More than 300 companies around the world cut their dividends in 2020—but not a single company in Fiona Wilson’s portfolio did. Fiona, who co-manages the i3 dividend fund portfolios within Guardian Capital LP, explains why chasing the highest dividend yield can be a costly mistake and why dividend growth is the key to building long-term wealth. She shares how her team uses artificial intelligence to forecast dividend growth, identify companies at risk of cutting their payouts, and uncover high-quality businesses that can compound for years.
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Costco (COST)
- An “old economy” pick chosen deliberately: began using AI in 2018 to monitor bakery freshness, later expanded across all perishables, warehouse robotics, self-checkout theft prevention, and advertising — all margin-supportive
- Deep moat via the membership model — proved recession-resistant in 2020, and over 50% of profit now comes from membership fees, with the higher-margin Executive tier still growing
- Stock has badly lagged Walmart this year despite solid underlying growth; Fiona says Costco was already expensive a year ago, so modest same-store-sales beats haven’t been enough — it doesn’t need a catalyst, just a shift in market sentiment
- Strong dividend growth and durable cash flow support the long-term thesis
ASML (ASML)
- Near-monopoly on EUV lithography, the only technology capable of making the most advanced chips (~$180 million per machine); customers include Samsung, Intel, and TSMC, while competitor Canon’s tools can’t compete at the leading edge
- Lagged the broader semiconductor rally last year despite sitting atop the AI/chip food chain — Fiona’s team added on that weakness; blockbuster earnings this week still couldn’t stop a pullback, which she attributes to valuation, not fundamentals
- Backlog exceeds a full year of orders, so the planned capacity expansion (+30% this year and next) is backed by firm demand, not speculation
- Roughly 20-year technological head start makes the oversupply bear case unlikely; dividend growth remains excellent
Amphenol (APH)
- Fiber-optic and connector maker whose two biggest end markets are data centers and aerospace/defense — a mix that tempers pure AI-capex volatility
- Larger rival TE Connectivity lacks the same inroads into data centers
- A newer addition to the portfolio, added at the start of this year
- Dividend grew roughly 30% last year; forward dividend growth is forecast around 17-18%, still well above average, alongside strong cash flow generation
Bonus pick: Parker Hannifin (PH)
- Industrial manufacturer of valves and components used across aerospace and automotive; roughly 35% of sales tied to aerospace and defense
- Another “old economy” name using AI operationally rather than trying to build foundation models — deploying IoT sensors and algorithms to flag likely failures at customer sites before they happen
- A beneficiary of onshoring and de-globalization, as industrial capacity increasingly shifts back to the U.S.
- Aerospace and defense demand remains robust globally — Europe is redirecting budget toward defense, and commercial flights remain packed despite higher fares
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DISCLAIMERS: This text AI generated and should be checked against actual delivery. The content provided in this podcast is for informational purposes only and does not constitute financial, investment, or professional advice. The views expressed by the host and guests are their own and do not necessarily reflect the opinions of any organization or company. The host and guests may maintain positions in any securities discussed on the podcast. Always consult with a qualified financial advisor or professional before making any investment decisions.
