The Dividend Corner

When narratives shift, discipline matters.In this quarter’s Dividend Corner, we examine how geopolitical developments are influencing financial conditions and the flow of credit, while also driving uneven investor responses across sectors. We discuss the importance of maintaining a process-driven approach grounded in company-level fundamentals rather than reacting to macro headlines. Our dividend growth framework emphasizes internally generated capital and balance sheet strength as key drivers of long-term value creation.Disclosure: The views expressed in this podcast are those of the speakers and Bahl & Gaynor as the date of recording.  They’re for informational purposes only, not investment advice, and may change without notice.  References to companies or securities are examples only and not recommendations.  Past performance is not a guarantee of future results, and investing involves risk, including possible loss of principal.

In this mid-quarter episode of The Dividend Corner, Nick Puncer discusses the themes of market broadening and volatility shaping the early part of the year. He reflects on how shifting leadership beyond the “Magnificent 7,” evolving valuation dynamics, and a strengthening earnings cycle may influence returns ahead, particularly in a mid-term election year historically associated with heightened volatility. Against a backdrop of elevated trailing returns and increased portfolio concentration, the episode explores how dividend growth investing may offer diversification, cash flow generation, and a disciplined framework for navigating uncertain markets. Nick shares observations on positioning portfolios thoughtfully while remaining focused on long-term fundamentals and sustainable cash generation.   Disclosure: The views expressed in this podcast are those of the speakers as of the date of recording.  They are for informational purposes only, not investment advice, and may change without notice. References to companies or securities are examples only, and not recommendations. Past performance is not a guarantee of future results and investing involves risk, including the possible loss of principal. Please see the full written disclosure appended to this podcast posting for additional important information.

In this episode of The Dividend Corner, Nick Puncer walks through Six Charts for 2026 that frame Bahl & Gaynor’s outlook. Rather than offering forecasts, the discussion focuses on fundamental trends shaping markets today—including the scale of the AI infrastructure build-out, rising market concentration, valuation dispersion, and the importance of downside risk management. The episode highlights how history, valuation, and risk awareness can help investors navigate an increasingly concentrated but potentially opportunistic market environment.   Disclosure: The views expressed in this podcast are those of the speakers as of the date of recording.  They are for informational purposes only, not investment advice, and may change without notice. References to companies or securities are examples only, and not recommendations. Past performance is not a guarantee of future results and investing involves risk, including the possible loss of principal. Please see the full written disclosure appended to this podcast posting for additional important information.

On this episode of The Dividend Corner, we’re going to dive deep into the Health Care sector with fellow Investment Committee member Kevin Gade, who’s part of our Health Care team. This is the first step in our journey to allow investors to look through the B&G lens and understand our positioning throughout various economic sectors. So Kevin, thanks a lot for your time today. Nick, it’s good to be here. The most recent sector deep dive that you shared with the committee was entitled Emergency Room to Recovery Room. Let’s start there. Can you talk about what justified that title? Yeah, certainly. Just to level set everything, Nick, it’s been an extremely brutal five years for any sector that you can classify as defensive, whether it’s healthcare, consumer staples, or utilities, and a lot of that is rational. It’s been an extremely strong bull market with the S&P up over 100%. So, it’s natural that there’s a lot of lag to the defensive Sectors. What that has really driven is a lot of narrowness—not only in the market overall with sectors, but as you lift under the hood, a lot of the sectors have really driven that narrowness. For Health Care specifically, Health Care actually kept up. It was a beneficiary coming out of the COVID pandemic, as you can imagine—innovation, testing, and pharmaceuticals. But really since 2024, almost in lockstep with the election, you saw a lot of policy headwinds appear. So that’s been a big driver of the decoupling of healthcare relative to the S&P 500 over the past 18 months. So it’s kind of election-based for now. Certainly, yeah. Health Care being a very diverse sector, many of the industries within it almost have their own policy overhangs that they’re dealing with at this time. That makes sense. And I shouldn’t say election-based—it’s probably more the political process, the policy-making process. Absolutely. Certainly something we’re aware of with Health Care. So that’s a great summary. And despite the challenges landing the sector in the emergency room, as it were, Health Care as a whole—among all the other S&P sectors—still has one of the highest Sharpe ratios. Can you provide some details about that? Yeah, absolutely. Health Care has been a long-term contributor to innovation in the marketplace. Whether it’s improvements in longevity driven by innovation in healthcare goods and services or the demand side, there’s been a focus on health here in the United States. And more broadly, globally, there’s been a growing middle class that’s helped the demand side. What we know from healthcare, for better or for worse for the consumer, is that it is an extremely inelastic good. It’s very much “when you need it, you need it.” So, from a business standpoint, that allows for reliability in the business model. The combination of innovation over the past 30 years and the reliable, steady business model that many of these companies have displayed has allowed Health Care to be the third best-performing sector over the past 30 years. On a risk-adjusted basis—return per unit of risk—it’s actually in second place. That’s a key focus for Bahl & Gaynor, in addition to companies with a growing stream of dividend income and compelling returns. That probably speaks to the value of compounding—that if you have a business model that just compounds with not a lot of variability over long timeframes, you get a pretty good outcome. You don’t need the highest absolute return, but that combination of return plus consistency is really powerful. Absolutely. Health Care, being the second best Sharpe ratio sector, shares top-three status with Consumer Staples and Utilities. By no means do you need the best return profile. The balance of return and stability creates a very compelling profile. I suspect healthcare also has one of the more attractive dividend yields. Does that play into it? Certainly. Across all strategies we manage at Bahl & Gaynor, Health Care has been a key anchor for dividend yield. The reliability of income streams—thanks to healthcare’s inelastic demand—lets companies reward shareholders through stable and growing dividends. A higher yield doesn’t necessarily mean the companies are mature or slow-growing; it reflects reliability. We actually see growth opportunities across the market cap spectrum. It’s interesting—the dividend yield might actually more reflect the variability of opinion of the public around the ability to compound. Part of the reason that we focus on above- average dividend yields is there might be an ability to add alpha if you have a well- informed opinion about the company because there’s disagreement on its future path. So we’re just looking for consistency of fundamentals to drive dividend growth, and that combined with a nice yield is hopefully additive to the portfolio’s objectives over time. Yeah, I would agree with that. That’s a hallmark of our strategies—we want growth at a reasonable price. If you go back and look at why Health Care has been down and out, we highlighted a lot of policy uncertainty that has driven compressed valuations of the sector relative to the S&P 500. There’s been an exodus of investor positioning—whether warranted or due to money chasing momentum into mega-themes such as AI. While volatile, it’s succeeded over time. Combined with a very narrow sub-industry in healthcare, it’s been uncertain and difficult to own the space, but we’ve found many opportunities in companies offering healthy yields. That suggests investors view uncertainty, but we have a differentiated view not shared by the market. If we have a view and a catalyst, we can take advantage of an above-average sector and its catalysts to come. Now, there are many companies out there with higher-than-average dividend yields. We’re not here to just buy companies with high yields—we want the symbiotic relationship of getting investors paid today through dividends while owning companies growing earnings to support income growth and competitive long-term returns. That makes sense. Thanks for indulging that sidebar about dividend yield. You mentioned some elements of the emergency-room thesis—why healthcare has landed there, narrowness, flows out of the sector, things like that. Let’s take each in kind, double-click, and talk about what we’re seeing specifically. Similar to other defensive sectors over the past five years, as you lift under the hood of each sector, you find extreme narrowness. In Health Care specifically, of the 75 stocks that were S&P 500 constituents over five years, only 9 (roughly 12%) outperformed the S&P 500. That’s consistent with the Pareto Principle—20% of companies drive 80% of outcomes. While 12% isn’t extreme relative to 80/20, it shows where we are. Those 12% are very thematic—platform technologies in med-tech or anti-obesity. We’ve benefited from that, but market narrowness is at extremes. Valuation-wise, healthcare is at an all-time low relative to the S&P 500. The largest S&P company is now equivalent in size to the entire healthcare space. Positioning is at the third percentile over 30 years. If that doesn’t tell you investors don’t want healthcare, I don’t know what does. Okay, so why don’t we move to a happier place—the recovery room. You cited supporting themes like medical inflation and sticky utilization that might support Health Care’s recovery going forward. Can you elaborate on those? Innovation is certainly continuing. You’ve got a sector that’s a combination of goods and Services. On the goods side, exciting innovation in pharmaceuticals—gene therapy, anti-obesity drugs with anti-inflammatory effects benefiting diabetes and obesity alike. In med-devices, robotic surgery has been around for a few years, but we’re still early in its adoption. There’s continued innovation paired with a massive demand driver over the next 15 years—the silver tsunami. In 2026, the first Baby Boomer turns 80. After 80, healthcare consumption jumps. That cohort will grow 5% per year through 2040. That demand driver, combined with innovation, makes us very excited about opportunities in Health Care. So bottom line, innovation is costly, there’s a medical-inflation element, and demographics will likely dictate higher utilization going forward. And though healthcare might be an expense for other sectors in the economy, medical inflation and utilization are revenue for the healthcare sector. We’re not blind to the cost of healthcare relative to the entire U.S. economy—roughly a third of non-discretionary spending goes to healthcare. While we’re finding opportunities in innovation, we also see them down-cap, particularly in companies bending the cost curve. Facilities such as skilled-nursing and inpatient rehab centers, physical therapy, and outpatient clinics can deliver similar care outcomes at lower cost. Many of these facilities are compelling growth stories given the silver tsunami and their ability to reduce system costs without compromising care. Right, and a large portion of the federal budget goes to non-discretionary items like healthcare. Even within that line item, administrative costs are a big share. If you can get people out of costlier care settings—and perhaps AI helps bend admin costs down—that protects budgets for true innovation and better patient outcomes. I want to go back to large cap quickly, since a lot of our exposure is pharma-oriented. The biggest risk is LOE (loss of exclusivity). How do we think about that given much of pharma’s narrative centers on blockbuster drugs that eventually lose exclusivity? A key theme for Bahl & Gaynor in healthcare investing is revenue diversity. When innovation booms, there’s success risk—blockbuster drugs become such a large revenue share that loss of exclusivity (LOE) events matter. We aim to avoid owning into LOE events but also find opportunities after them. Valuation often compresses heading into an LOE, making that period compelling to re- underwrite or even lean in. Recent examples include AbbVie in 2023 when Humira came off patent in the U.S.