The series
The format was designed to generate a large body of quality content by making the most of the talent in the room. With a three-camera setup operating alongside the event, we worked with investment managers back-to-back to produce 14 films throughout the day.
A shoot like this takes real preparation, and organising it is half the fun. Every interview is mapped in advance, questions tailored to each expert and a running order coordinated to keep things moving without losing editorial focus. On location it feels like being back in a live newsroom, and as journalists that energy is something we know well.
In the edit, this same discipline carries through, with each conversation shaped into a focused, standalone film. Animation was added in post to give the series a consistent visual identity.
These two films from the series spotlight investment managers discussing dividend growth strategies and the current AI innovation cycle.
Speaker: Amritha Kasturirangan, CFA, Vice President, Portfolio Manager, Research Analyst, Franklin Equity
Amritha Kasturirangan
It means that management have confidence that their business will grow at a steady, reliable pace to continue making that ongoing commitment to shareholders.
Who are these sustainable dividend growers? They're typically companies with very strong moats. Sustainable competitive advantages, strong balance sheets, a very disciplined approach to capital management and most importantly, a management team that is confident enough in ongoing top and bottom line growth to continue maintaining that commitment to a growing dividend.
2026 is a reminder that markets rarely move in linear fashion. Trying to play every headline is difficult. What we do is we focus on building a basket of resilient names with durable cash flow generation prospects, strong balance sheets, a disciplined approach to capital allocation, and names such as these tend to hold up better in times of volatility.
They also tend to perform somewhat irrespective of the broader political environment. A portfolio like rising dividends tends to deliver that downside protection, but importantly, is also poised for potential upswing through the range of secular growth drivers exemplified within the portfolio.
And I will add, as an active manager, volatility is not necessarily a bad thing. It's when we like to go shopping because we frequently find great businesses at discount valuations.
The reason why dividend strategies have endured for decades is because of their focus on these extremely resilient business models, as well as a very disciplined approach to shareholder returns.
Of course, we have to acknowledge that the market has increasingly become more narrow, more focused on a small group of large cap technology names, mostly driven by AI-related momentum.
But I would call out trends to be mindful of. The first is we have seen a broadening of the market ever since the presidential election. And this argues for diversification, which also protects against violent corrections, as we saw in 2022.
The second very exciting and intriguing trend I'd call out, is that many of these large cap mag seven names, three of them Meta, Google, and recently Nvidia, have seen fit to either initiate or grow their dividends meaningfully.
What are management teams saying? They are saying that they are confident enough in their cash flow generating capacity to balance an aggressive investment in growth initiatives, including AI, with an increasing focus on shareholder return programs. And that shifts them squarely into our opportunities set.
It means that it's not, as people might be tempted to think, a defensive category purely focused on traditional industries like utilities or telecoms. Some of the most exciting and innovative companies are moving into our buckets, so it keeps our pipeline fresh and vibrant.
About two years ago, when my fellow co-lead portfolio manager Matt Quinlan and I took over, we were very thoughtful about how to evolve the portfolio, in addition to staying true to its DNA.
For example, we felt that the portfolio could benefit from increasing exposure to the AI ecosystem. So we added names such as Broadcom and Oracle and Applied Materials.
We added exposure to utilities, which have benefited from an increasing demand for power generation from electrification or AI-related infrastructure buildout. We've added exposure to biopharma innovation, which is extremely exciting in the form of names like Eli Lilly and Merck, because these have actually talked about harnessing AI to potentially improve drug development productivity, which could have massive ramifications for the sector.
But the most important thing is that the nature of companies that we invest in, we use sustainable, substantial dividend growth as a flag for business resilience and quality. Those companies never go out of fashion. They participate well in a market up-cycle because they have these engines of growth momentum behind them, persistent, reliable, steady, as well as very good downside protection.
Speakers: Tasos Dovolos CIM®, PFP, Senior Vice President Sales, Franklin Templeton Canada and Josh Varon, CFA, CFP, Senior Client Portfolio Manager, Franklin Equity
Tasos Dovolos
Josh, what makes this innovation cycle so different from those in the past?
Josh Varon
We don't believe this is just another software cycle. We're really at the convergence of different types of technology being able to come together.
What we mean by that is cloud computing infrastructure, networking, semiconductor chip manufacturing. These AI systems are all so incredibly powerful and will have this major impact across a variety of sectors and industries.
The market tends to misprice innovation because they really don't understand the pace at which innovation grows or the duration. If you look at something like exponential data, for instance, this is something where every bit is being stored, measured and analysed, and we continue to go through this cycle.
So we're very excited by the opportunities presented to us because of all these converging technologies.
Tasos Dovolos
How should the investors think about the convergence of AI and the physical economy?
Josh Varon
First phase was really the scaffolding, kind of building the infrastructure and the software systems, and we believe that this next phase will be AI kind of proliferating through the rest of the physical world.
If you look at applications like robotics, industrial automation, residential automation, drones, flight systems, there's a lot of applications that are out there.
And this isn't science fiction, like, these are things that are happening now. If you look at self-driving vehicles, for example, the company Waymo already has 200 million miles across cities and highways out there with some really tremendous data.
We think that this theme of sort of intelligent machines, were really at the beginning of a really long innovation ramp that's going to have profound impacts for all of us.
Tasos Dovolos
How could innovation reshape healthcare and scientific innovation over the next decade?
Josh Varon
If you think of how we diagnose and treat different diseases, if you look at drug discovery, for instance, research and development is the lifeblood of any biotechnology and pharmaceutical company. And these large systems allow us to analyse big data sets and come to potentially market a lot sooner.
For example, one of the pharmaceutical companies working with one of the large language model companies, they even cited something that would have taken a nine week human trial, they were able to get down to one hour.
Tasos Dovolos
Where do you see the next phase of consumer innovation emerging?
Josh Varon
We think that the innovation will continue from whether it's e-commerce or digital payments, all things that should impact the consumer in a positive way.
If you think about more customization, more personalization, greater impact on customer service, this should be a sector where there's still a lot of avenues and trajectory for growth that's coming out.
Tasos Dovolos
How should investors think about the relationship between AI growth and rising energy demand?
Josh Varon
If you look at a lot of these S curves of growth within artificial intelligence, it started with the chips, GPUs and CPUs going up like this, then memory. And we think that power is that next S curve of demand.
The more powerful these systems get, the more power and cooling systems that are needed. This might even usher in that next era of space as an industry, because perhaps the most efficient place to have computing power is not here on Earth, but actually up above in the stars.
So this is an area that we think is actually a physical bottleneck in terms of demand that we have for compute, and a space that innovation will be a necessity in order for us to continue to get where we need to go.
