w March 26, 2021 Joseph E. Buffa, Equity Sector Analyst Jack Russo, CFA, Equity Sector Analyst Advice & Research

Diversified Stock Income Plan List Investment Rationales Diversified Stock Income Plan Overview The DSIP List (Diversified Stock Income Plan List) focuses on companies that we believe will provide consistent annual dividend growth over a long-term investment horizon. Our objective is to provide a broad list of high quality, industry leading companies from which an investor can assemble a well-diversified portfolio. Through consistent dividend growth, our goal is to help investors stay ahead of the wealth eroding effects of inflation.

The DSIP List is a varied bunch. Our recommendations span each of the market sectors, range in market capitalization from about $3 billion to over $1 trillion, yield anywhere from below 1% to over 7%, and sell everything from lumber to electricity to pharmaceuticals. This is, of course, by design – remember the “D” in DSIP stands for Diversified. The rationale for recommending any one of them is similarly diverse – some have lots of stuff going on, some not so much; some look very compelling from a valuation perspective, some less so; some grow quickly, others slowly. The unifying theme that encompasses each and every one of the names on the list, however, is that we believe each can provide a reliable, steadily- growing stream of dividend income over a long-term investment horizon. Over time, we believe the company’s value will reflect the growth of the dividends it generates for its owners.

All financial data as of March 25, 2021 and sourced from FactSet and Wells Fargo Advisors.

Please see pages 49-51 of this report for Important Disclosures, Disclaimers and Analyst Certifications DSIP List – Investment Rationales March 26, 2021

Table of Contents Financials ...... 14 Communication Services ...... 4 Aflac Incorporated (AFL) ...... 14 Comcast Corporation Class A (CMCSA) ...... 4 BlackRock, Inc. (BLK) ...... 15 Verizon Communications Inc. (VZ) ...... 4 Brown & Brown, Inc. (BRO) ...... 16 Consumer Discretionary ...... 5 Chubb Limited (CB) ...... 16 Home Depot, Inc. (HD) ...... 5 Commerce Bancshares, Inc. (CBSH)...... 17 Lowe's Companies, Inc. (LOW) ...... 6 FactSet Research Systems Inc. (FDS)...... 17 McDonald's Corporation (MCD) ...... 6 Intercontinental Exchange, Inc. (ICE) ...... 18 NIKE, Inc. Class B (NKE) ...... 7 S&P Global, Inc. (SPGI) ...... 18 Starbucks Corporation (SBUX) ...... 7 T. Rowe Price Group, Inc. (TROW) ...... 19 V.F. Corporation (VFC) ...... 8 Health Care ...... 20 Consumer Staples...... 8 Abbott Laboratories (ABT) ...... 20 Brown-Forman Corporation Class B (BF.B) ...... 8 AmerisourceBergen Corporation (ABC) ...... 20 Church & Dwight Co., Inc. (CHD) ...... 9 Amgen Inc. (AMGN) ...... 21 Clorox Company (CLX) ...... 9 Becton, Dickinson and Company (BDX) ...... 22 Colgate-Palmolive Company (CL)...... 10 Johnson & Johnson (JNJ) ...... 22 Costco Wholesale Corporation (COST) ...... 10 Medtronic Plc (MDT) ...... 23 J.M. Smucker Company (SJM) ...... 11 Stryker Corporation (SYK) ...... 23 McCormick & Company, Incorporated (MKC)11 UnitedHealth Group Incorporated (UNH) ...... 24 Mondelez International, Inc. Class A (MDLZ)..12 Industrials...... 24 PepsiCo, Inc. (PEP) ...... 12 3M Company (MMM) ...... 24 Procter & Gamble Company (PG) ...... 13 Emerson Electric Co. (EMR) ...... 25 Walmart Inc. (WMT) ...... 13 General Dynamics Corporation (GD) ...... 25 Energy ...... 14 Honeywell International Inc. (HON) ...... 26 Phillips 66 (PSX) ...... 14 Illinois Tool Works Inc. (ITW)...... 26 L3Harris Technologies Inc (LHX)...... 27 Lockheed Martin Corporation (LMT)...... 27 Raytheon Technologies Corporation (RTX) .... 28 Union Pacific Corporation (UNP) ...... 29 United Parcel Service, Inc. Class B (UPS) ...... 29 W.W. Grainger, Inc. (GWW) ...... 30 Xylem Inc. (XYL) ...... 31

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Information Technology ...... 31 Materials...... 38 Accenture Plc Class A (ACN) ...... 31 Air Products & Chemicals, Inc. (APD) ...... 38 Analog Devices, Inc. (ADI) ...... 32 Ecolab Inc. (ECL) ...... 39 Apple Inc. (AAPL) ...... 33 Linde plc (LIN)...... 39 Automatic Data Processing, Inc. (ADP) ...... 33 PPG Industries, Inc. (PPG) ...... 40 Broadridge Financial Solutions, Inc. (BR) ...... 34 The Sherwin-Williams Co. (SHW) ...... 40 Cisco Systems, Inc. (CSCO) ...... 34 Real Estate ...... 41 International Business Machines Corporation American Tower Corporation (AMT) ...... 41 (IBM)...... 35 Crown Castle International Corp (CCI) ...... 42 Jack Henry & Associates, Inc. (JKHY) ...... 36 Federal Realty Investment Trust (FRT) ...... 42 Microsoft Corporation (MSFT) ...... 36 Realty Income Corporation (O) ...... 43 Paychex, Inc. (PAYX) ...... 37 Utilities ...... 44 Texas Instruments Incorporated (TXN) ...... 37 American Water Works Company, Inc. (AWK) ...... 44 Atmos Energy Corporation (ATO)...... 44 CMS Energy Corporation (CMS) ...... 45 Eversource Energy (ES) ...... 46 New Jersey Resources Corporation (NJR)...... 46 NextEra Energy, Inc. (NEE) ...... 47 WEC Energy Group Inc (WEC) ...... 47 Xcel Energy Inc. (XEL)...... 48

Page 3 of 51 DSIP List – Investment Rationales March 26, 2021 Communication Services Comcast Corporation Class A (CMCSA) Price $56.30 Consensus NTM EPS Estimate $2.82 Dividend Per Share (DPS) $1.00 Consensus Long-Term Growth Estimate 14% DPS Yield 1.8% NTM PE 19.8x DPS Growth Estimate 9% NTM PE 5-yr Average 15.8x DPS Growth History 13 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 13% Net Debt/Capital 50% Comcast is the leading U.S. cable TV and wireline internet access provider, with a physical network passing over 57 million homes and businesses. In addition to its vast cable TV and internet distribution assets, Comcast also owns NBCUniversal (NBCU), a premier media company, and distribution and content assets in Europe.

Comcast is the leader in cable video and high speed data distribution with more than 50% share in markets served. The company’s video, internet access, and voice networks span eight of the ten largest markets in the country, a critical competitive advantage giving Comcast the size and scale to compete effectively as content consumption patterns evolve. Given vertical integration of content created at NBCU combined with scale in both high speed internet and cable, we believe Comcast is well positioned in the evolving media and entertainment ecosystem.

Key Risks: The markets Comcast serves are very competitive and each faces distinct challenges including regulation, technology advances that may displace cable TV (OTT), and cost and pricing pressures (content creation/rights, ad rates). Through ownership of essentially all the super-voting Class B stock, Comcast is controlled by Brian Roberts, the company's chairman and CEO, and his family. In addition to representing 33% of the voting power, Class B stock also grants the Roberts family the right to reject certain proposals, even if approved by the Board of Directors and Class A shareholders.