—that was a perfect time to lean in, as the stock re-rated. Likewise, Johnson & Johnson’s 2025 event (Stelara) has led to a positive re-rating benefiting shareholders. In the SMID space, I want to come back to cost reduction from a different angle. We already covered post-acute care—getting patients into physical therapy instead of Hospitals. There’s also the sensitive topic of end-of-life care. You said something that stuck with me: a large portion of lifetime healthcare expense occurs at the end of life. Maybe that part of the care continuum can be optimized—humanely, of course—but in ways that benefit providers who haven’t had much spotlight. Let’s talk about that. Certainly. We understand it’s a sensitive topic. Unfortunately, many people go through this personally. Hospice care is ultimately a family and doctor decision to provide comfort for those near end of life. The positive side of the industry is its focus on compassion—allowing someone to live out their life in the comfort of home, surrounded by family. There are many for-profit and non-profit providers who benefit from this model. Hospice care is growing 8 % per year—above the growth rate of the 80+ population—and saves the Medicare Trust Fund over $3 billion annually. Okay, thanks for reviewing that. And this wasn’t on our list of discussion points, but it’s a good place to end. We talked at the beginning about one environmental element that’s challenged healthcare—the uncertainty around regulation. That’s maybe the biggest risk to the sector overall, perceived or actual. Any parting thoughts on how we view that risk? I’d say it’s all about diving as deep as possible into the business model and understanding stakeholders—not just the company and its products, but the buyers and payers.  Governments worldwide play a major role. Understanding this evolving landscape is critical for investment theses. At the same time, the high uncertainty we discussed creates alpha opportunities. The market is short-term focused, but with a reasonable time horizon, we can step into names at attractive valuations that ultimately reward shareholders. Great, well said. So, lightning-round summary: though it’s been tough sledding for Health Care, that’s understandable—uncertainty, multiple compression, outflows—but reasons we might move from the emergency room to the recovery room include sustained innovation, demographic tailwinds, and consistent business models managing risk. The silver tsunami, first Boomers turning 80 in 2026, and cost-curve bending initiatives all reinforce the long-term case. We see opportunity across market-caps—pharma and medical devices in large cap, diversified care and cost-reduction plays in SMID. If I missed anything, Kevin, you get the last word. I think you summarized it extremely well. It’s been a difficult past five years, but we’ve held up well relative to the sector, and the future holds bright opportunities for us and our peers across the firm. Great, well thanks for this initial tour of the Health Care sector. We really appreciate it. Great to speak with you. Thanks, Nick. Disclaimer: Bahl & Gaynor, Inc. (“Bahl & Gaynor”) is an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC does not imply a certain level of skill or training. The views expressed in this commentary reflect the opinions of Bahl & Gaynor as of the date noted and are subject to change without notice. This commentary is provided for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security or adopt any specific investment strategy or investment product. Any reference to specific securities, indices, or market segments is for illustrative purposes only.  This discussion is intended for informational purposes only and should not be relied upon as the sole basis for any investment decision. Past performance is not indicative of future results, and all investments involve risk, including the possible loss of principal. Any forward-looking statements or projections are based on current expectations, may not come to pass, and are subject to change due to market, economic, or other conditions. Past performance is not indicative of, nor a guarantee of, future results. Investing involves risk, including the possible loss of principal. Listeners should consult their own financial, tax, or legal advisers to determine whether any investment strategy or security discussed is appropriate for their personal circumstances. Additional information about Bahl & Gaynor, including our Form ADV Brochure, is available at www.bahl-gaynor.com and on the SEC’s website at www.adviserinfo.sec.gov. © 2025 Bahl & Gaynor Investment Counsel, Inc. All rights reserved.

4Q2025 Mid-Quarter Update   In this episode of The Dividend Corner, Portfolio Manager Nick Puncer discusses current market dynamics and the balance between confidence and concentration across equity markets. With enthusiasm around AI, expectations for rate cuts, and strong equity performance shaping investor behavior, Nick explores how these themes are influencing both large-cap and small-mid market capitalization segments. He highlights the ongoing dividend growth outcomes Bahl & Gaynor seeks to deliver, contrasts the momentum-driven performance of unprofitable companies with the steady fundamentals of quality dividend payers, and examines what these trends mean for portfolio diversification and risk management.  Ultimately, the conversation centers on helping investors stay constructive—focusing on fundamentals, discipline, and outcomes aligned with their long-term goals rather than short-term market sentiment.

Description:  In this conversation, Nick Puncer and Ryan Welch discuss the current investment landscape, focusing on the smid market, opportunities for gaining true diversification amid a concentrated and richly valued market, the implications of rate cuts, and the impact of AI, trade, and fiscal policies. They emphasize the complementary nature of a risk-managed approach to investing potentially offered via dividend growth strategies.  The discussion continues with a review of use cases for risk-managed dividend approaches to help clients achieve their financial goals amidst market volatility.    Disclosure: The views and opinions expressed in this podcast are those of the speakers as of the date of recording and may not reflect current market conditions. They are provided for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any security. References to portfolio characteristics such as dividend yield, downside protection, or alpha are based on historical data and may not reflect future conditions. These statements are not guarantees or assurances of future performance. Any references to specific securities, sectors, or strategies are intended only to illustrate the investment process and do not represent all securities recommended for clients. Actual portfolio holdings may differ and are subject to change. All investments involve risk, including possible loss of principal. Past performance is not indicative of future results.   Bahl & Gaynor Investment Counsel is an SEC-registered investment adviser. For more information, please refer to our Form ADV Part 2A.

In this episode of The Dividend Corner, Nick Puncer and Stephanie Thomas discuss a recent refinement made to Bahl & Gaynor’s large cap Income Growth strategy. They explore the transition from an individual company dividend yield mandate to a portfolio-level approach, emphasizing the importance of maintaining consistent income growth and managing risk. The conversation highlights market dynamics affecting dividend yields, insights from a similar refinement implementation with one of Bahl & Gaynor’s small-mid cap strategies, and the characteristics of an expanded investable universe. The episode concludes with what clients should expect going forward as well as some thoughts about the potential benefits of active management and flexibility.   Disclosure: The views you’ll hear today are for informational purposes only and do not constitute investment advice or a recommendation. Past performance is not a guarantee of future results, and all investments involve risk, including loss of principal. Any targets or expectations we mention are forward-looking and subject to change. References to strategies or securities are examples only and not recommendations. Investors should consult their own advisors before making investment decisions.

Artificial intelligence (AI) has become one of the most discussed themes in markets, drawing significant investment and generating both opportunities and risks. In this special episode of The Dividend Corner, Nick Puncer hosts a conversation with Kunaal Kanagal of Bahl & Gaynor’s Tech, Media & Telecom (TMT) group to examine how AI is influencing companies and the broader economy.   Discussion Highlights: Scale of Investment: AI is widely viewed as a major technology shift. Over the past four years, S&P 500 companies have materially increased capital expenditures, with a large share directed toward data centers and advanced computing. Independent research, as well as Bahl & Gaynor’s proprietary analysis, suggests combined AI and data center investment may be substantial through the end of the decade. Understanding AI Capex vs. Sales: The team discusses how infrastructure providers (e.g., semiconductors, cooling, networking) are often among the earliest beneficiaries of large platform shifts, while longer-term revenue opportunities may develop for consumer-facing organizations (AI Sales), with some business not even imagined at this point. Volatility & Disruption: Like past technology changes, AI has introduced excitement and volatility. Supply chain bottlenecks and questions around software business models may create near-term challenges, even as adoption broadens. Historical Lessons: Prior technological shifts suggest that long-term value capture tends to concentrate where firms have durable scale, intellectual property, or distribution advantages. Investment Lens: Bahl & Gaynor continues to apply a bottom-up, research-driven approach to evaluating companies across all sectors, with an emphasis on financial flexibility and sustainable business models, which may allow these companies to avail themselves of the benefits of AI.   Important Note: The views expressed represent the discussion as of the recording date and may change. References to specific securities, sectors, or strategies are for illustrative purposes only and do not constitute investment advice or recommendations. Investing involves risk, including possible loss of principal. Past performance is not indicative of future results.

