Ask the Manager: Austin Graff on Why Dividend Durability Matters

Welcome to Ask the Manager, ETF Central's new series where we sit down with top experts, analysts and portfolio managers to dive into the latest investment trends, market updates, and economic insights.

This week, we sat down with Austin Graff, CEO/CIO of Opal Capital and Portfolio Manager of the DIVZ ETF to discuss the evolving role of dividends in today’s market, DIVZ's disciplined investment process, and why a forward-looking lens is more critical than ever.

Who is the ideal investor for DIVZ?

DIVZ is best suited for investors seeking a reliable stream of income through high-quality dividends, while still maintaining equity market exposure. It appeals to income-focused investors, long-term savers, and those nearing or in retirement who value stability and consistency. DIVZ also resonates with investors looking for a more disciplined, fundamentals-based approach to dividend investing—one that prioritizes forward-looking analysis over short-term market trends.

What sets DIVZ apart in how it selects companies for the portfolio?

DIVZ employs a rigorous, forward-looking fundamental analysis to identify companies with sustainable and growing dividends. This means evaluating a company’s future earnings power, free cash flow, balance sheet strength, and capital allocation discipline.

Rather than chasing high yields, the strategy emphasizes dividend durability—ensuring that companies selected can not only maintain but potentially grow their dividends over time. This forward-focused lens helps avoid common dividend traps and positions the portfolio for long-term success.

How have dividends historically contributed to performance and total return?

Dividends have been a crucial driver of total return, particularly over long investment horizons. Historically, dividends and their reinvestment have accounted for a significant portion—often 30% to 40%—of total returns in the equity markets.

In addition to enhancing returns through compounding, high-quality dividend payers tend to be more stable, helping to mitigate volatility and downside risk during market drawdowns.

DIVZ builds on this history by focusing on companies with consistent, well-supported dividend payouts.

What are the advantages of concentrated investing in a dividend-focused strategy like DIVZ?

Concentrated investing allows for greater conviction and control. By holding a focused portfolio of 25–35 names, DIVZ can zero in on only the highest-quality companies—those that demonstrate superior fundamentals and dividend sustainability.

This approach avoids the dilution of broad-market ETFs and allows for more meaningful positions in each holding. When paired with a quality dividend screen, this strategy can lead to lower overall volatility and better risk-adjusted returns over time.

How does DIVZ use forward-looking fundamentals to manage risk?

Risk management is embedded in DIVZ’s forward-looking approach to fundamental analysis.

The team actively assesses projected earnings, cash flows, and financial strength to ensure that companies in the portfolio are well-positioned to sustain their dividends even in challenging environments.

By avoiding reliance on trailing metrics, DIVZ reduces exposure to companies with deteriorating fundamentals or unsustainable payouts.

This anticipatory stance enables the portfolio to adapt to changing conditions and helps minimize downside risk while preserving income generation.