Instead, Woodford’s strategy involves looking for attractively valued businesses that he believes can deliver sustainable dividend growth.
However, he noted the key difficulty in investing in finding a company where a target for dividend growth leads to boards taking huge steps to avoid a dividend cut that simply stores up problems for the future.
Woodford added: “This is where judgement comes into my investment process – I have to make judgements about the sustainability of a company’s dividend which may be at odds with what a management team is saying.”
He concluded: “The dividend has always been important to me as an investor and it always will be.
“The dividend isn’t ordinary – if anything it is extraordinary. And by selecting the most attractive and sustainable dividends, I aim to deliver extraordinary long-term returns to investors.”