Nicholas Puncer: Hi, I'm Nick Puncer, Portfolio Manager and member of Bahl & Gaynor's Investment Committee. Welcome to the Dividend Corner It's August 2025, and for this quarter's mid-quarter update, fresh off of earnings season, we're going to be speaking with fellow Investment Committee member and Bahl & Gaynor's Chief Investment Officer, Pete Kwiatkowski. Thanks for your time today, Pete.  Pete Kwiatkowski: Thanks, Nick. It's great to be here. Nicholas Puncer: Pete, one could argue that markets today look much the way they did at the end of 2024. They're concentrated, got pretty high valuations, and perhaps the market's vulnerable to small changes in the growth narrative. But investors have been handsomely rewarded for being invested in equities over the last 15 plus years. Now, as equity investors ourselves here at Bahl & Gaynor we don't want to come off as bearish on equities, but maybe a good place to start is talking about the role of risk management and how we manage our strategies given the market backdrop.  Pete Kwiatkowski: Yeah Nick, it's a great place to start since paying attention is at the center of our investment process. Our process is designed to put downside protection potential along with inflation beating dividend growth at the center of our portfolio construction and management.  We want downside protection potential to be a perennial characteristic of how we invest. Investment environments can change so quickly as we have seen. So, I believe the emphasis that we place on risk as a firm differentiates us. And while equities, as you said, they've done a tremendous job generating wealth for investors over the long run, our timing for this discussion, I feel, is a bit more precarious than usual. If you look since 1999 or mid 1999, over the last 25 plus years, there are only handful of observations where we've seen forward PEs greater than what we've had today, 22 times earnings. And of those handful of observations, all of them have produced negative forward five year returns. So what we saw in the first quarter culminating with the early April drawdown, as well as the recent volatility around the July non-farm payroll release, those were good real world signals that we were appropriately positioned across our strategies to deliver the downside protection potential that we target if you look at how we performed. This primary focus on risk has led our strategies historically having a risk profile with lower volatility than their respective benchmarks. We feel that allows our clients to potentially consider a higher allocation equities in their portfolios than they otherwise might be comfortable with. And we feel, as you know, this can help our clients build more wealth over the long run. It's a good starting point and good context from a risk perspective.  Nicholas Puncer: I wonder if we can double click on that risk element and talk a little bit about how we incorporate risk management specifically into our approach, maybe from a company selection or a portfolio construction standpoint. Pete Kwiatkowski: Yeah, sure, so, I think again, I'll double click on the point that we most when you think about stocks, you just think about returns, right? So, we spent from the very beginning when we're looking at stocks, and then how the stocks roll up to the sector and the portfolio, we pay very close attention to how that stock performs when the market goes down or downside capture. We're always looking at volatility and beta. So we have to respect risk first and not just chase returns, which as you know today is extremely tempting. So, what we're looking for within our dividend growth universe, we aim to own the best companies that meet our requirements within that. And while we're keeping portfolio risk within our constraints. So, you know, one big point within that is a stable company that leads its peer group and possesses competitive advantages is something that we would love to invest in. And the main thing there is that those types of companies tend to defend very well when the market declines. To us, that's as valuable as fast-growing companies can be. Nicholas Puncer: Yeah, absolutely. Yeah. I'm reminded of a quip that think Warren Buffett made where if you have $100 and you lose 50%, it's really unfortunate because you need 100 % return to get back to even. But, if with that same hundred dollars, maybe you lose 25%. You only need a 33% return to get back to even. So, while the return is important on the upside, you know, we're really focused on trying to constrain that downside risk element to keep the capital employed for recovery.  Pete Kwiatkowski: A lot of what we do, Nick, is it's behavioral, right? Human beings were all wired to look for returns first. Yeah. We want, we want to chase those returns at times. The great thing about our firm is you know we've been focused on dividend growth for 35 years now and it's just ingrained in who we are so there's no question at this point whether we stray from our process. It's very embedded and we think that at this point when returns are really in vogue and risk isn't that our companies are more attractive than they've you know they've been in a long time. Yeah. So we think that's an attractive fact pattern.  Nicholas Puncer: Great, great. So, you mentioned kind of the market level returns being very strong.  We've done a lot of work on market concentration, which maybe is an outcome of market level equity returns being strong for so long. And we published a fair amount of that in client facing collateral. So, can you maybe talk a little bit about current market level concentration alongside valuation and where we fit into that continuum maybe as a dividend growth manager in our opportunity set? Pete Kwiatkowski: Yeah, sure. I so I mean, we've heard all the terms out there. You've got Meg 7, you've got Great 8. But, you generally right now, the top 5, 10 companies on a given day represent at least right around 40 % of the S &P 500, which, you know, that is high when you look back at the last call at 45 years or so. going back even farther historically, you know, in American history and American stock market, you have had times where you've had banks in the early 1800s and railroads in the late 1800s have even larger concentrations. We don't have a lot of great data on those times, but basically what's happened subsequent to those periods where you saw those high levels of concentration you really saw a period where there was a lot of disruption post that and some capital destruction.  I think what we're really concerned about at this point is in any one of these periods, it seemed like that period would never end and it would go on forever and the market loves to extrapolate current trends out, which is understandable, but it's something that we have to be very cognizant of as we go forward. So we've been in this concentration cycle for about 20 years now, and growth has continued to outperform value with this. Cap weighted portfolios have beaten equal weighted ones, sometimes handily, and large cap has outdone small cap. What generally happens when this reverses is the concentration cycle gives way to a diversification cycle. And obviously, like we're not seeing that right now at all. with the fast pace of change with AI, seems like it's extremely ripe for that to happen. It's something that we saw post that first tech boom and while this is certainly different in a lot of ways we would never argue that it's also ripe for a lot of disruption with this with this new technology.  We also think the math does get a little harder the larger these numbers get and this year in particular these numbers have gotten very very large if you look at the amount of capital spending that's going into call it AI and the entire build out of AI.  One other point with this, you talked about how we're looking at this. The rest of the market really does look pretty reasonably valued. And most of the stocks that we invest in, of course, we have some exposure to the AI trends. There's no doubt about that. The stocks that we invest in, we're always underwriting and re-underwriting these names. And what we do see though is that the rest of the market that lasts 490 or so stocks is much more reasonably valued. So we do feel like active that results in us having a high active share. I think everybody kind of sees that, you know, in our historical performance. We don't look much like the market. Right. But we think that's a good thing. Again, when you go back to our process and the fact that we have not strayed, you do see the benchmark moving quite a bit and the sector concentrations changing. While our portfolio will certainly move around depending on what's rewarding us in our process and what companies we see are the best to invest in from that perspective, it does not lend itself to that level of concentration and our risk controls also keep us a little bit more cautious about adding too much risk in one area of the economy or any kind of disrupting type of technology right until it's more proven. So we're looking to companies that have already shown us historically that they can produce great returns. And so maybe one last point on that, Nick. I know I've talked for a little bit here, but the companies in that top 10 have tended historically, although they performed very well, have been also very volatile and had some significant drawdowns. So that does give us a caution going back to that risk framework.  Nicholas Puncer: It is interesting that a lot of the narrative right now is around a capex cycle that in many respects is a lot of those top companies maybe willingly disrupting their core business models through this disruptive technology that we know as AI. And the market will have to digest what that looks like for each individual company and that probably is maybe one of the sources of volatility. It will be interesting to, if you consider AI, maybe to be like other general purpose technologies. If you own a well-run business that is able to avail themselves of those technologies as they become more diffused throughout the economy, you might be able to maintain or harvest some pretty good returns on invested capital. So maybe that's the optimistic scenario for the fact pattern that we look for. We look for companies that have financial flexibility to invest when a technology comes along, maybe they're not gonna be at the bleeding edge, but they have the capacity to do it and that can have some pretty important outcomes in terms of enterprise value and sustainability over time.  Pete Kwiatkowski: Yeah, you hit the point right on the head, I think. Two things I would say is I totally agree. And I do think there's so much capex going into these trends that the top companies right now know that there's a high probability that things will be disrupted and they want to be on the other side of that too. And they are using the tremendous cash flow that a lot of them are producing and pushing it in this direction. Whether that's successful or not, that's somewhat unclear. And then on the other side of that, the companies that we tend to invest in, strong balance sheets, really good cash flow, generally self-fund themselves. It's a great opportunity for them to invest in this. To your point, I do feel, and we feel, that this does become more diffused and the benefits should flow through the economy and we should get some great productivity with the optimistic scenario, so to speak.  I do feel personally that there'll be some growing pains as we walk through this. think some of that tends to be with the security of data and arranging data and making sure that's a little bit of what we're hearing. But certainly there's tremendous potential, just like there was when you first saw the internet build out and then post that. So I do think history could rhyme a little bit with that, but that's why there's a lot of money being thrown at this right now.  Nicholas Puncer: Maybe on the other side of the ledger, lots of money being thrown at AI capex, lots of money also being remitted to Treasury from tariff levies.  It's very much an of-the-day topic. We seem to be nearing maybe the end of the negotiation process, at least with our largest trading partners here in the US. We haven't seen the impact of tariffs necessarily appear in a big way, at least in the inflation numbers. But as I said before, that cash was coming from somewhere. It's flowing into the treasury from some source. We're mostly through earnings seasons. Are there general observations that you would have across our holdings, maybe in terms of how tariff exposures impact in company profitability? Is this different from the broader market? Any read throughs to future dividend growth potential?  