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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"The Madison Dividend Income Fund sees a generational opportunity in high-quality, dividend-paying stocks trading at historically cheap relative valuations compared to an overvalued, highly concentrated broader market."
The Madison Dividend Income Fund's Investment Strategy Letter for the period ending June 30, 2025, outlines a strong constructive outlook for dividend-paying stocks, contrasting them against a highly valued and concentrated broader market. During the second quarter, the Fund (Class Y) returned +1.1%, trailing the S&P 500 (+10.9%) and Russell 1000 Value (+3.8%). On a year-to-date basis, the Fund returned +4.3%. Portfolio managers John Brown and Drew Justman emphasize that the market's heavy rotation into non-dividend-paying technology giants has created a generational opportunity to acquire high-quality, above-average dividend stocks at bargain valuations. The managers identify three critical, underappreciated market risks: valuation risk, with the S&P 500 forward P/E at an expensive 22.4x and dividend yield at a historically low 1.25%; market concentration risk, with the 'Magnificent 7' tech stocks now representing over 34% of the S&P 500 index; and macroeconomic risk, highlighted by early-year tariff concerns and current near-decade-low high-yield credit spreads that are vulnerable to widening. In contrast, the Madison Dividend Income Fund offers a 2.6% absolute dividend yield, growing dividend streams averaging 8% annual increases, and a high-quality credit profile (87% rated A- or better), positioning it as an excellent defensive vehicle to protect capital.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High-conviction positioning: The Madison Dividend Income Fund sees a generational opportunity in high-quality, dividend-paying stocks trading at historically cheap relative valuations compared to an overvalued...
Growth Outlook
Market outlook remains low conviction: The Madison Dividend Income Fund sees a generational opportunity in high-quality, dividend-paying stocks trading at historically cheap relative valuations compared to an overvalued...
Risk Appetite
Risk appetite posture is low conviction: The Madison Dividend Income Fund sees a generational opportunity in high-quality, dividend-paying stocks trading at historically cheap relative valuations compared to an overvalued...
Capital Deployment
Manager actively deployed capital into high-conviction opportunities. The Madison Dividend Income Fund sees a generational opportunity in high-quality, dividend-paying stocks trading at historically cheap relative valuations compared to an overvalued...
Forward Guidance
Forward guidance signal: The Madison Dividend Income Fund sees a generational opportunity in high-quality, dividend-paying stocks trading at historically cheap relative valuations compared to an overvalued...
Language Signal
Tone analysis indicates above average conviction language: The Madison Dividend Income Fund sees a generational opportunity in high-quality, dividend-paying stocks trading at historically cheap relative valuations compared to an overvalued...
Perceived Risk
Perceived risk level is evaluated as moderate conviction. The Madison Dividend Income Fund sees a generational opportunity in high-quality, dividend-paying stocks trading at historically cheap relative valuations compared to an overvalued...
Opportunity Density
Opportunity density index indicates high conviction actionable entry points. The Madison Dividend Income Fund sees a generational opportunity in high-quality, dividend-paying stocks trading at historically cheap relative valuations compared to an overvalued...
Time Horizon
Investment time horizon reflects a high conviction orientation. The Madison Dividend Income Fund sees a generational opportunity in high-quality, dividend-paying stocks trading at historically cheap relative valuations compared to an overvalued...