Verizon Communications Inc. (VZ) Price $57.38 Consensus NTM EPS Estimate $5.07 Dividend Per Share (DPS) $2.51 Consensus Long-Term Growth Estimate 3% DPS Yield 4.4% NTM PE 11.4x DPS Growth Estimate 2% NTM PE 5-yr Average 11.9x DPS Growth History 14 years S&P Credit Rating BBB+ DPS 5-yr Historical Annual Growth 2% Net Debt/Capital 58% Verizon Communications Inc. (Verizon) is one of the largest U.S. telecom companies. The company operates extensive wireless and wireline networks, serving more than 110 million wireless subscribers through Verizon Wireless, nearly 7 million broadband customers, and 11 million voice connections. Verizon’s products and services include wireless voice and data services and equipment sales, and wireline voice, Internet access, broadband video and data, IP network services, network access, long distance, and other services.

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We view Verizon Wireless as perhaps the strongest and best-positioned wireless player in the U.S. The company has consistently been the U.S. industry leader, largely on the strength and reputation of its network. Verizon was the first U.S. carrier to complete nationwide LTE network coverage, an important marketing and operational advantage that we believe positions the company for further growth as the faster, more efficient LTE network drives higher revenue per customer. Verizon is now squarely focused on the next generation of wireless technology – 5G. A key element of Verizon’s strategy is its focus on high quality postpaid retail subscribers who tend to switch carriers infrequently, are generally higher credit quality, and more profitable than pre-paid subscribers.

Key Risks: Operating and maintaining an advanced technology telecom network is capital intensive. Verizon’s services are often sold on the availability, speed, and reliability of its network. Network shortcomings, either real or perceived, can impact sales and customer retention. Competition across Verizon's business lines is intense, with several formidable competitors in each area. Technology advancements could disrupt each of the company's product offerings. The Communication Services sector is subject to various levels of regulation which could impact Verizon's investment opportunities and potential returns. Consumer Discretionary Home Depot, Inc. (HD) Price $297.18 Consensus NTM EPS Estimate $12.65 Dividend Per Share (DPS) $6.60 Consensus Long-Term Growth Estimate 9% DPS Yield 2.2% NTM PE 23.7x DPS Growth Estimate 9% NTM PE 5-yr Average 21.0x DPS Growth History 11 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 21% Net Debt/Capital 76%

The Home Depot, Inc. (Home Depot) is the world’s largest home improvement specialty retailer. The company generates over $100 billion in annual sales across its robust 2,200+ store base in the U.S., Canada, and Mexico and online.

We view Home Depot as an excellent operator in an attractive segment of retailing. The company has increased sales per square foot consistently since the financial crisis of 2008-2009. Same store sales, another important retailing metric, ramped into the current +5-7% window. Over that same timeframe, return on invested capital has also steadily increased to the current level of nearly 45%, which is top-tier not only among retailers but any company broadly. Since resuming regular dividend increases in 2010 (the company left annual dividends at $0.90 from 2007-2009), Home Depot increased its dividend at a compound annual growth rate of +20%. We estimate dividend growth going forward at a more conservative 9%, a rate in line with earnings growth expectations and thus keeping the payout ratio around management’s stated 55% target.

HD shares currently trade in line with their historical five-year average. We believe the relatively attractive valuation level is due to market expectations (driven by Home Depot management at its 2019 analyst day) for outsized investments in stores, technology, and supply chain initiatives over the next 12 to 24 months. This spending is expected to weigh on margins in the near term but we believe will strengthen the company’s position longer term.

Key Risks: Home Depot’s success is highly correlated to private fixed residential investment which is driven by consumer confidence and the wealth effect associated with increases in housing prices. Unusual weather patterns could have a harmful impact on same store sales. Potential disruptions in the supply chain could also impact financial performance. Other risks here could include a slowdown in the U.S. economy, a weaker housing market, higher interest rates and declines in consumer confidence and consumer spending. Finally, e-commerce competition is impacting all retailers of late. However, we note Home Depot’s digital business has grown nicely in recent times and now accounts for nearly 10% of total sales.

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Lowe's Companies, Inc. (LOW) Price $185.17 Consensus NTM EPS Estimate $9.72 Dividend Per Share (DPS) $2.40 Consensus Long-Term Growth Estimate 20% DPS Yield 1.3% NTM PE 19.5x DPS Growth Estimate 10% NTM PE 5-yr Average 17.8x DPS Growth History 58 years S&P Credit Rating BBB+ DPS 5-yr Historical Annual Growth 17% Net Debt/Capital 76%

With fiscal 2019 revenues of roughly $70 billion, Lowe’s Companies, Inc. (Lowe’s) is one of the world’s largest home improvement retailers. The company offers a complete line of products for home decorating, maintenance, repair and remodeling, and commercial property maintenance.

The company’s dominance in the large but fragmented North American home improvement industry provides it with tremendous buying power and economies of scale. In addition to meeting customers’ everyday home improvement, repair and maintenance needs, Lowe’s is also focused on delivering better project-oriented experiences in order to drive lead conversion and average ticket growth. Lowe’s is focused on its roots: strong customer relationships, good store locations, well-merchandised stores and operating efficiency. Demographic trends (aging baby boomers, rising average age of homes) favor continued industry growth in the years ahead.

Key Risks: Changes in economic factors specific to the home improvement industry, namely employment, personal income, consumer spending, household formations, home prices and housing turnover may negatively impact Lowe’s sales growth. The company operates in a highly competitive market with numerous competitors.

McDonald's Corporation (MCD) Price $224.20 Consensus NTM EPS Estimate $8.42 Dividend Per Share (DPS) $5.16 Consensus Long-Term Growth Estimate 14% DPS Yield 2.3% NTM PE 26.6x DPS Growth Estimate 6% NTM PE 5-yr Average 24.4x DPS Growth History 44 years S&P Credit Rating BBB+ DPS 5-yr Historical Annual Growth 8% Net Debt/Capital 110%

McDonald’s is a leading global food service retailer with more than 37,000 restaurants in more than 100 countries, serving nearly 70 million people each day.

McDonald’s is the market leader in the roughly $210 billion U.S. quick service restaurant industry with an estimated 20% market share, several times larger than its nearest competitors. McDonald’s global brand is well known and its marketing, promotional, and public relations activities are designed to promote the company’s brand image. Emerging markets represent a growth opportunity for the firm, as the number of McDonald’s restaurants per capita is far less than the U.S.

Key Risks: McDonald’s failure to respond effectively to consumer spending patterns, demographic changes, trends in food preparation and consumer preferences can impact its ability to meet customer’s expectations. MCD’s market share is being challenged by the millennial generation’s preference for healthier foods, and the company faces ongoing pricing concerns due to strong price promotional activity by its peers. Rising commodity input costs can impact profits, along with changes in foreign currency exchange rates, as a significant share of the company's operating income is generated outside the U.S.

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NIKE, Inc. Class B (NKE) Price $128.64 Consensus NTM EPS Estimate $3.75 Dividend Per Share (DPS) $1.10 Consensus Long-Term Growth Estimate 27% DPS Yield 0.9% NTM PE 35.3x DPS Growth Estimate 12% NTM PE 5-yr Average 31.0x DPS Growth History 19 years S&P Credit Rating AA- DPS 5-yr Historical Annual Growth 12% Net Debt/Capital 20%

Nike is the largest seller of athletic footwear and apparel in the world. The company sells products through leading retail chains, company-owned stores and internet sites, and through a mix of independent distributors and licensees, in virtually all countries around the world.