Pete Kwiatkowski: Yeah, think things haven't completely settled yet as far as tariffs. definitely, we do feel like we're farther along and people have settled into some sort of rhythm with this, right? So we have seen some affected companies quantify the impact of their guidance. So we do know a little bit. Most companies really hit guidance in the first quarter reports and then second quarter. Most of them have settled that back down a little bit. So the impact and I think that's why we had such a beat season here in the second quarter we have so far. But with us leaning towards the top companies, usually in their area, we want to buy the best. These firms tend to have defensible competitive positions, but the most important thing is they tend to have pricing power. And so they can choose relative to many other companies, whether to pass on those price increases and defend their profits, as well as how much of that to maybe eat and continue to build deeper relationships with the customers that they want or the consumers that they want.  One other thing to remember is, of course, a lot of the companies that we invest in are service companies, so we don't see exposure there. so when we're thinking about tariffs, these are interesting times, right? So it's a little bit of taking from one and giving the other.  We have shifted. So tariffs are a little bit more of a sales and corporate tax and then rather than an income tax and then that is funding the Big Beautiful Bill that we've seen out there. It is a little bit difficult right now to see how all these cross currents will shake out. We do think there might be some more disruption on uncertainty as now the tariffs are actually flowing through even more in earnest post August and seeing companies realizing that they might have to pass on more of those price increases to consumers and or their end users. So we are staying really close to our companies with this, but again, if you're investing in the types of companies that we push towards with strong balance sheets, good competitive positions, we feel like a lot of times they can take this potential disadvantage and turn it into an advantage. Nicholas Puncer: Yeah, that makes sense. And the timing element also seems to be something that will discovering coming quarters like the ramp up it takes time and we might not have seen the full impact of a lot of this quite yet. Pete Kwiatkowski: Correct. Nicholas Puncer: Thanks for bringing up the One Big Beautiful Bill Act that that was the other side of the cross-current that I was going to ask you about I think this is maybe viewed by many as a counterweight or like a sterilization mechanism to the negative economic impact that tariffs might have. So any general thoughts about guidance companies we hold that provided us about how this interacts to maybe offset those growth headwinds? Pete Kwiatkowski: I think it's certainly intended that way. We'll definitely have to see how that plays out. What we like about it is it is encouraging companies to invest and kind of think long term. They are allowed to invest in these bigger projects for capacity very focused, of course, on the United States and its capacity to manufacture and so on. And it is going to be a nice offset to the uncertainty that the trade policy has brought us as well as any potential effects. So we do feel though that there could continue to be some retooling, although I think we saw this the first time that President Trump was in office. So I think companies have retooled their supply chains based on that and COVID to some extent. So, and of course, it is important that we continue to get some thrust from the fiscal side, both to offset the potential dampening effects of tariffs, as well as just that good push into next year. So we will see, you know, what happens there.  One thing I do want to call out though is that although there was some anticipation that we would reduce the fiscal deficit, don't anticipate that happening. It's not increasing it. We're getting a nice fiscal bill pushing things forward, maybe some thrust from that. But with the fiscal deficit already high, it's unclear what the bond market will do and how that'll affect interest rates as we go forward. The main thing for us is again, we'll stay very close to our companies from a bottom up standpoint. We don't necessarily do a lot of trading as you know, we're very long-term focused and do feel like when you do have some periods like this, it tends to favor higher quality companies and ones that have other ducks in a row because they can make adjustments.  Nicholas Puncer: Yeah, yeah, that makes sense. Maybe we don't want the most cyclical companies that would be levered to this because those might also be companies that are extremely reliant on external sources of capital. And you kind of mentioned that if there is some concern within the bond market at some point, we would just rather have companies that can sidestep that as much as possible from a balance sheet strength or cash generation standpoint.  Pete Kwiatkowski: Yeah, it's really always very hard to know when you need liquidity and when your balance sheet will be really important, in other words, to keep that high quality. And it's always tempting to add more leverage, but at this point, although there's a lot of anticipation that rates may come down, it's definitely an uncertain environment. We, think companies that can take advantage of the back and forth here as we see the next few quarters pull through is really important.  I do think that strong balance sheets, as you said, Nick, and companies that are very focused on their cashflow dynamics and internally funding will be able to take full advantage.  Nicholas Puncer: I want to move to maybe winding things down a little bit, but I think that we'd be remiss if we didn't talk about one topic that's on everybody's mind. We've talked about a little bit already, artificial intelligence, but then maybe one topic that's on our mind a lot and that's the small mid cap space. Any parting thoughts that you would have about AI and just that narrative as we've gone through this earnings season and maybe how we're looking at exposure there? Pete Kwiatkowski: For sure, things haven't obviously slowed down. In fact, they seem like the capex plans have continued to move higher. So what we're really focusing on at this point, we have some investments again in a lot of these areas, but we're watching for constraints around the compute and energy supply in general, I think there is a general awareness of that, but this is very real and just trying to get faster to market. So we're seeing some creative solutions being provided out there, but we're watching for that infrastructure that serves the needs of the needs of that you need to generate the AI types of services, if you will, the general purpose. And that's semiconductors, data center infrastructure, power delivery, power generation. So I do feel like going forward, the other thing that could happen, we could see a hiccup over the next several quarters is something around data. And we'll just have to pay close attention to that. And what I'm talking about is something that causes everything, it's big enough that it causes everything to pause and kind of take a step back and people are making sure that they have their data secure or something like that. I do think that people are moving forward fast with this. I'm not saying it's going to happen, but it's definitely a risk.  Nicholas Puncer: Yeah. It's an interesting point that you bring up and kind of from the technology side of things, it's a little bit of a double-edged sword. Like you need to have a really good handle on your data estate and have a digital core to your business as it were to be able to implement AI. But that's not every company out there and that journey is a complex journey the more complex the business becomes.  Pete Kwiatkowski: So yeah, you definitely want to make sure you have the data sovereignty and security handled as you're venturing into ramping that up. That's certainly part of our due diligence process. Yeah, that kind of maybe closed that thought on AI. We're very focused on trying to continue to establish who the current leaders are, their competitive advantages, and be very observant on who may be emerging as leaders. But we're really focusing on what we can see right now in financial results and returns on the capital being invested. Certainly, as you know, we're very focused on cash flow dynamics. And so we're continuing to do that. And we feel like we've done that with our strategies that honors both our commitment to providing growing dividend income and actively managing downside. Like we talked about earlier, emotions come run high at a time like this and things can, thinking can get all or nothing. So we're very focused on with the AI, with everything happening with AI that investors can be confident that we're not wavering from our core values of processes as we've talked about. Nicholas Puncer: Shifting gears to something that maybe is a little bit overlooked. And this is where I get excited at least. Thinking about, you talked about kind of the gravitational pull of AI, concentration of markets, that's maybe pulling attention away from other parts of the large cap market. But then you go down the market cap spectrum into mid cap, small cap. Some interesting dynamics there, maybe even unexpectedly in our dividend growth process and approach being viable talk about that a little bit sure  Pete Kwiatkowski: Yeah, I think I'm excited just like you are Nick. I think small and mid or smid have has been a little bit ignored in this current market environment and You know, there's conventional wisdom that you should only own these types of exposures something called an early cycle environment. We don't necessarily feel like that's true. We feel like it's something that you could own all the time. So what you're probably getting at there is the large cap arena has seen some concentration issues in the benchmark, but the smid space really hasn't seen that. And so we feel our approach is just as well suited to that area of the market, if not more. And I think that is showing up in our historical results. One of the big things that's happening in this space is there's a much starker differentiation between the haves and the have nots, if you will. You know, the profitable versus unprofitable in this space. And so we feel like we could take full advantage of that, make sure that we're focused on profitable companies. And they have outperformed in most years going back 20 plus years in this space, but also really focus on the very best within that cohort. We feel like this is a bit of a proof of concept for what we're doing, but again, this space has kind of been ignored here lately. And so you have that as well. So I think putting all that together, it's very attractive because the space is cheap. And then I think people tend to assume that you have to be very growthy in this area. But what we found in our experience, it's just focusing on, again, the very best companies, the ones that are probably already gone from infancy to proving that they have a competitive advantage. It's a beautiful thing in this space.  Nicholas Puncer: Great. Okay. Well, it's been a great discussion, Pete. Thanks for your time. Any last items that you want to leave us with? Pete Kwiatkowski: Maybe as you think about the balance of the third quarter and coming into the end of the year. Yeah, I think I would just reiterate, which is probably apropos for our conversation that I've mentioned risk so much, Nick, but I think the importance of a focus on risk at this point in the market cycle is extremely important. We don't invest again for particular cycles, but I think if you do think this is late cycle, then obviously you need to be paying attention to risk at this point. And we do a lot of risk work as we've talked about stress testing our portfolios. Sometimes you get the real time stress testing that we've seen earlier this year, and we feel good about that. But I would also let people know that our firm philosophy, we're an equity firm, we're highly optimistic. And we believe in investing in equities for the long term and just doing it in a disciplined, risk aware way. So we feel like you can see significant volatility. That's a hallmark of equities. Knowing that our process deeply respects risk. And when we're doing that, that means when things do get volatile, we can continue to remain really low turnover and be built with a long-term investment horizon in mind.  