When I started Segment Wealth Management in 2010, it was because my view of investing looked nothing like Wall Street’s. Most firms seemed to think the path to success was clever trading, complex products, and a casual attitude toward fees and taxes. I never bought that. My bet was simpler: slash fees and obsess over the tax footprint, and clients would end up with meaningfully higher returns. Sixteen years later, that bet has held up.

The Segment Rising Dividend strategy actually traces its roots to 2006, while I was still at UBS, running this approach as a discretionary strategy. Our first client to adopt the strategy put in $5 million and added another million over each of the next three years, bringing the total to $8 million—$6 million of which was invested before the 2008 crash. That account has seen almost no additional deposits or withdrawals since. Today it sits at a shade over $50 million, with just over $30 million of unrealized gains. Performance has stayed competitive with the S&P 500 and is currently outpacing it significantly year-to-date in 2026*.

People hear “dividend strategy” and immediately picture high-yield stocks. That’s not what we do. We prefer companies that pay modest dividends but have a long, consistent history of raising them. Low current yield combined with steady growth produces better tax results and stronger long-term compounding than chasing big payouts.

I have a long-since-passed family member who managed his own money by scanning the newspaper’s dividend tables and hunting for the highest yields. Seven percent payouts looked like free money to him, especially compared to stocks that pay nothing. He thought he was being shrewd. The problem is that high dividends are rarely free. They often manifest as a liability; coming at the expense of the company’s balance sheet, future research and development, higher borrowing costs or maybe all of the above. Many of those companies aren’t paying a big fat dividend because they want to—they’re paying it because they have to. Cutting the dividend would signal distress, trigger a capital flight and drive the stock even lower. The payout thus continues, even when the business can’t really afford it.

That cash also creates a tax drag to investors. Over the last fifty years, dividends have typically made up around a quarter of total equity returns. For clients who don’t need the income and simply reinvest it, even the low 23.8% maximum federal tax on qualified dividends chips away at compounding every single year. Berkshire Hathaway is the classic counterexample. It pays only corporate tax on its profits and never distributes a dividend. The rest of the return stays inside the company as unrealized gain, which remains untaxed as long as the shares are held. It also bolsters the balance sheet, putting the company in strong position to negotiate compelling deal terms in times of stress, like when Berkshire bailed out Goldman Sachs in 2008 when they were on the ropes. That makes for a powerful, and extraordinarily efficient compounding machine.

Our Rising Dividend strategy tries to capture a version of that efficiency. We keep the current yield low, which reduces the annual tax friction. We also manage every tax lot individually—harvesting losses aggressively and realizing gains more selectively. The result is a portfolio that compounds capital with less leakage to the IRS.

That’s the core idea: lower fees, tighter tax management, and a preference for dividend growers rather than high-yielders. It’s why the strategy has become one of our most popular offerings.

*To obtain GIPS-compliant performance information for our strategies please contact us at info@segmentwm.com.