WHO NEEDS CONVENTIONAL WISDOM?
A small-cap fund that focuses on yield? It sounds like a contradiction in terms. Most investors looking for good dividend income are also looking for safety and therefore focus on large, well-known stocks. Besides, the conventional wisdom says successful early stage companies reinvest their profits, leaving not much to pay in dividends. For much of the ’90s, however, Frank Reichel III, who has worked for Stratton Mutual Funds for the past 12 years, has made a mockery of the conventional wisdom. He tried out the firm’s successful stock screening methodology on small companies years ago and found that Stratton’s low-risk equity-income strategy worked equally well with small caps and large caps. The result? Five years ago, he got his own fund to manage. Since its inception, Stratton Small-Cap Yield (STSCX) has returned an average of 19% a year. And in the past 12, it’s up 50%. Just because it focuses on dividend-paying stocks doesn’t mean the fund provides a lot of income. The current yie