It's really hard to tell when things will erupt. I think we've seen that this year and in the past. The impossible can become the possible, but you can't really time those things or predict those things. So we focus on the controllables here at Bahl & Gaynor. So we feel that served us well and will continue to.  Nicholas Puncer: That's great. That reminds me of an adage, like risk is basically that more things can happen than ultimately will happen. And so you just have to control what you can in that framework.  Pete, this has been a great discussion. Thanks so much for your time and we look forward to having you on a future podcast for too long.  Pete Kwiatkowski: Thanks, yeah, appreciate it. Disclosure: Bahl & Gaynor Investment Counsel, Inc. (“Bahl & Gaynor”) is an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC does not imply a certain level of skill or training. The views expressed in this podcast are those of the participants and are subject to change without notice. They do not constitute investment advice, a recommendation, or an offer to buy or sell any security, strategy, or investment product. This discussion is intended for informational purposes only and should not be relied upon as the sole basis for any investment decision. Any reference to specific securities, sectors, or markets is for illustrative purposes only and may not be representative of all securities purchased, sold, or recommended for advisory clients. Past performance is not indicative of future results, and all investments involve risk, including the possible loss of principal. Equity investments are subject to market risk, including volatility, and may decline in value. Any performance data referenced in this podcast is presented on a gross-of-fees basis unless otherwise noted and does not reflect the deduction of investment advisory fees, which would reduce returns. For information regarding the firm’s fees, please see Bahl & Gaynor’s Form ADV, Part 2A. Where performance or returns are discussed, such results are based on historical data and may not be predictive of future performance. Statements relating to future events, expectations, or trends are “forward-looking statements” and are inherently uncertain; actual future results may differ materially from those expressed or implied. This podcast may include discussions of “downside protection potential” or other risk management strategies. Such strategies cannot guarantee a profit or prevent losses in declining markets. References to dividends or “dividend growth” refer to the stated policies of the companies discussed and are not guaranteed; dividend payments may be reduced or eliminated at any time. If testimonials or endorsements are included—such as positive statements by current clients, business partners, or employees—they may not be representative of all clients’ experiences, are not a guarantee of future performance or success, and no compensation has been provided for such statements unless otherwise disclosed. Listeners should consult their own financial, tax, or legal advisers to determine whether any investment strategy or security discussed is appropriate for their personal circumstances. Additional information about Bahl & Gaynor, including our Form ADV Brochure, is available at www.bahl-gaynor.com and on the SEC’s website at www.adviserinfo.sec.gov. © 2025 Bahl & Gaynor Investment Counsel, Inc. All rights reserved.

Hi, I’m Nick Puncer, Portfolio Manager and member of Bahl & Gaynor’s Investment Committee. Welcome to our fourth episode of The Dividend Corner, following our mid- quarter update published in late May. Today is Monday, June 30, 2025 and what a start to summer it has been! Markets have staged an impressive comeback following the “Liberation Day”-induced drawdown of the first quarter. The recovery has been impressive in both its speed and magnitude. Given the full summer lies in front of us, our thoughts this quarter will be compact. This is partly an acknowledgement of a season replete with vacations, time with family, and conditions ripe for thought and reflection — but also a recognition of how little has changed with respect to the underlying market risks we’ve highlighted previously, and Bahl & Gaynor’s role in addressing them for investors. Toward the end of last year, we continued to raise concerns about market concentration, high valuation levels, and lofty earnings expectations amid gathering storm clouds. A market priced for perfection was inherently more sensitive to any disruption of the growth narrative. The source of disruption in the first quarter came in the form of heightened trade policy uncertainty, leading the market to correct nearly 20% from its intra-year highs. Many of our conversations going into the end of the second quarter have centered upon “clearing the smoke”, so to speak, around traded policy uncertainty, Fed policy considerations, and other “known unknowns.” Because these variables are unknowable in the near and perhaps even medium term, clearing the smoke entails returning to basics: where we are now, where we may go from here, and most importantly, how to position for it. The fact pattern of where we are now goes something like this: First, markets have mounted an enormous comeback from the drawdown that began in the first quarter and bottomed out in early April, surpassing prior all-time highs at the time of this recording. Second, there has been little improvement in key economic metrics or “hard data.” If anything, some of these metrics have softened recently, likely reflecting the lagged impact of trade disruption. Therefore, the market’s recovery has been sourced largely from a recovery in sentiment (read: emotion). Third, earnings growth expectations have been dented because of the various growth disruptions mentioned, and their future path remains as uncertain as the timeframe for the resolution of top-of-mind risks for investors such as fiscal policy, trade policy, and the Iran/Israel conflict, to name a few. Taken together, this fact pattern means the market has returned to high levels of concentration, valuation, and susceptibility to changes in the growth narrative — a similar position to the closing months of 2024. Where we may go from here is anybody’s guess. That said, the last two quarters have been enormously useful to investors because the drawdown and subsequent recovery has granted them a “free preview” of risk present in their portfolios as currently allocated. We cannot overstate the importance of this opportunity. If our conversations with clients and prospects — as well as the flow of new capital into our strategies — are a representative indicator, we believe investors held more risk exposure than may have been ideal for their circumstances going into the first-quarter drawdown. Now is the time to make thoughtful changes to risk profiles so the progress investors have made over the last decade of excellent equity returns is protected, and so they sidestep serious market risks that have recently tested the behavioral limitations of investors to withstand high levels of volatility. We want to conclude this quarter’s update by highlighting the fact pattern that Bahl & Gaynor offers across its strategies that can address the re-emergence of significant market risks and help investors remain optimally positioned to achieve their goals amid an uncertain future: We begin with the concept of upside and downside capture. Bahl & Gaynor’s strategies have historically demonstrated upside capture ratios amid market rebounds that are relatively consistent with downside capture ratios experienced during drawdowns. Year-to-date upside capture ratios across our strategies have ranged from 63% to 76%. These metrics reflect performance during recent market conditions and are based on gross-of-fees results, so investors would have seen a portion of the recovery relative to the market — though actual results may differ depending on fees, timing, and portfolio composition – but with less volatility. Earnings and dividend growth stability are another important concept. Though the companies we invest in are not immune to growth disruptions, we seek to identify quality companies with ample flexibility to navigate uncertain environments. As a result, our portfolios continue to deliver stable earnings profiles and dividend growth that is little changed from our estimates at the beginning of the year. This stability helps to ensure client goals remain funded as previously expected, and that the compounding so vital to successful equity investment is not disrupted. In our last few investor letters and mid-quarter updates, we’ve highlighted the extreme levels of concentration in passive equity indexes. Though these concentrations are not occupied by poor business models, they have left equity indexes more volatile than in the past. Bahl & Gaynor’s strategies are actively managed to promote diversification, which may help support more predictable outcomes compared to unmanaged index exposure. This diversification allows us to make thoughtful portfolio adjustments as fact patterns change rather than “hoping” the market consensus is infallible. Alongside our discussions of downside protection potential through quality exposure and diversification, we have also discussed the protection potentially afforded by valuation discipline. At the end of 2024, valuation levels of our strategies were several turns lower than their respective benchmark indexes, offering an added layer of protection amid the valuation compression that occurred through the first-quarter drawdown. That favorable valuation differential still exists today, even as the market has recovered, and we believe it will continue to serve investors in the form of added protection potential if the growth narrative is disrupted yet again. We wish readers of this publication an enjoyable and safe summer ahead. We believe that the outcomes our strategies have delivered during this recent drawdown and recovery — including growing income, reduced downside risk exposure, and attractive risk-adjusted returns — can provide valuable support for clients’ financial peace of mind. We thank those of you who have entrusted your or your clients’ capital to our care. And for those reassessing risk and portfolio positioning during these sun-drenched months ahead, we are confident in our ability to help move risk in a direction that can support critical outcomes for the investors we serve. Disclosure: Please note that the information provided in this update is for informational purposes only and does not constitute investment advice or a recommendation by Bahl & Gaynor.  Before making any investment decisions, please consult with a qualified financial professional to ensure the information is appropriate for your individual circumstances. Bahl & Gaynor is a registered investment adviser with the Securities and Exchange Commission (SEC), and all discussions in this update are subject to the firm’s disclosure documents, including Form ADV Part 2A and Part 2B, which are available upon request. This is not an offer to buy or sell any securities or investments. Any examples or information related to specific securities are for educational purposes and should not be considered a solicitation or recommendation. Downside and upside capture ratios are supplemental performance measures calculated using gross returns of Bahl & Gaynor representative large-cap and small/mid-cap strategy composites compared to the S&P 500® Index during down-market and up-market periods, respectively, for the YTD period through June 30, 2025. The S&P 500® Index is an unmanaged index that cannot be invested in directly. This podcast contains forward-looking statements that reflect the current views of Bahl & Gaynor at the date of recording. These statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially. For complete net performance information, including 1-, 5-, 10-year, and since-inception figures, please refer to the full GIPS-compliant presentation available upon request at [email protected]. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal.  

