This document discusses sustainable dividend investing in a low yield environment. It notes that traditional income assets now offer very low yields and that opportunities exist outside these areas. The key points are: - Focus on companies' fundamental drivers of performance to find stocks that can support and grow dividends. - A disciplined process using over 600 financial screens and qualitative reviews can identify these types of dividend-paying stocks and lead to outperforming the market over time. - The portfolio manager's strategy called AD-STAR has achieved higher returns with lower volatility than the S&P 500 since its inception in 2010.

1. Sustainable Dividend Investing –
Finding income in a yield starved environment
Mark Painter, CFA
Senior Portfolio Manager

2. Overview
 The search for yield is becoming increasingly difficult
 Understanding and balancing risk is necessary as RISK continually shifts
 Opportunities exist outside of “traditional” income asset classes
 Focus on fundamental drivers of company performance is essential
 A disciplined approach will lead to outperformance of benchmarks
2

3. Current Asset Class Yields
3
INCOME
ASSETS
REAL
ESTATE
3.78%
CASH
.15%
10 YR
2.65%
INV.
GRADE
3.48%
HIGH
YIELD
5.82%
INV.
GRADE
7.19%
SOURCE: BLOOMBERG
MUNI
Bonds
2.94%
Current yields are as of 4/30/2014 and from the following sources. ETF’s representing VNQ for real estate,
JNK for High Yield, MUB for Muni Bonds, LQD for Inv. Grade, 6 mo current CD rate available on Schwab
institutional for cash, and 10 yr treasury for bonds

4. Why Investors use Traditional “Income” Assets
• Low perceived risk
• Low perceived volatility
• Known income stream
• Low perceived correlation with the market
• Understood by the general population
4

5. Myths about risks
• Low perceived risk Interest Rate Risk?
5
0
2
4
6
8
10
12
14
16
18
5/6/1980
5/6/1981
5/6/1982
5/6/1983
5/6/1984
5/6/1985
5/6/1986
5/6/1987
5/6/1988
5/6/1989
5/6/1990
5/6/1991
5/6/1992
5/6/1993
5/6/1994
5/6/1995
5/6/1996
5/6/1997
5/6/1998
5/6/1999
5/6/2000
5/6/2001
5/6/2002
5/6/2003
5/6/2004
5/6/2005
5/6/2006
5/6/2007
5/6/2008
5/6/2009
5/6/2010
5/6/2011
5/6/2012
5/6/2013
5/6/2014
!0yr.yield
10 Yr. Treasury Yield
SOURCE: BLOOMBERG

6. Myths about Volatility
• Low perceived volatility Spread Risk?
6
SOURCE: FRED St. Louis Federal Reserve
Current
Spread is
44bps away
from all
time low
set in 2007

7. Where does that leave us – Equities?
 Investors are afraid of the market
 Volatility drives bad decisions
(buy high – sell low)
• Headline news drives fear and greed
• Dividends are less predictable than traditional
income assets
7

8. Components of Shareholder Equity Return
 Fundamental
 Underlying Earnings of company
 Dividends
 Share Buy-Backs
8
0
5
10
15
20
25
30
35
3/1/1954
12/1/1955
9/1/1957
6/1/1959
3/1/1961
12/1/1962
9/1/1964
6/1/1966
3/1/1968
12/1/1969
9/1/1971
6/1/1973
3/1/1975
12/1/1976
9/1/1978
6/1/1980
3/1/1982
12/1/1983
9/1/1985
6/1/1987
3/1/1989
12/1/1990
9/1/1992
6/1/1994
3/1/1996
12/1/1997
9/1/1999
6/1/2001
3/1/2003
12/1/2004
9/1/2006
6/1/2008
3/1/2010
12/1/2011
9/1/2013
Historical S&P 500 P/E Ratio
SPX Index - Price Earnings Ratio (P/E) Average +1 SD -1 SD
 Psychological
 Multiple Expansion and Contraction
SOURCE: BLOOMBERG

9. Our View: FOCUS ON THE FUNDAMENTALS
From 1930-2011 DIVIDENDS accounted
for 50% of total return in S&P 500 – ISI
group
9

10. Why stocks pay high yields?
– Market Believes Unsustainable
10
TICKER NAME
DIV YLD
1 YR AGO DIVIDEND CUT
CMO
CAPSTEAD
MORTGAG 12.99 √
WIN
WINDSTREAM
HOLDI 12.08
RRD
RR DONNELLEY
& S 11.57
CEQP
CRESTWOOD
EQUITY 11.27 √
APO
APOLLO
GLOBAL 11.18
CWH
COMMONWEALTH
REI 11.05 √
FSC
FIFTH STREET
FIN 10.75
SCCO
SOUTHERN
COPPER 10.72 √
PSEC
PROSPECT
CAPITAL 10.71
FGP
FERRELLGAS-
LP 10.04
BBEP
BREITBURN
ENERGY 9.91
MMLP
MARTIN
MIDSTREAM 9.85
SOURCE: BLOOMBERG

11. What We Learned
 Markets Often Take Broad Stroke Views - Mark Down Sectors, Categories
and Industries
 Market Generalizations Offer Opportunity
 Each Company is a Unique Story - Buy Companies, Not Markets
 Find the Companies Who can Support, and Grow Dividends
 Income Durability through Diversification - Own all Sectors S&P 500 Sectors
 Identify companies through AD-STAR that
 Pay Unusually (Above Market) High Dividends
 Generate Consistent Returns on Invested Capital to Support and Grow Dividends
 History of Utilizing Capital Efficiently through Shareholder Returns
 Record of Consistent Cash Generation
11

12. AD-STAR
Continual Revaluation
& Assessment
Portfolio
Valuation
(Level 3)
600+
Financial
Screens
(Level 2)
All Listed
Companies
(Level 1)
12

13. Qualitative Overlay
Qualitative Review After Passing AD-STAR:
 Competitors/Competitive Advantages
 Market Potential/Market Share
 Product Mix
 Business Model
 Governance
 Risk
13

14. Company Attributes
14

15. SLG High Dividend and Value Performance
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All statistics calculated from Stanley Laman Group, Ltd. High Dividend and Value Composite as of 03/31/2014 (the “Composite”). You should not
consider this performance data as a prediction or an indication of future. The Composite represents fully discretionary advisory accounts that are
managed in accordance with the SLG Dividend and Value investment strategy. The performance results above are prepared in accordance with Global
Investment Performance Standards (“GIPS”). The returns of the accounts presented were calculated on a total return basis and include all dividends
and interest and realized and unrealized gains and losses. All returns are presented after the deduction of a hypothetical 1.00% fee. Inception date of
the Composite was February 1, 2010.
■ Beta: .91 (inception)
■ Alpha: 3.03% (inception)
■ R2: .87
■ Turnover: 37.45% (3yr avg.)