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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Madison Dividend Income underperformed in Q2 as Technology surged to 1999-like extremes, pushing S&P 500 valuations to record highs. The managers position defensively in high-quality dividend stocks, viewing Energy's 13.5% decline as an opportunity given healthy fundamentals."
The Madison Dividend Income Fund returned 1.8% in Q2 2026 and 7.7% year-to-date, underperforming broader indices as Technology stocks drove historic gains with 12 names up over 100%, the most since 1999. This strength pushed S&P 500 valuations to all-time highs at 3.6x price-to-sales. The managers view this as creating multiple contraction risk and position defensively in high-quality, above-average dividend yield stocks. Energy was the worst performing sector at negative 13.5%, its weakest Q2 since 1990, but the managers see this as an opportunity given healthy fundamentals including production discipline, strong balance sheets, and shareholder capital returns. Top holding Exxon Mobil offers attractive upstream assets, a five-year growth plan targeting $25 billion in earnings growth, and a 43-year dividend increase track record. The fund maintains 2.6% portfolio yield versus 1.1% for the S&P 500, with 94% of holdings rated A- or better providing downside protection. Portfolio holdings increased dividends 6% over the past year, well above inflation. The strategy aims for near-full participation in bull markets with limited drawdowns in corrections through conservative, quality-focused positioning.
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