Hi, I’m Nick Puncer, Portfolio Manager and member of Bahl & Gaynor’s Investment Committee. Today is Thursday, May 15, 2025, so we are halfway through the second quarter, and we wanted to provide investors with our thoughts about the year so far and our outlook. Markets have regained a meaningful portion of what was lost in the volatile drawdown experienced after “Liberation Day.” This advance has come via a combination of the passage of time, reversal of some policy proposals, and contours of trade policy resolution emerging so companies can return to the collective highest and best use of their resources: maximizing profits. In our interactions with investors during this quarter, several questions are a consistent staple of our discussions. We will answer them here but also provide broader thoughts that we believe may be helpful in positioning for the future. How are your strategies positioned to navigate the ongoing volatility driven by trade and tariff policy uncertainty and where do Bahl & Gaynor think we go from here? This is the first question we get, usually before sitting down, and usually asked in a way that exhibits genuine concern, which is understandable. We think it’s best to divide answering this question into two parts: first-order and then second-order effects of trade policy uncertainty. The first-order narrative we recount is along the lines of, “Markets ended 2024 with high valuation levels, and therefore greater sensitivity to any potential change in the growth outlook. Tariffs just happened to be the particular domino flicked into this fact pattern.” It makes sense that the first-order reaction to the growth disruption precipitated by trade policy uncertainty is the compression of the price/earnings (P/E) multiple of a very expensive market. Because Bahl & Gaynor’s strategies came into this market fact pattern with considerably lower portfolio-level valuations, part of our downside protection YTD has simply been the avoidance of an as-significant compression in P/E multiple. But this is not the complete picture. To complete the picture, we must examine idiosyncrasies present in both the large cap and small/mid (or smid) cap portions of the equity market. In the large-cap space, concentration in top index constituents, which include many of the Magnificent 7, contributed significantly to the indexes’ nearly 20% peak-to-trough decline. We highlighted in our Investor Letter and quarter-end edition of The Dividend Corner that not only have the top 10 constituents of the S&P 500 grown to represent 35% of the index’s market cap at 3/31/2025 (versus 17% a decade prior), but the average downside capture of these top constituents has risen to 134% versus 92% a decade ago. While the beta of the market will always be one, this does not mean its volatility is constant. Our work in portfolio construction and fundamental analysis is heavily focused on intentionally building downside protection potential so it is present in volatile periods whenever they arise and independent of proximal cause. For our large-cap strategies, this has involved avoiding the concentration of market indexes, selecting companies with lower-volatility business models and therefore lower-volatility equity, combining portfolio constituents in such a way as to maximize the benefits of diversification, and maintaining valuation discipline. This discipline has contributed to year-to-date downside capture ratios for our large-cap strategies ranging from approximately 60% to 75% versus the S&P 500. The smid cap portion of the equity market possesses a different form of concentration. Nearly 40% of constituents were not profitable in the last four quarters ended 1Q2025 and this figure has been rising since 1990. A lack of profitability leaves a company dependent on external sources of capital, and capital market access can be unpredictable. Growth disruptions can upend this access and precipitate significant equity volatility or even impairment. In the smid space, Bahl & Gaynor builds in downside protection potential primarily through a focus on profitable companies – a near-universal feature of dividend-paying companies. This discipline minimizes exposure to unpredictable variables like capital market access that can potentially impair a business model. We also maintain our focus on diversification and valuation discipline, the combination of which has allowed our small and smid strategies to deliver downside capture ratios YTD of between approximately 65% and 75% versus their respective benchmarks. Recall that we view this question as best answered in terms of first-order and second-order effects of tariff policy uncertainty. With the first-order impacts now articulated, the second-order component of this question relates to the impact of trade policy changes on the earnings profile of the market versus the companies we hold in our strategies. We believe tariffs can be viewed as inflationary in the short run in the form of a one-time price increase and disinflationary in the medium-to-longer run via substitution effects and supply chain retooling. This resembles the dynamics present in goods markets during the pandemic. The companies across our strategies demonstrated earnings resilience during this historical period, allowing the strategies to deliver portfolio income growth ahead of inflation. Today, the downside protection our strategies have provided relative to their respective benchmarks amid the trade policy upheaval signals the market’s confidence in resilient earning power despite these challenges. On an individual company basis, we do believe this and subsequent earnings cycles will provide a clearer picture of how various businesses will be able to manage through any shift in trade regime. Inevitably there will be mis pricings that become evident in our fundamental work that we may act upon across our strategies. It’s important to note that these may be limited for the time being for two reasons: The performance of our strategies in this period of elevated volatility has been peer-leading from a downside protection perspective, and in line with the expectations derived from investment theses across our strategy holdings. Trading in anticipation of what may be, particularly with respect to fluid policy decisions, is not the sort of value we seek to add in delivering outcomes to investors. Allowing investor capital to compound consistently and produce more cash for them over time is our value proposition. These characteristics are fortunately slow to change because they are grounded in business models with wide moats, guided by management teams with experience through many kinds of cycles, and backstopped by balance sheets fortified in good times so they may provide protection in uncertain periods. All this said, the second-order effects of evolving trade policy will not be known until trade policy itself arrives at a steady state. It’s uncertain how long various bilateral negotiations will take, and, in turn, when companies will be comfortable making investment decisions and individuals making purchase decisions based on these new policy equilibria. What we do know is financial flexibility amid a rapidly changing business and consumer environment is an advantage to companies that possess it. We view a significant component of our work as fundamental investors to be the underwriting of both business model resilience and financial strength for precisely these kinds of situations. Even though action may be less necessary within the portfolios we manage, we do think now is an important time to re-underwrite overall portfolio positioning and risk exposure, which leads to our second question.   How do you think about the positioning of your strategies across other risk assets in investor portfolios, given the current and anticipated landscape? From a longer-term and general perspective, the reason investors earn a risk premium from investing in equities is rooted in the innate tendency of humans to panic. This is one of those periods – it just so happens that tariffs were the proximal cause this time around and the reaction was made worse by the high starting valuation of the market and the idiosyncrasies we described across certain market cap spectrums in our first question. Many of our conversations with investors during this period suggest that the volatility they experienced in investment disciplines outside of our own offerings exceeded their expectations and comfort levels. Recent strength, therefore, should be viewed as an opportunity for investors to re-think and re-calibrate their go-forward risk posture. Across all risk assets, public and private, equity and fixed income, liquid and illiquid, we think it’s a very worthwhile exercise to re-underwrite quality exposure. Quality can be multi-faceted. It can concern valuation – an expensive quality asset can fail to deliver downside protection. It can concern fundamentals – unprofitable companies with great promise can be challenged by tightening financial conditions. It can concern mean reversion – the historically anomalous role price appreciation has played in the last 15 years of equity returns versus dividends may not continue for another 15 years.  Whatever the vector, quality has mattered in this current environment, and it is likely to continue to matter for some time as the causes of volatility may be partly secular in Nature. Though we are biased, we believe strongly that dividend growth strategies deserve a place in any investor’s portfolio. Dividends, in our view, provide a convenient signal to investors about the inherent quality of the business underlying the equity. Dividends have not been a central focus of investors for some time, whether because of falling interest rates and tame inflation, globalization, technological innovation, or simply investor zeitgeist. But a reversal or change to any of these reasons for dividends having been de-emphasized in the collective investor psyche is precisely what may make them so attractive as a portfolio component now and going forward. Perhaps in the future, investors will be more focused on durable earnings and the tangibility of dividends in the face of uncertainty. As with tariffs, we have no special insight as to how this or any other volatility-inducing event may affect economic and market fortunes in the future. What we do know is the world is navigating significant change, and that can be uncomfortable, particularly given the uncertainty around its magnitude and duration. Through these changes, anything that can potentially enhance certainty of outcome will likely command a premium from investors. We know of no better way to increase certainty of outcome, in investment terms, than to own a diverse basket of resilient businesses that trade at reasonable valuations and reliably produce cash for reinvestment and distribution shareholders. Though the next few months and quarters may continue to be a nerve-wracking rollercoaster ride (and we hope it is not), we are confident in our ability to deliver these outcomes to investors in their time of need.   