The Nike “swoosh” is one of the most respected, recognized and valuable brands in the world. Spurred by the development of innovative new products that connect with the changing needs and desires of its customers, the Nike brand is relevant to both young and old, athletes and non-athletes. Brand strength has driven strong sales growth in recent years, enabling premium pricing and attractive profit margins. Increasing consumer interest in healthier lifestyles is driving higher athletic participation and broadening the appeal of athletic apparel for other occasions (running errands, not just literal running). Though the Nike brand is recognized around the world, sales penetration in emerging and developing markets is low relative to its North American base and offers strong potential for growth going forward. Nike’s direct-to-consumer channel (e-commerce and company-owned stores) represents another growth opportunity.

Key risks include exposure to emerging markets (both currency and macro conditions), input cost pressures including material costs and labor costs, and a competitive active wear and athletic footwear landscape.

Starbucks Corporation (SBUX) Price $107.35 Consensus NTM EPS Estimate $3.07 Dividend Per Share (DPS) $1.80 Consensus Long-Term Growth Estimate 13% DPS Yield 1.7% NTM PE 35.5x DPS Growth Estimate 10% NTM PE 5-yr Average 29.9x DPS Growth History 10 years S&P Credit Rating BBB+ DPS 5-yr Historical Annual Growth 21% Net Debt/Capital 118%

Since opening its first store in Seattle, Washington in 1971, Starbucks has grown into a global coffee powerhouse. The company sells coffee, tea and other beverages, as well as a variety of fresh food items and accessories through 28,000+ owned and licensed stores in 75 markets.

We believe Starbucks shares offer a compelling dividend growth opportunity. We estimate long-term dividend growth of 10% per year driven by low double digit earnings growth and the potential for a steady payout ratio. Our assumptions are based largely upon management’s guidance for low to mid-single digit comp growth, high single digit sales growth with margin expansion and 10% earnings per share (EPS) growth. We believe these targets are achievable given the company’s growth opportunities including new products (food, tea, packaged goods) and store formats (Reserve, Roastery), international expansion (China, India, Japan, Brazil), digital innovation (mobile order and pay), customer loyalty programs (rewards, personalization), and market share potential across channels (food service, at-home).

Key risks include an inability to find/secure the appropriate real-estate to satisfy square footage growth, disruption in consumer spending that would impact same-store sales growth, commodity (coffee) cost pressures, dependency on key personnel and increased competition from well-established restaurant companies.

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V.F. Corporation (VFC) Price $78.11 Consensus NTM EPS Estimate $2.86 Dividend Per Share (DPS) $1.96 Consensus Long-Term Growth Estimate 17% DPS Yield 2.5% NTM PE 27.8x DPS Growth Estimate 7% NTM PE 5-yr Average 25.9x DPS Growth History 48 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 9% Net Debt/Capital 45%

V.F. Corp. is a worldwide leader in branded lifestyle apparel, footwear and related products. Its largest brands are The North Face, Vans, Timberland and Dickies. The company distributes its products through department, specialty and mass stores worldwide, as well as through directly-operated stores. International sales represent approximately 40% of total sales.

V.F. Corp. is one of the largest apparel companies in the world, with a stable of strong, well-managed and diverse brands that we believe offer significant growth potential. The company expects its direct-to-consumer business (e-commerce and owned stores) to grow at a low double-digit percentage rate, well ahead of its overall growth rate. Further sales penetration internationally, particularly in Asia, and ongoing margin improvement initiatives are also key growth drivers.

Key Risks: Global economic trends, particularly those that impact consumer spending on discretionary items (e.g., employment), are key to the company’s success. Commodity prices, particularly for cotton and other fabrics, are an important driver of profit margins. Consumer Staples Brown-Forman Corporation Class B (BF.B) Price $68.95 Consensus NTM EPS Estimate $1.83 Dividend Per Share (DPS) $0.72 Consensus Long-Term Growth Estimate 5% DPS Yield 1.0% NTM PE 37.7x DPS Growth Estimate 7% NTM PE 5-yr Average 33.5x DPS Growth History 37 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 43%

Founded in 1870 in Louisville, Kentucky by George Garvin Brown, Brown-Forman is a leading spirits producer. Brown- Forman’s leading brands include Jack Daniel’s, Finlandia, and Canadian Mist.

Jack Daniel’s Tennessee Whiskey is one of the world’s best known spirits brands, and Brown-Forman continues to expand the Jack Daniel’s franchise. The company invests significantly behind both its brands and its distribution network in U.S. and international markets. We see future growth opportunities in emerging markets like Eastern Europe, Latin America, Asia, and Africa, as well as more developed markets, such as the U.K., France, Germany and Australia. The company has aggressively expanded its international footprint and now generates nearly 60% of its net sales outside the U.S. compared to about 40% ten years ago.

Key Risks: The distilled spirits industry is highly competitive and Brown-Forman must successfully adjust to changes in demographic trends, dining and beverage consumption patterns, consumer preferences, etc. Brown-Forman is dependent on its Jack Daniel’s brand for a substantial portion of its revenues, and any significant damage to its brand equity would impact the company’s financials.

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Church & Dwight Co., Inc. (CHD) Price $86.00 Consensus NTM EPS Estimate $3.04 Dividend Per Share (DPS) $1.01 Consensus Long-Term Growth Estimate 7% DPS Yield 1.2% NTM PE 28.1x DPS Growth Estimate 6% NTM PE 5-yr Average 26.7x DPS Growth History 25 years S&P Credit Rating BBB+ DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 40%

Church & Dwight Co., Inc. (Church & Dwight) is a relatively small, yet successful manufacturer in the household and personal care sectors. Recognizable brand names include Arm & Hammer, Flawless, Water Pik, Trojan, Nair and Spinbrush to name just a few. About 80% of revenues come from within the United States.

Church & Dwight focuses on two segments in Consumer Staples – household and personal care products. The company has a strong product portfolio and leading brands in most of the niche categories in which it competes. These high profile brands make up roughly 70% of the company’s sales and profits. Many of these leading brands were acquired and we believe growth through acquisition will continue to be a big part of the overall story as was seen with recent purchases of Water Pik and Flawless. The company’s track record with acquisition integration has been good over time as management seeks out companies with strong market shares, high margins and asset light business models.

Key risks include the impact of adverse economic conditions on consumer spending within the company's end markets, the company's inability to pass on higher input costs to customers, deteriorating fundamentals surrounding any of the company's key categories, intensifying competition from branded and/or private-label players (especially in the laundry category), shift toward a highly promotional environment, and poor execution/integration related to acquisitions.

Clorox Company (CLX) Price $190.77 Consensus NTM EPS Estimate $7.41 Dividend Per Share (DPS) $4.44 Consensus Long-Term Growth Estimate 4% DPS Yield 2.3% NTM PE 25.5x DPS Growth Estimate 6% NTM PE 5-yr Average 24.8x DPS Growth History 43 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 56%

The Clorox Company (Clorox) manufactures and markets laundry, home care, and professional health care products in the U.S. and internationally. Its main brands include its namesake bleach, Liquid-Plumr, Pine-Sol, Tilex, Glad, Fresh Step, Kingsford, Brita, Hidden Valley, KC Masterpiece, and Burt’s Bees. Liquid bleach, trash bags, and charcoal each account for about 10% of annual sales.

Many of Clorox's brands hold leading market share positions in their categories. The company has a strong track record of shareholder value creation resulting from the consistent delivery of revenue and earnings growth, accretive acquisitions, dividend growth and share repurchases. Revenue and profit growth comes from outperforming its mature, defensive categories through product innovation, selective acquisitions, international expansion and strong cost controls.

Key Risks: Clorox generates a significant portion of its sales in international markets and is subject to risks like economic instability, inflation and exchange rate fluctuation in international markets, particularly in Latin America. The company’s portfolio is skewed to the home care market, viewed as mature and slow-growing. Volatility in the cost of raw materials may impact the company’s sales and profitability. The company’s ability to achieve sales growth depends on its ability to drive innovation, and increase its footprint in international markets. Poor consumer acceptance of new products and the impact of consumers trading down to private label products are also risks.

