time to own a company that possesses world-leading brands in consumer categories we believe have a favourable growth outlook in the long run. Nestlé's comprehensive pricing architecture through umbrella brands Nescafé and Nespresso means the portfolio should be well-positioned to capture spending shifts up and down the price ladder. In pet foods, Nestlé also possesses category leaders in its Purina line. We see both coffee and pet care as attractive categories that are more experiential and less commoditised relative to other staples. Over recent quarters, Nestlé was able to deliver positive volume growth in coffee despite pushing through high-single-digit percentage price increases. Scale matters as Nestlé is the world's largest provider of packaged coffee and among the top pet food producers globally. |
| NVDA | Capital spending from Google, Microsoft, Amazon, Meta, OpenAI, and more have led to Nvidia becoming the Rrst 5 trillion market cap company. |
| ODFL | Rotated exposure from Old Dominion Freight Line, a leading less-than-truckload (LTL) carrier. |
| ORCL | Investor enthusiasm for Oracle's stock in calendar year 2025 was initially driven by several multi-billion-dollar contracts it signed with leading AI companies, including OpenAI and Meta. However, in Q4 sentiment for ORCL's growth prospects shifted to skepticism, as investors began to scrutinize the return profile of the substantial capital investments required to support the approximately $500 billion of contracts signed by Oracle. Given the widening range of potential outcomes associated with Oracle's elevated capital needs, we reduced our position in ORCL during Q4. |
| TEL | Longtime holding TE Connectivity benefitted in 2025 from continued demand growth in several of the markets in which it sells into, including: AI infrastructure and data center connectivity; energy and grid update cycling; and industrial automation. TE also acquired Richards Manufacturing earlier in the year, which helped strengthen the company's competitive position in industrial and utility markets, and raised the dividend throughout 2025. |
| TMUS | T-MOBILE US INC detracted -0.32% from relative performance |
| UL | Unilever is a global consumer goods company that develops and markets everyday food and personal care brands for billions of consumers worldwide. Anchored by iconic brands such as Dove, Knorr, Hellmann's and Vaseline, Unilever's refreshed management team is driving improved execution and strategic discipline to deliver more consistent growth, with a focus on higher-margin categories. Specifically, we appreciate their undertaking of various self-help initiatives, including cost-savings programs and brand divestments, which we believe will help unlock sustained value in the future. Despite Unilever's strong outlook, it trades at a discount to its peer group as prior undermanagement has resulted in 1% volume growth for the past decade. This provided us the opportunity to invest in a strong company with leading brands and an improved management team that is poised to increase per-share value. |
| UNP | Union Pacific, the largest freight rail operator in the western United States, has announced plans to merge with Norfolk Southern, one of its major eastern counterparts. If approved, the merger would create the first coast-to-coast rail network in the U.S. |
| XOM | BAC, JNJ, JPM, and XOM were held in Miller/Howard portfolios as of December 31, 2025. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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