We conclude with the final question we have been asked frequently: What would make you more optimistic about the economic and market backdrop? This question is usually asked in the context of the prior answers being perceived as bearish in nature – which is not our intent. After all, we at Bahl & Gaynor are long-term equity investors and ours is a fundamentally optimistic asset class. We do not view ourselves as bearish, merely cautious, which is an underpinning of our value proposition in the form of downside protection – discussed at length so far today and in our most recent quarterly Investor Letter (link). Since the trough lows in early April, markets are clearly discounting some level of resolution to the shift in trade policy and other risks as markets have recovered about half their losses from YTD peak in short order. Part of this may be the self-inflicted nature of trade policy revisions and the ongoing adaptation of the approach to resolution. There is a careful balance here because uncertainty is not only what pressures P/E multiples outright, but also future earnings via diminished investment and demand. Conversely, incremental removal of uncertainty allows the market to more clearly discount future value. We do think some inked trade deals, or at least memoranda of understanding, will go a long way towards helping businesses regain confidence to invest and demand to recover. This has already been reflected in the positive reaction to the announced outcomes of negotiations between the US and the UK and a détente with China. But we also think this overlooks the broader opportunity currently available to investors. Because of the recovery in risk assets, there is currently an uncommon opportunity for investors to reassess their portfolio positioning based on their recent experience amid volatility and potentially adjust this risk profile if it has threatened future goals or caused undue concern. The incipient market recovery is providing an opportunity for investors to make necessary changes without as much of the behavioral pain of forced selling or “trading under fire.” While the incredibly strong equity returns of the last few years, indeed the last 15 years, have advanced investors closer to their goals, now is the time (and opportunity) to think deeply about the level of risk one is willing to accept on their continuing journey. We are pleased with the tangible outcomes we have provided to investors through this period of volatility, namely a little-altered dividend income stream that is likely to grow faster than inflation this year, and downside protection amid the market drawdown. We hope to be considered as part of this risk introspection process we believe investors will be undertaking in the coming weeks and months.   Disclosure: Please note that the information provided in this update is for informational purposes only and does not constitute investment advice or a recommendation by Bahl & Gaynor. The views expressed in this update are those of the speaker and may not reflect the views of Bahl & Gaynor. Market conditions can change rapidly, and past performance is not indicative of future results. Before making any investment decisions, please consult with a qualified financial professional to ensure the information is appropriate for your individual circumstances.  Bahl & Gaynor is a registered investment adviser with the Securities and Exchange Commission (SEC), and all discussions in this update are subject to the firm’s disclosure documents, including Form ADV Part 2A and Part 2B, which are available upon request. This is not an offer to buy or sell any securities or investments. Any examples or information related to specific securities are for educational purposes and should not be considered a solicitation or recommendation.  Downside capture ratios are supplemental performance measures calculated using gross returns of Bahl & Gaynor representative large-cap strategy composites compared to the S&P 500® Index during down-market periods YTD through May 15, 2025. The S&P 500® Index is an unmanaged index that cannot be invested in directly. For complete net performance information, including 1-, 5-, 10-year and since-inception figures, please refer to the full GIPS-compliant presentation available upon request. Downside capture ratios represent gross performance for representative Bahl & Gaynor’s mid and small-cap strategies during negative return periods YTD through May 15, 2025. These are supplemental to net performance and benchmark results, which are available in Bahl & Gaynor’s full GIPS compliant presentation upon request. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal.

Hi, I’m Nick Puncer, Portfolio Manager and member of Bahl & Gaynor’s Investment Committee. Welcome to our second episode of The Dividend Corner, following our inaugural episode, which was our mid-quarter update. Today is Monday, March 31, 2025, and we will discuss the first quarter including the current growth scare, Bahl & Gaynor’s positioning, and our outlook. Since our mid-quarter update, domestic equity markets have remained volatile after sliding as much as 10% during the quarter on growth concerns. This drawdown is perhaps not unsurprising given the combination of high recent returns, lofty valuations, and a fast-changing policy mix. Bahl & Gaynor’s strategies are designed to provide downside protection, which they did during this quarter. We believe this downside protection is a natural outgrowth of our preference for companies that pay dividends and grow them because the market recognizes the intrinsic quality of these businesses, particularly in times of stress. As active managers, we believe we can further compound this intrinsic quality, and therefore downside protection, through portfolio diversification and valuation discipline. In a broader sense, downside protection is important for investors not only because of the recent market drawdown but also because of the current market structure. The slide pictured here illustrates the well-understood dynamic of large-cap concentration increasing over the last decade. But we take this a step further and examine how the downside capture ratio of the largest equity market constituents, pictured at the bottom of the slide, has also changed. This group’s downside capture profile has increased by nearly 50% over the last decade. Even though the market’s beta will always be one, this does not mean the market has constant volatility. With the high equity returns of the past few years, indeed the last decade, it may be tempting for active managers or investors to mirror index composition. But that action could involve assuming more risk than investors expect or is necessary to achieve their goals. That is why Bahl & Gaynor’s strategies emphasize high active share relative to their index benchmarks, meaning we look very different than the construction of passive indexes. Because investors have made significant progress against their goals, given the high equity returns of the last decade, a core mandate for our active approach is to avoid setting investors back through exposure to excessive risk and downside volatility. — Switching gears to the growth scare at hand. Growth scares occupy a tiring middle ground between the wealth creation of economic expansions and the unsettling wealth diminishment of economic contractions. This fear is perhaps most poignantly elicited in the Atlanta Fed’s GDP Now indicator pictured on this slide, which shows the onset of the growth scare in real time. Investors are now understandably busied by trying to figure out whether the economy will continue to grow or weaken further. We don’t know which way this growth scare will break, but we also don’t believe that information is necessary for many investors to achieve their goals. Various envisioned futures depend largely on the timeframe. An economic contraction may have a higher probability of occurring near term, but that gives way to a rising potential of expansion further out. The reverse of this is also true. Much of the work to be done by investors concerns managing risk around different time frames. In the near term, if an incremental drawdown is more likely, then downside protection can serve an important purpose. But in the long term, inflation and preserving investor purchasing power are probably the risks of greatest concern. Bahl & Gaynor’s investment approach attempts to balance the various timeframes investors must navigate: The downside protection we seek to provide is the desired outcome of the fact pattern we prefer for fundamental investment. It should be predictably present in the near term when needed, as it has been amid this current growth scare. But our commitment to being a fully invested, diversified, equity-only manager serves the longer-term objective of inflation protection both through growing investment income and capturing the equity risk premium. We believe exposure to equities with less volatility than the market, particularly downside volatility, is a potentially useful component of any investor's portfolio. — Much of our commentary has been philosophical, which we view as appropriate given the inherent emotion of a growth scare. But we also believe there are more tangible takeaways worth highlighting: First, diversification balanced with conviction is an important competitive advantage of active management. This speaks to the market concentration and downside capture profile of the current market structure we shared earlier. Letting risk exposures float freely – as in passive index construction – can yield volatile outcomes for investors when economic fundamentals or even sentiment and expectations shift. While operating a diversified portfolio may not deliver maximum near-term absolute return, we do think it can provide competitive returns adjusted for risk, which we believe suits the temperament of human clients well. Our efforts to manage concentration risk in our portfolios have paid off in terms of providing downside protection and potentially capturing the opportunities available through rotating proceeds from high-expectation wins to low-expectation opportunities. Second, opportunities likely exist where most investors are not focused. Strong market returns of the last few years have been concentrated in sectors receiving significant investor attention, like the Information Technology and Consumer Discretionary sectors. While exposure to secular growth patterns in these sectors is important, and something we possess across our strategies, we also believe opportunities can be found in unloved sectors where many investors have allocated little attention. Lately, these might include the Consumer Staples and Health Care sectors, or Energy and Financials before that. Many of these unloved sectors have provided alpha generation and downside protection amid the recent growth scare. In turn, we believe some of the recently dented sectors that had captured much investor attention in prior years may possess their own opportunities that we are currently investigating. Third, uncertainty in the market does not abate – it just shifts around. The policy uncertainty, partly to blame for worrying investors this quarter, may never return to zero. Indeed, believing it was zero to start is likely a false premise. Given this, it makes sense to pay close attention to fundamental characteristics that position business models to thrive in the broadest range of potential outcomes. That is why the work of fundamental analysis is a critical tool Bahl & Gaynor constantly utilize