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Colgate-Palmolive Company (CL) Price $77.89 Consensus NTM EPS Estimate $3.28 Dividend Per Share (DPS) $1.80 Consensus Long-Term Growth Estimate 6% DPS Yield 2.3% NTM PE 23.7x DPS Growth Estimate 4% NTM PE 5-yr Average 23.7x DPS Growth History 58 years S&P Credit Rating AA- DPS 5-yr Historical Annual Growth 3% Net Debt/Capital 81%

Colgate-Palmolive Company (Colgate) is a global consumer products company with well-known brands and products that include Colgate toothpaste, Palmolive dish soap, Speed Stick deodorant, Softsoap, Irish Spring, Ajax, and Hill’s pet food.

Colgate is a leader in many product categories of the global personal care market, in particular liquid hand soap and oral care. The company competes in more than 200 countries, with approximately 75% of the company’s net sales generated from markets outside the U.S., and roughly 50% of the company’s net sales coming from emerging markets. This geographic diversity and balance helps to reduce the company’s exposure to business and other risks in any one country, with Colgate’s strong presence in fast-growing emerging markets balanced against financial and operating risks in parts of Latin America currently. The company seeks to capture significant opportunities for growth by identifying and meeting consumer needs within its core categories, through its focus on innovation and the development of successful new products. Colgate is expected to maintain its strong market share and continue investing in research and development (R&D) and marketing, ultimately benefiting from rising incomes and changing lifestyles, especially in less mature overseas markets.

Key Risks: Colgate sells products into a highly competitive global market. During periods of economic uncertainty consumers may switch to economy brands, which could adversely affect its market share and profitability. Increasing dependence on individual retailers in developed markets, changes in the policies of its retail trade customers, and the emergence of new sales channels may adversely affect its business. Colgate’s product portfolio, weighted toward oral care, is less diversified than major multinational competitors. Input cost and foreign exchange fluctuations also influence margins.

Costco Wholesale Corporation (COST) Price $346.34 Consensus NTM EPS Estimate $10.32 Dividend Per Share (DPS) $2.80 Consensus Long-Term Growth Estimate 11% DPS Yield 0.8% NTM PE 33.6x DPS Growth Estimate 10% NTM PE 5-yr Average 31.0x DPS Growth History 15 years S&P Credit Rating A+ DPS 5-yr Historical Annual Growth -16% Net Debt/Capital -8%

Costco Wholesale Corporation (Costco) operates more than 700 membership warehouses, primarily in the U.S. and Canada which constitute roughly 85% of revenue. The company offers its members low prices on a limited selection of nationally branded and select private-label products in a wide range of merchandise categories that typically generate high sales volumes and rapid inventory turnover.

Costco stores offer a strong value proposition and upscale product mix that caters to a more affluent consumer. New store openings, growth in traffic and transaction size, and new membership fees (rate and volume) are the primary avenues for growth. Costco has seen rising traffic and growth in its comparable store sales in recent periods, in part by holding the consumables category steady at approximately 55% of sales, while improving the selection and presentation of its non- consumables product offerings; unlike many other retailers that have focused on expanding their consumables offerings in an effort to drive traffic into the store. Cost containment is critical to the profit equation at Costco. Volume purchases of inventory, shipped directly from manufacturers to its warehouse clubs, with rapid sales turnover in no-frills, self-service warehouse facilities, allow Costco to profitably compete at lower gross margin levels than other retailers.

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Key Risks: Costco competes in a highly competitive retail industry on the basis of merchandise pricing, selection and availability, services, location, and convenience. Costco’s financial and operational performance is highly dependent on its U.S. and Canadian operations, which comprise the majority of consolidated net sales and operating income. Personal income and consumer spending trends are also critical.

J.M. Smucker Company (SJM) Price $126.64 Consensus NTM EPS Estimate $8.24 Dividend Per Share (DPS) $3.60 Consensus Long-Term Growth Estimate 1% DPS Yield 2.8% NTM PE 15.5x DPS Growth Estimate 5% NTM PE 5-yr Average 13.7x DPS Growth History 23 years S&P Credit Rating BBB DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 39%

The J.M. Smucker Company (Smucker) is a leading manufacturer of pet foods, fruit spreads, coffee, peanut butter, baking products, shortenings and oils. Key brands include Milk Bone, Smucker’s, Jif, Folgers, Millstone, Pillsbury, and Crisco.

The company boasts a strong portfolio of iconic, market-leading brands that are sold to consumers and food service operators. The company is the branded market leader in coffee, peanut butter, fruit spreads, and several other categories in the U.S. Smucker plans to drive organic growth by expanding single serve coffee offerings, building its frozen food category and accelerating growth of the Jif and Smucker’s brands. Acquisitions are an important growth driver, as the company seeks to own iconic brands in the center aisles of the store. Geographic expansion, both organic and through acquisitions, also provides a long runway for growth in our view.

Key Risks: Changes in relationships with large customers could adversely affect Smucker's results. The company’s results may be adversely impacted as a result of increased costs, limited availability or insufficient quality of raw materials, especially agricultural commodities like coffee, peanuts, fruits, wheat, etc. Commodity deflation and weak demand trends can lead to heightened competitive promotional activity and price pressures.

McCormick & Company, Incorporated (MKC) Price $88.70 Consensus NTM EPS Estimate $2.95 Dividend Per Share (DPS) $1.36 Consensus Long-Term Growth Estimate 5% DPS Yield 1.5% NTM PE 30.2x DPS Growth Estimate 7% NTM PE 5-yr Average 27.5x DPS Growth History 35 years S&P Credit Rating BBB DPS 5-yr Historical Annual Growth 6% Net Debt/Capital 52%

McCormick & Company (McCormick) is the leader in the herbs and spices market with about 20% market share. Key brands include McCormick, Lawry's, Club House, Zatarain's, French’s and Frank’s.

McCormick’s growth strategy is to expand its base business through product innovation, brand marketing, acquisitions and customer intimacy. New products in recent years include Grill Mates seasonings for grilling, Grinders whole seasonings with grinders built into the container, Slow Cookers crockpot cooking seasonings, Perfect Pinch Seasoning Blends and Recipe Inspirations recipe cards with pre-measured packets of seasonings specific to the recipe. These products, as well as the core spices business, we believe are well-aligned with consumer demand for flavorful, healthy eating. Acquisitions over the past few years have meaningfully expanded the company’s presence in Eastern Europe, India and China and provide potential growth going forward.

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Key Risks: Private label competition is a significant threat in spices and seasonings; and although McCormick is a major manufacturer of private label spices, margins are thought to be below its branded business. Sales to industrial customers carry lower margins than its branded business. Prices of raw materials are subject to fluctuations in market price and availability. Foreign exchange rates fluctuate and can impact reported results. Food quality and safety concerns can impact results.

Mondelez International, Inc. Class A (MDLZ) Price $58.56 Consensus NTM EPS Estimate $2.88 Dividend Per Share (DPS) $1.26 Consensus Long-Term Growth Estimate 9% DPS Yield 2.2% NTM PE 20.3x DPS Growth Estimate 8% NTM PE 5-yr Average 19.5x DPS Growth History 7 years S&P Credit Rating BBB DPS 5-yr Historical Annual Growth 13% Net Debt/Capital 35%

Mondelez International, Inc. (Mondelez) is a packaged food manufacturer focused largely on the snacking sub-segment. Kraft Foods Inc. spun out its U.S. grocery business, Kraft Foods Group, now part of Kraft Heinz (KHC $31.22), in the fall of 2012 and subsequently renamed itself Mondelez International. Today, Mondelez produces biscuits, cookies, crackers, and salted snacks; chocolates; gums and candies; coffee and powdered beverages; and cheese and grocery products, primarily focused outside the U.S. The company’s high profile brands include Nabisco, Oreo, LU, and belVita biscuits; Cadbury, Milka, Cadbury Dairy Milk, and Toblerone chocolates; Trident gums; Halls candies; and Tang powdered beverages. Sales for its most recently completed year were approximately $26 billion with about 75% generated outside the U.S.

