Month End Recap:
For the month of March, the Caldwell U.S. Dividend Advantage Fund (UDA or Fund) declined 7.7% versus a decline of -5.7% for the S&P 500 Total Return Index (Index)1. From a sector standpoint, Energy, Utilities, and Healthcare were relative outperformers, whereas Consumer Discretionary, Information Technology, and Communication Services underperformed.
Top performers in the month of March were Paychex (PAYX), Brown & Brown (BRO), and McKesson (MCK)2. PAYX rerated higher following its quarterly earnings release, as the company demonstrated strong execution as well as impressive cost performance. BRO continued to rerate higher as the rising re-insurance rates suggest continued robust insurance pricing and BRO, being a broker, benefits from higher insurance pricing without incurring the underwriting risks. MCK performed well during the recent tariff‑driven market selloff as a high-quality defensive healthcare company, due to its diversified medical‑surgical supply chain and its ability to pass through tariff costs while maintaining low‑cost, reliable product delivery.
During the month of March, the Fund initiated positions in McKesson (MCK), Cboe Global Markets (CBOE), Paychex (PAYX), and T-Mobile U.S. (TMUS).
MCK is one of the largest distributors of prescription medicines and surgical supplies in North America with an approximate share of one-third of the U.S. wholesale prescription drug market. The company is well-positioned amid tariff uncertainty, as no single country materially supplies its medical-surgical business. Where tariffs apply, it plans to pass on costs to customers while maintaining its focus on low-cost, reliable product supply.
CBOE is a leading U.S. financial exchange company focused on equities, index options, and futures. It offers a broad range of products that cater to all levels of investor sophistication, including an exclusive licence to trade index options on the S&P 500, S&P 100, and S&P Select Sectors through 2032. The company continues to drive growth through product innovation and miniaturization, which enhances clients’ ability to fine-tune hedging strategies. Additionally, it has a strong track record of expense discipline, which helps protect margins even in more challenging market environments.
PAYX provides Human Resources (HR), payroll, and benefits outsourcing services to businesses of all sizes, helping them streamline administrative tasks like payroll processing, employee onboarding, compliance, and benefits administration. The company enables clients to focus on core operations by simplifying complex HR functions. The company stands to benefit from market share gains as larger competitors like Automatic Data Processing face challenges in delivering a cohesive, integrated human capital management suite, creating an opportunity for more tech-forward providers like PAYX.
TMUS is the second-largest wireless carrier in the U.S., combining strong value with 5G network leadership to deliver an exceptional mobile and growing home broadband experience. The company has captured 80% of the industry’s subscriber growth since 2013, driven by a greatly improved network and innovative marketing targeting underserved segments in urban, rural, and business markets. The deceleration of its capital expenditures cycle should enable accelerating free cash flows.
Top performers in the first quarter of 2025 were Paychex (PAYX), Costco Wholesale (COST), and Mastercard (MA). PAYX was also a top performer in the month of March and was already discussed in the monthly section above. COST performed well as investors expected its sales momentum to continue, outpacing its peers. Additionally, amid accelerating inflation and tariff risks, the company’s superior value proposition and flexible product mix should enable it to capture additional market share and effectively manage margins. MA performed well as the company experienced continued modest growth in spending volume, aided by increased international travel that drove a further rebound in cross-border transaction volume.
The Fund held a 31.1% cash weighting at month-end. While we remain mindful of the macro environment, the Fund employs a bottom-up investment approach designed to seek out attractive investment opportunities in any market. Over the long run, given its unique momentum-driven investment approach and focus on well-managed, dividend growth companies, we believe UDA is well-positioned to provide strong performance by way of both attractive regular monthly distributions and long-term capital appreciation potential. We expect that our approach to dividend growth investing should continue to provide a means of generating compelling risk-adjusted returns for our investors over the long term.
1All returns (for the fund, individual stocks and sectors) are in total return, Canadian dollar terms. All stock returns represent performance for the full period noted. All fund returns are in respect of Series F.
Standard performance as at March 31, 2025:
Caldwell U.S. Dividend Advantage Fund (Series F): 1 Year: -2.3%, 3 year: 6.9%, 5 year: 10.7%, Since Inception (June 19, 2015): 8.1%.
S&P500 Total Return Index: 1 Year: 15.1%, 3 year: 14.3%, 5 year: 18.9%, Since Inception (June 19, 2015): 14.4%.
2Actual investments, first purchased: PAYX 3/11/2025, BRO 2/27/2025, MCK 3/11/2025.
All data is as of March 31, 2025 sourced from Morningstar Direct or S&P Capital IQ, unless otherwise indicated. Fund returns are from FundData. UDA, Index total return numbers, sector returns and individual stocks returns are in CAD terms. The Fund was first offered to the public as a closed-end investment since May 28, 2015. Effective November 15, 2018 the Fund was converted into an open-end mutual fund such that all units held were redesignated as Series F units. Performance prior to the conversion date would have differed had the Fund been subject to the same investment restrictions and practices of the current open-end mutual fund.
The information contained herein provides general information about the Fund at a point in time. Investors are strongly encouraged to consult with a financial advisor and review the Simplified Prospectus and Fund Facts documents carefully prior to making investment decisions about the Fund. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Rates of returns, unless otherwise indicated, are the historical annual compounded returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The payment of distributions should not be confused with a fund’s performance, rate of return or yield. If distributions paid are greater than the performance of the fund, your original investment will shrink. Distributions paid as a result of capital gains realized by a fund, and income and dividends earned by a fund, are taxable in your hands in the year they are paid. Your adjusted cost base (“ACB”) will be reduced by the amount of any returns of capital and should your ACB fall below zero, you will have to pay capital gains tax on the amount below zero.
Publication date: April 24, 2025.