to proactively manage portfolio risk. — We are often asked about our broader thoughts and perspectives outside of our focused fundamental dividend growth philosophy. To close out this quarter’s commentary, we want to share some of these thoughts, ordered from the nearest term to the most secular in nature: Sentiment has shifted massively over the last quarter, almost a complete 180° from the prior quarter and two years. This almost inevitably means sentiment has overshot in terms of bearishness and may begin to recover before long. So, human sentiment is volatile and unpredictable, which is why it’s important to be invested and stay invested; that is what permits compounding. But, sentiment improving and some market recovery do not necessarily mean market volatility will settle back down. There remains a tug of war between growth-negative and growth-positive policy narratives. Timing, sequencing, and magnitude of these policies will eventually impact fundamentals, but specifics won’t be known for some time. In the face of this ongoing uncertainty and paying deference to the importance of being invested and staying invested – being diversified while invested acknowledges and addresses the presence of risk, which we think of as the possibility that more things can occur than will occur. It’s not lost on us that “soft data” responds quickly to shocks, but “hard data” can take longer to register a response. This is both a good and a bad thing. A good thing if policy volatility quickly settles down, then real economic damage could be minimal. A bad thing if policy volatility remains elevated and important economic decisions are put off, stalling growth via a negative feedback loop. Focusing on business model resilience is critical given the spectrum of potential economic outcomes. Benchmarks can be useful to gauge variables affecting equity returns like valuation, earnings growth, and participation. But benchmarks can also possess serious flaws, like susceptibility to excessive investor optimism or concentration, and reflect the past perhaps more than the future. For human investors, the best benchmark is likely simply achieving one’s goals. This often has more to do with a well-considered plan regarding risk than the pursuit of only surface-level absolute return. Take time to revisit goals and re-underwrite portfolio positioning according to risk tolerance and goals. Pictured in this slide, the contribution to equity return has been heavily skewed towards price return rather than dividend return in the last 15 years. This differs significantly from the last century of market history. It is not unprecedented to have price return-heavy regimes, but these are often followed by dividend return-heavy spans. Many of the topics causing investors concern today, like inflation and hyper-globalization, are new risks that differ considerably from the risks faced over the prior 15 years. These risks will likely have different impacts on the mix of dividend and price return comprising total equity return over the next 15 years. Consider dividends as a potential return source to address secular risks. The current growth scare is another reminder of the uncertainty equity investors must endure to earn the risk premium associated with the asset class. But investors are not powerless in controlling the risk profile of their portfolios to align with their temperament and needs. We are grateful for the opportunity to share our results and thoughts about these topics with investors we currently serve, and those we hope to serve in the future. Thank you for your time in listening today, and please do not hesitate to reach out to us through your local Institutional Portfolio Consultant, our website, or by telephone. We look forward to continuing to serve you. Disclosure: The information presented in this commentary is for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. This commentary does not create a fiduciary relationship or obligation between Bahl & Gaynor and any recipient. Investing involves risk, including the possible loss of principal. No investment strategy, including those designed to provide downside protection or dividend growth, can guarantee positive returns or eliminate risk. Diversification does not ensure a profit or protect against loss in declining markets. Past performance is not indicative of future results. The views expressed in this commentary are those of the speaker and may not necessarily reflect the views of Bahl & Gaynor. Market conditions can change rapidly, and any opinions or projections are based on current information and assumptions that may change without notice. Actual results may differ materially due to various factors, including market conditions, economic developments, and unforeseen events. This commentary may contain forward-looking statements, which are based on current expectations, estimates, forecasts, and assumptions that involve risks and uncertainties. Actual outcomes and results may differ materially from those expressed or implied in any forward-looking statements due to various factors, including but not limited to changes in economic conditions, interest rates, market volatility, and regulatory developments. Bahl & Gaynor assumes no obligation to update any forward-looking statements. References to benchmarks and market indices are for illustrative purposes only and do not imply that Bahl & Gaynor’s strategies will achieve similar results or outperform. Benchmark and index comparisons are not intended to suggest that any Bahl & Gaynor strategy will outperform or achieve similar results. Investors should carefully consider their objectives, risk tolerance, and investment time horizon before making any investment decisions. Any references to specific securities are for educational purposes only and should not be considered a solicitation, recommendation, or endorsement. Bahl & Gaynor is a registered investment adviser with the Securities and Exchange Commission (SEC). All discussions in this commentary are subject to the firm’s disclosure documents, including Form ADV Part 2A and Part 2B, which are available upon request. Bahl & Gaynor provides investment advisory services in accordance with applicable laws and regulations.  

Hi, I’m Nick Puncer, Portfolio Manager and member of Bahl & Gaynor’s Investment Committee. Today is Friday, March 7, 2025, so we are more than 2/3 of the way through the first quarter, and we wanted to provide investors with our thoughts about the year to date and outlook. The quarter started with optimism regarding economic growth, which is understandable given the strong economic profile of the last two years and the substantial equity returns this fact pattern has supported. But challenges have mounted, including: The emergence of DeepSeek as a potentially lower-cost disruptor of the US artificial intelligence ecosystem, Attempts to reduce fiscal spending via DOGE and congressional action; and, Fluid tariff policy enactment across major US trading partners. These factors have not yet significantly affected growth, inflation, or other economic variables, but policy volatility has weighed on investor sentiment. This can eventually impact investment decisions and promote elevated volatility in equity markets. Friday, February 21, seemed to be the first day of market action reflecting the emergence of a “growth scare”: Market action that day carried a distinctly defensive market tone, The volatile trading pattern has generally been sustained through February and into March, This has generally benefited our high-quality, dividend growth approach, leaving all four marketed strategies ahead of their respective benchmarks for the YTD period through March 7. Our Investment Committee views these periods of elevated volatility as opportunistic because they generally produce investor over-reactions, which can lead to assets becoming mis-priced: In particular, we have been focused on the opportunity set in the Health Care and Consumer Staples sectors, where investor expectations appear to be quite low, yet business models exist within these sectors that fit our quality and shareholder capital return criteria. We are also aware of sectors where expectations may be lofty coming into this period of volatility, like Information Technology and Consumer Discretionary. This is not to say we are downbeat on the categories as a whole, but funding opportunistic asset mis-pricings in beaten-down sectors is often best achieved by sourcing funds from sectors where high expectations may be at risk of disappointing investors. Taking a step back in terms of market outlook, we believe the last two years of healthy equity returns were largely driven by the upside surprise of avoiding recession. We suspect the avoidance of recession was a base case expectation for investors entering this year, which is partly evidenced by equity index targets published by the Street to begin the year that were largely ahead of levels achieved by the end of 2024. All of this is to say that continued disruption to the narrative of a “no recession scenario” could sustain volatility like what we are seeing now. To manage this risk, we focus on owning reasonably priced assets, with a low-volatility source of return in the form of dividends and dividend growth, and underlying business models capable of compounding throughout economic cycles. We do think that active management possesses an advantage of choosing risk exposures in a volatile environment, and we do see ample opportunity for our style of investing to add value across the market cap range. On that note, we will conclude by inviting you to review two recent and brief white paper publications: “Big Reasons to Think Small – Volume 2,” and “Market Concentration: At the Tipping Point?” on our website under the Insights tab. The first publication outlines the opportunity for owning dividend growth equities in the small and mid-cap space. The second paper takes a historical view of concentration and diversification cycles in equity markets and the distinctly different return profiles in each of these regimes. Thank you for your time in listening today, and please do not hesitate to reach out to us through your local Institutional Portfolio Consultant, our website, or by telephone. We look forward to serving you.   Disclosure: Please note that the information provided in this update is for informational purposes only and does not constitute investment advice or a recommendation by Bahl & Gaynor. The views expressed in this update are those of the speaker and may not reflect the views of Bahl & Gaynor. Market conditions can change rapidly, and past performance is not indicative of future results. Before making any investment decisions, please consult with a qualified financial professional to ensure the information is appropriate for your individual circumstances. Bahl & Gaynor is a registered investment adviser with the Securities and Exchange Commission (SEC), and all discussions in this update are subject to the firm’s disclosure documents, including Form ADV Part 2A and Part 2B, which are available upon request. This is not an offer to buy or sell any securities or investments. Any examples or information related to specific securities are for educational purposes and should not be considered a solicitation or recommendation.