Mondelez focuses largely on the snacking sub-segment within packaged food where growth rates have been above industry average. Mondelez has a strong product portfolio and leading #1 or #2 brands in most of the niche categories in which it competes thanks to product innovation and focused brand investments. These high profile brands make up the vast majority of the company’s sales and profits. Our expectation for longer-term EPS growth is in the upper single digit range, above the averages for most packaged food peers led by an ongoing commitment to expense management and potential revenue benefits from operating in the higher growth snacking segment.

Key Risks: Mondelez's profitability is dependent on a mix of factors including currency exchange rates, commodity costs and consumer preferences. Over 70% of revenues are generated outside the U.S., so strengthening of the dollar could pose a risk to earnings and cash flows. Almost 40% of sales are from emerging markets, so any erosion in macroeconomic factors and/or consumer sentiment there could pose a risk to earnings growth. If margin expansion through cost-savings initiatives is not realized or is less than estimated, earnings projections could be adversely affected.

PepsiCo, Inc. (PEP) Price $139.63 Consensus NTM EPS Estimate $6.05 Dividend Per Share (DPS) $4.09 Consensus Long-Term Growth Estimate 8% DPS Yield 2.9% NTM PE 23.1x DPS Growth Estimate 7% NTM PE 5-yr Average 21.9x DPS Growth History 48 years S&P Credit Rating A+ DPS 5-yr Historical Annual Growth 8% Net Debt/Capital 61%

PepsiCo manufactures, markets and sells a wide variety of snack foods and beverages in more than 200 countries. Its major brands include Pepsi, Mountain Dew, Gatorade, Lays, Doritos, Cheetos, Ruffles, Tostitos, Fritos, and Quaker Oats.

PepsiCo is an industry leader in both sides of its business – snacks and soft drinks. These two complementary businesses provide a degree of balance to results, a trait we appreciate. The company’s R&D is focused on non-carbonated soft drinks (juices, water, energy drinks) and healthier snacks and packaged foods – on-trend categories. We appreciate the diversified nature of PepsiCo’s business.

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Key Risks: PepsiCo operates in highly competitive global markets against a number of very strong players. The company is also subject to volatile raw materials costs, unfavorable economic conditions, changes in government regulations, and fluctuations in exchange rates.

Procter & Gamble Company (PG) Price $133.48 Consensus NTM EPS Estimate $5.84 Dividend Per Share (DPS) $3.16 Consensus Long-Term Growth Estimate 7% DPS Yield 2.4% NTM PE 22.7x DPS Growth Estimate 4% NTM PE 5-yr Average 22.1x DPS Growth History 64 years S&P Credit Rating AA- DPS 5-yr Historical Annual Growth 3% Net Debt/Capital 24%

Procter & Gamble is a global leader providing branded consumer packaged goods around the world. The company’s product portfolio include 21 brands with over $1 billion in annual sales including Crest, Gillette, Olay, Pampers, Pantene, Dawn, and Tide.

In an effort to transform into a faster-growing, more profitable, and simpler company, Procter & Gamble is focused on 10 product categories with roughly 65 brands, down significantly from recent years. Within these key product categories, the company is the leader in seven and #2 in the remaining three and management has stated it sees significant growth potential in each. This focused portfolio is the result of recent product and category rationalization which was designed to streamline the company’s operations by divesting non-core, often underperforming and lower-profit brands. Management’s strategy incorporates sales growth, margin improvement, and asset efficiency to drive profit and cash flow growth, and ultimately deliver attractive shareholder returns.

Key Risks: Procter & Gamble sells products in more than 180 countries and is exposed to weakening global economic conditions, unfavorable currency conversion and slow acceptance to new products which could negatively impact the company. The competitive environment in many of Proctor & Gamble's categories may intensify in such a way that Proctor & Gamble may need to invest more aggressively in its businesses in an effort to meaningfully expand its market share and drive sales growth.

Walmart Inc. (WMT) Price $134.01 Consensus NTM EPS Estimate $5.39 Dividend Per Share (DPS) $2.20 Consensus Long-Term Growth Estimate 6% DPS Yield 1.6% NTM PE 24.9x DPS Growth Estimate 2% NTM PE 5-yr Average 21.5x DPS Growth History 48 years S&P Credit Rating AA DPS 5-yr Historical Annual Growth 2% Net Debt/Capital 32%

Walmart operates nearly 12,000 retail stores around the world. It provides a broad assortment of quality merchandise and services at everyday low prices. The company has a wide geographic presence with stores spanning the U.S., Africa, Argentina, Brazil, Chile, China, Japan, Mexico and various other geographies. During fiscal 2019, Walmart generated over $500 billion in revenue of which international sales accounted for about 24%.

Walmart’s massive scale and relentless focus on cost containment drive its ability to offer what are typically the lowest prices available for its products. The company’s three priorities to improve shareholder value are growth, leverage and returns. The company aims to grow sales via increased sales per store and growing the store base. Growing sales combined with disciplined cost containment and capital allocation allows Walmart to leverage the sales growth to produce increased cash flow and earnings which can then be reinvested back into the business to keep the virtuous circle spinning.

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Key Risks: General economic conditions and employment levels are significant factors in consumer confidence and spending. In periods of low economic growth, consumers may be less willing to spend on the more discretionary offerings at Walmart. The retail business is highly competitive; each of Walmart’s business segments competes with many local, regional and national retailers, some of which may offer more compelling or less expensive options. Local land use and other local laws and regulations may affect Walmart’s ability to open new stores and clubs, to convert discount stores into supercenters, or to relocate or expand existing units in certain cities, and countries. Energy Phillips 66 (PSX) Price $82.44 Consensus NTM EPS Estimate $3.10 Dividend Per Share (DPS) $3.60 Consensus Long-Term Growth Estimate -2% DPS Yield 4.4% NTM PE 26.8x DPS Growth Estimate 6% NTM PE 5-yr Average 17.8x DPS Growth History 7 years S&P Credit Rating BBB+ DPS 5-yr Historical Annual Growth 11% Net Debt/Capital 40% Phillips 66 operates a leading petroleum refining business, has significant marketing and transportation assets, is one of the largest domestic producers of natural gas liquids, and is one of the world’s top producers of petrochemicals.

Phillips 66 boasts a unique, diverse and highly competitive portfolio of businesses which has generated significant cash flow available to fund profitable investment opportunities and shareholder distributions. Increased management focus following the spin-off from ConocoPhillips (COP $35.53) has led to improved capital allocation, margin expansion and reduced operating costs throughout the portfolio, including a focus on optimizing utilization rates at its refineries and maximizing access to cost-advantaged crude oil feedstocks. Phillips 66 is in a position to rapidly grow its midstream business through the recent formation of a master limited partnership (MLP) that will focus on fee-based crude oil, refined petroleum product and natural gas liquids pipelines, terminals and other transportation and midstream assets.

Key Risks: Refining margins and utilization trends may be volatile, in line with industry characteristics. The business is dependent upon sufficient access to natural resource inputs, particularly oil, the cost of which may vary dramatically from quarter to quarter. Changes in environmental laws or liabilities arising from environmental remediation may have a material negative impact on the company’s profitability and cash flow. Unplanned downtime, declines in refined product demand growth, and potential disagreements with joint venture partners are also risk factors. Financials Aflac Incorporated (AFL) Price $51.14 Consensus NTM EPS Estimate $4.92 Dividend Per Share (DPS) $1.32 Consensus Long-Term Growth Estimate - DPS Yield 2.6% NTM PE 10.4x DPS Growth Estimate 5% NTM PE 5-yr Average 11.0x DPS Growth History 39 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 7% Aflac provides supplemental health and life insurance in the U.S. and Japan. Aflac offers voluntary supplemental insurance policies that provide a layer of financial protection against loss of income (life and short-term disability) and asset depletion (accident, cancer, critical illness/care, hospital intensive care). Aflac’s individually-issued policies are portable and designed to pay regardless of other insurance. Most individual policy benefits are paid in cash and are typically guaranteed- renewable for the lifetime of the policyholder. Aflac Japan’s products are designed to help pay for costs that are not reimbursed under the government’s national health insurance system. Approximately 75% of earnings are generated in Japan.

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As an innovator and leader in supplemental insurance policies that are often less relevant to competitors, Aflac has created what has been a profitable niche in the insurance space. The company’s policies are typically offered alongside a corporation’s benefits lineup as fill-ins for specific diseases or illnesses. This setup is free for the corporation as the product is outside its benefits package and therefore limits Aflac’s direct selling costs. As the market leader and low-cost operator in Japan, we believe Aflac should benefit from what we expect will be continued strong demand for supplemental insurance products due to favorable demographic trends in the country.

Key Risks: Fluctuations in the Japanese yen versus U.S. dollar exchange rate can materially impact reported results from quarter to quarter. Performance of the company’s investment portfolio is impacted by the general level of interest rates, the credit quality of issuers, and global equity market indices. The insurance industry is heavily regulated, both in the U.S. and Japan.

BlackRock, Inc. (BLK) Price $727.50 Consensus NTM EPS Estimate $36.79 Dividend Per Share (DPS) $16.52 Consensus Long-Term Growth Estimate 12% DPS Yield 2.3% NTM PE 20.0x DPS Growth Estimate 7% NTM PE 5-yr Average 17.7x DPS Growth History 12 years S&P Credit Rating AA- DPS 5-yr Historical Annual Growth 11% Net Debt/Capital -1%

With nearly $7 trillion in assets under management (AUM) in mid-2019 and clients in more than 100 countries, BlackRock is the largest asset manager in the world. Through its iShares products, the company is also the leading global provider of exchange-traded funds (ETFs). BlackRock’s AUM is comprised of about 50% equity strategies, 30% fixed income, 6% money market, 8% multi-asset class, and 3% alternative investments. The firm’s passive investment strategies (most notably ETFs) represent about two thirds of AUM.

BlackRock, through its market leading iShares ETF platform, is at the forefront of what we see as an ongoing industry shift toward passive investment strategies. The iShares business has grown significantly over the past two decades, a trend we expect to continue given the diversity of the product mix, BlackRock’s leading market position (approximately 40% share), global footprint and operational scale. Given higher fees from active vs. passive products, and BlackRock’s significant operating leverage, the firm’s actively managed strategies (e.g., mutual funds) could provide additional growth if efforts underway to reposition the business and improve performance metrics are successful as we expect. BlackRock also runs what we view as an attractive risk management business – BlackRock Solutions – that provides investment management technology systems, risk management and advisory services on a fee basis. Blackrock’s historically superior growth profile, brand strength, diversity of AUM by asset class and investor mix, size and scale, geographic reach, strong profitability and free cash flow generation make it one of the premier asset managers globally in our opinion.

Key Risks: The asset management business is very competitive and results focused. Fund flows are driven by performance and underperforming funds can experience rapid asset withdrawals. Departures by key portfolio managers can adversely affect fund assets and future growth. The company's active fund products have recently underperformed peers. BlackRock is subject to extensive supervision (including by the Federal Reserve (Fed)) and regulation (including most banking laws) due to its ownership structure. BlackRock's largest shareholder (owns approximately 20% of shares) has agreed to vote its shares in line with BlackRock's Board of Director's recommendations which gives the Board significant authority over corporate activities.

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Brown & Brown, Inc. (BRO) Price $45.90 Consensus NTM EPS Estimate $1.80 Dividend Per Share (DPS) $0.37 Consensus Long-Term Growth Estimate 11% DPS Yield 0.8% NTM PE 25.5x DPS Growth Estimate 7% NTM PE 5-yr Average 24.7x DPS Growth History 27 years S&P Credit Rating BBB- DPS 5-yr Historical Annual Growth 9% Net Debt/Capital 17%

Brown & Brown is an independent insurance intermediary. The company sells insurance products and services, primarily in the property, casualty and employee benefits domain. Its principal business includes insurance agency, wholesale brokerage, and insurance programs. The company derives revenues principally from commissions paid by insurance companies. It conducts its operations in nearly 300 locations in 42 states in the U.S. Brown & Brown generates almost all of its sales in the U.S.

Brown & Brown’s growth strategy includes attracting high-quality insurance intermediaries to join its operations (typically through acquisition) and foster a strong, decentralized sales culture with a goal of consistent and sustained growth over the long term. The company is in the process of upgrading technology systems which we expect should improve margins in the long-term following near term pressure. Standardizing technology across the numerous operating companies Brown & Brown has acquired over the years should produce significant cost savings and create a more streamlined organization, in our opinion. As an insurance broker, Brown & Brown’s business model has produced wide margins and significant free cash flow while requiring minimal capital investment.

Key Risks: Brown & Brown operates in a cyclical industry which has a high degree of volatility based on prevailing economic and competitive conditions. The company’s growth strategy is largely focused on acquisitions. Lack of discipline on purchase prices or failure to integrate new acquisitions could disrupt Brown & Brown’s operations and financial results. The insurance brokerage industry is highly competitive and can experience periods of prolonged price weakness.

Chubb Limited (CB) Price $158.91 Consensus NTM EPS Estimate $11.78 Dividend Per Share (DPS) $3.12 Consensus Long-Term Growth Estimate 10% DPS Yield 2.0% NTM PE 13.5x DPS Growth Estimate 5% NTM PE 5-yr Average 13.4x DPS Growth History 28 years S&P Credit Rating AA DPS 5-yr Historical Annual Growth 3% Net Debt/Capital 20%

In January of 2016, ACE Limited (ACE) acquired The Chubb Corporation, creating a global insurance leader – Chubb Limited (Chubb). Today, Chubb is the world’s largest publicly traded property and casualty (P&C) insurer. The company provides commercial and personal P&C insurance, personal accident and supplemental health insurance, reinsurance, and life insurance in 50+ countries. Chubb is headquartered in Zurich, Switzerland.

Prior to their merger, we viewed both ACE and Chubb as high quality insurance companies (Chubb was on the DSIP List at the time the merger was announced). The combined entity brought together ACE’s strong international presence with Chubb’s predominantly U.S. focus. We believe Chubb’s scale, geographic reach, product line diversity and underwriting expertise provide strong potential for long-term dividend growth potential.

Key Risks: Many of Chubb's insurance products carry long-tailed risks because payouts/claims associated with policies may not be realized until years in the future. Catastrophe losses, as well as greater severity in non-catastrophe events, often associated with natural disasters or other specific events, are unpredictable, and require appropriate risk management policies to avoid over-exposure. As with most insurance companies, Chubb invests policy premiums. Investment losses or low returns from the portfolio directly affects profitability of the company. Insurance pricing tends to be cyclical which could lower returns and profitability of Chubb. Page 16 of 51 DSIP List – Investment Rationales March 26, 2021

Commerce Bancshares, Inc. (CBSH) Price $76.31 Consensus NTM EPS Estimate $3.56 Dividend Per Share (DPS) $1.05 Consensus Long-Term Growth Estimate 9% DPS Yield 1.4% NTM PE 21.7x DPS Growth Estimate 5% NTM PE 5-yr Average 18.4x DPS Growth History 53 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 9% Net Debt/Capital 30%

Commerce Bancshares, Inc. (Commerce) provides a broad range of retail and corporate banking, investment, trust and asset management products and services to individuals and businesses. Commerce is one of the nation’s top 50 bank holding companies based on asset size, with locations throughout Missouri, Kansas, and central Illinois, as well as Tulsa, OK and Denver, CO.

Commerce strives to offer top quality service, a strong risk management culture, and a strong balance sheet. Its strategy is to grow core revenue by expanding new and existing customer relationships, utilizing improved technology, and enhancing customer satisfaction. It operates under a super-community banking format which incorporates large bank product offerings along with deep local market knowledge, augmented by experienced and centralized support. The markets which Commerce serves are well-diversified, including telecommunications, automobile, aircraft and general manufacturing, health care and numerous service industries. The diversity and nature of its markets has historically resulted in manageable real estate loan losses in these markets.

Key Risks: Commerce faces strong competition from national, regional and local banks for deposits, loans and trust accounts and from savings and loan associations and credit unions for deposits and consumer lending products. The company faces interest rate and liquidity risk as the interest rate environment it operates in is affected by the general economic conditions and other regulatory measures. Its investment portfolio values may be adversely impacted by deterioration in the credit quality of underlying collateral. Any significant change in U.S. banking laws and regulations could result in lower revenues and higher operating costs.

FactSet Research Systems Inc. (FDS) Price $321.17 Consensus NTM EPS Estimate $11.24 Dividend Per Share (DPS) $3.08 Consensus Long-Term Growth Estimate 7% DPS Yield 1.0% NTM PE 28.6x DPS Growth Estimate 10% NTM PE 5-yr Average 25.4x DPS Growth History 15 years S&P Credit Rating - DPS 5-yr Historical Annual Growth 12% Net Debt/Capital 15%

FactSet Research Systems (FactSet) is a leading provider of integrated financial information and analytical applications to the global investment community. The company’s products provide aggregate company, market and industry financial data, portfolio management and analysis tools, corporate news, security pricing and more for major fixed income and equity markets around the globe. (As a real-world example of what this company does, the vast majority of the numbers included in this report are sourced from FactSet and integrated into the document.)

FactSet is one of a few financial data providers with significant scale and reach. The company continues to expand its product offering through acquisitions and internal development. With Microsoft Office integration, wireless access and customizable options, FactSet offers a complete financial workflow solution combined with excellent customer service. The company continuously looks to increase its international presence (international sales share increased from 20% in 2003 to nearly 40% in 2018) which enhances the company’s earnings and lessens the impact of weakness in any single region.

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Key Risks: FactSet’s industry is very competitive with multiple entrenched operators. Once established with a client, switching platforms can be a tough sell given the disruption in operations during transition as well as workflow impacts. Prolonged weakness in financial markets could lead to reduced spending by FactSet customers or potential customers. Consolidation within the financial services industry may cause FactSet to lose clients.

Intercontinental Exchange, Inc. (ICE) Price $112.28 Consensus NTM EPS Estimate $4.93 Dividend Per Share (DPS) $1.32 Consensus Long-Term Growth Estimate 10% DPS Yield 1.2% NTM PE 22.8x DPS Growth Estimate 8% NTM PE 5-yr Average 21.6x DPS Growth History 8 years S&P Credit Rating BBB+ DPS 5-yr Historical Annual Growth 16% Net Debt/Capital 42%

Intercontinental Exchange (ICE) is a global operator of regulated exchanges, clearing houses and listing venues, and a provider of data services for commodity, financial, fixed income and equity markets. ICE was founded in 2000 by Jeffrey Sprecher, the company’s chairman and CEO.

ICE organizes its business into two segments – Trading & Clearing and Data & Listings – each representing about half of 2019 revenue. Trading & Clearing (T&C) provides execution and risk management services to businesses, investors and traders across major asset classes. T&C contains ICE’s 12 regulated exchanges and six clearing houses. The ICE Brent crude oil futures contract is the company’s largest contract by volume traded. The Data & Listings (D&L) segment provides data and listing services for global financial and commodity markets including pricing and reference data, exchange data, analytics, feeds, index services, desktops and connectivity solutions as well as corporate and exchange traded funds (ETF) listings services. The famous New York Stock Exchange is part of ICE’s D&L segment.

We are attracted to ICE’s core exchange business (high margin oligopolistic industry with relatively steady growth), its faster growth data business, and its history of innovation around core competencies (which we expect to continue). Additionally, we believe the company is committed to dividend growth as evidenced by annual increases since its initial dividend payment in 2013. Our expectation for continued dividend growth is supported by free cash flow growth and a payout ratio below 30%. We estimate dividend growth of 8% per year.

Key risks include slower growth in trading volumes, increased competition in the credit default swap clearing business, tighter regulatory guidelines that may limit trading, and a weak recovery in the global economy.

S&P Global, Inc. (SPGI) Price $351.30 Consensus NTM EPS Estimate $12.37 Dividend Per Share (DPS) $3.08 Consensus Long-Term Growth Estimate 14% DPS Yield 0.9% NTM PE 28.7x DPS Growth Estimate 8% NTM PE 5-yr Average 25.2x DPS Growth History 48 years S&P Credit Rating - DPS 5-yr Historical Annual Growth 15% Net Debt/Capital 12%

S&P Global is a leading provider of ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. Prior to April 2016, S&P Global was named McGraw Hill Financial. Following recent strategic changes and portfolio modifications, S&P Global is now focused on financial data and analytics.

We are attracted to S&P Global’s leading positions in its end markets, free cash flow generation and commitment to return at least 75% of it to shareholders via share buybacks and dividends, and high level of recurring revenue. We estimate dividend growth of 8% per year.

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In the oligopolistic (three firms control about 95% market share), high margin (about 50%) Ratings business, S&P Global maintains 45-50% market share in the U.S. and Europe. We believe mid-single digit growth from this segment is a reasonable expectation based on global debt trends and increasing use of public market debt as opposed to bank debt. Market Intelligence operates in a more fragmented industry against notable competitors but we view the company’s platform as somewhat differentiated as it marries S&P Global proprietary and third party research, data, and modeling capabilities. Indices, a joint venture between S&P Global (73% ownership) and CME Group (CME $170.90), is S&P Global’s highest margin business and benefits from the ongoing trend toward passive index-linked investments. Platts is the leader in global energy benchmarks. Similar to the Market Intelligence segment, Platts is in the process of simplifying its product and platform strategy which we believe could drive incremental margin gains and free cash flow. At the consolidated level, management targets mid-to-high single digit revenue growth and low double digit earnings per share growth over the next three to four years as outlined at the company’s 2018 analyst day.

Key Risks: S&P Global's financial results are sensitive to global debt issuance levels. A downturn in broad economic activity or a recession would likely reduce corporate debt issuance which would be reflected in S&P Global's results. The Index business is sensitive to equity market levels, notably the S&P 500, as well as the recent trend of passive investing taking share from active. Cheaper, or in some cases free, benchmarks have been launched by competitors over recent years which could lower the demand for S&P Global's long-established, more expensive options.

T. Rowe Price Group, Inc. (TROW) Price $172.07 Consensus NTM EPS Estimate $12.12 Dividend Per Share (DPS) $4.32 Consensus Long-Term Growth Estimate 16% DPS Yield 2.5% NTM PE 14.3x DPS Growth Estimate 7% NTM PE 5-yr Average 14.8x DPS Growth History 35 years S&P Credit Rating - DPS 5-yr Historical Annual Growth 12% Net Debt/Capital -25%

Since its founding in Baltimore in 1937 by Mr. Thomas Rowe Price Jr., T. Rowe Price Group, Inc. (T. Rowe Price) has grown into a leading asset management firm with nearly $1 trillion in AUM at year-end 2018 and clients in 36 countries around the world. T. Rowe Price provides global investment management services to individual and institutional investors through mutual funds, separately managed accounts, sub-advised funds and other sponsored investment portfolios.

The company’s strong brand, solid fund performance and leading target-date franchise have driven impressive AUM growth over the past two decades. More than half of the company’s AUM are held in retirement accounts and variable annuity investment portfolios which tend to remain with the firm throughout cycles of fund performance due to switching costs associated with these products (in industry parlance, the assets are “sticky”). These types of accounts produce a relatively stable stream of inflows to the firm as client’s automatic payroll deductions are deposited. T. Rowe Price is a leader in the attractive target-date fund space, a niche that is expected to continue posting steady growth in the coming years. The firm is also taking a measured approach to international markets; another growth opportunity as only about 5% of AUM is with non-U.S. investors.

Key Risks: The asset management business is very competitive and results focused. Fund flows are driven by performance and underperforming funds can experience rapid asset withdrawals. Departures by key portfolio managers can adversely affect fund assets and future growth. T. Rowe Price's international expansion efforts may not produce expected results. Market volatility (declines) will reduce T. Rowe Price's AUM and therefore, the management fees the firm collects. Regulatory changes could lead to significant changes in the asset management industry.

Page 19 of 51 DSIP List – Investment Rationales March 26, 2021 Health Care Abbott Laboratories (ABT) Price $119.05 Consensus NTM EPS Estimate $5.06 Dividend Per Share (DPS) $1.80 Consensus Long-Term Growth Estimate 16% DPS Yield 1.5% NTM PE 23.6x DPS Growth Estimate 8% NTM PE 5-yr Average 23.0x DPS Growth History 49 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 9% Net Debt/Capital 24%

Abbott Laboratories (Abbott) is a diversified healthcare company engaged in the discovery, development, manufacture and sale of a broad line of healthcare products including branded generic pharmaceuticals, pediatric and adult nutrition products, diagnostic and ophthalmic equipment, and products for the treatment of vascular disease and diabetes. The company generates about 65% of its total sales outside the U.S.

We believe Abbott is well positioned to deliver above average growth through its diversified portfolio, leadership position in major product categories, presence in key global emerging markets and strong margin expansion potential. The company is a market leader in immunoassay and blood screening products, coronary drug-eluting stents, LASIK devices, and nutritional products. Faster growing emerging markets represent close to 50% of total sales. Acquisitions and new product development are also key growth drivers.

Key Risks: Abbott’s future revenues and operating income may be impacted by the expiration or loss of patent protection and licenses. The company’s products are subject to rigorous regulation by the U.S. Food and Drug Administration (FDA) and international authorities which may cause delays or failure to obtain approvals for new products. Other risks include potential changes in health care regulations, inability to develop and launch new products, and fluctuating exchange rates.

AmerisourceBergen Corporation (ABC) Price $117.34 Consensus NTM EPS Estimate $8.68 Dividend Per Share (DPS) $1.76 Consensus Long-Term Growth Estimate 9% DPS Yield 1.5% NTM PE 13.6x DPS Growth Estimate 6% NTM PE 5-yr Average 12.6x DPS Growth History 15 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 0%

Since its formation in 2001 following the merger of AmeriSource Health and Bergen Brunswig, AmerisourceBergen has grown to be a leader in global pharmaceutical sourcing and distribution services. AmerisourceBergen is the second largest pharmaceutical distributor by revenue in the U.S. and is a leader in the specialty distribution channel. The pharmaceutical distribution industry is dominated by three major players who fill a critical role within the healthcare sector by linking drug manufacturers to healthcare providers and ensuring efficient, cost-effective distribution and availability of prescription drugs.

We believe AmerisourceBergen’s scale and efficiency, industry position, and key partnerships, along with secular tailwinds including an aging population, increased use of health insurance and prescription drugs, and expected expansion of prescription drug use as a frontline treatment option position the company to continue growing free cash flow and dividends into the future.

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Key Risks: The pharmaceutical distribution business is a very low margin business, therefore it is very sensitive to changes in product pricing, and therefore margin performance. Increased transparency in drug pricing between manufacturers and wholesalers could pressure retail sales prices and hence have a negative effect on distributors' marigns; additionally, cost payers could also effect margins if they put pressure on pharmaceutical pricing based on coverage decisions. As part of a long-term contract between AmerisourceBergen and its customer WalgreensBootsAlliance (WBA), AmerisourceBergen granted WBA equity warrants exercisable for 16 percent in the aggregate of the fully diluted equity of AmerisourceBergen. Warrants issued to WBA are marked to market quarterly and cause fluctuations in reported earnings of AmerisourceBergen and if exercised, will dilute existing ABC shareholders. Loss of a major customer could significantly reduce operating leverage and results.

Amgen Inc. (AMGN) Price $246.25 Consensus NTM EPS Estimate $16.83 Dividend Per Share (DPS) $7.04 Consensus Long-Term Growth Estimate 9% DPS Yield 2.9% NTM PE 14.7x DPS Growth Estimate 10% NTM PE 5-yr Average 14.0x DPS Growth History 10 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 15% Net Debt/Capital 53%

Founded in 1980 as Applied Molecular Genetics and headquartered in Thousand Oaks, California, Amgen is a pioneer in biopharmaceutical medicines. The company focuses on discovering, developing, manufacturing, and delivering innovative human therapeutics using a “biology first” approach. Amgen therapies treat diseases including cancer, kidney failure, blood and autoimmune disorders, and bone diseases. Key products include Neulasta/Neupogen (neutropenia), Enbrel (rheumatoid arthritis), and Epogen/Aranesp (anemia).

As the largest independent biotech company in the world, Amgen boasts a diverse lineup of proven medicines targeted at renal (kidney), cancer supportive care and inflammatory diseases. Though challenged by emerging biosimilar competition, Amgen has introduced a number of new drugs in recent years that have continued to ramp up in sales and looking ahead we believe a very promising pipeline of both new biologic and biosimilar medicines in areas like osteoporosis, oncology and cholesterol reduction should keep the company on a growing path. Amgen has also embarked on a significant, multi-year program to reduce manufacturing costs that we believe should provide a meaningful boost to margins going forward. Lastly, Amgen management has committed to “meaningful year-over-year increases” in the company’s annual dividend, a commitment it has met since paying its initial dividend in the third quarter of 2011. The company’s relatively low payout ratio has also expanded as management continues to move toward its total shareholder return target (dividend plus share repurchases) of 60% of adjusted net income.

Key Risks: Amgen is facing both branded and biosimilar competition for many of its established medicines. Drugs in development may not receive regulatory approval, may receive approval later than expected, and may not achieve sales expectations assuming approval. Amgen's cash balances and free cash flow are largely outside the U.S. Capital returns to shareholders may be impacted if Amgen cannot repatriate funds in a fiscally prudent manner. Amgen's program to lower manufacturing costs and improve efficiencies and margins may not meet expectations.

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Becton, Dickinson and Company (BDX) Price $241.73 Consensus NTM EPS Estimate $11.57 Dividend Per Share (DPS) $3.32 Consensus Long-Term Growth Estimate 8% DPS Yield 1.4% NTM PE 20.9x DPS Growth Estimate 5% NTM PE 5-yr Average 20.2x DPS Growth History 49 years S&P Credit Rating BBB DPS 5-yr Historical Annual Growth 6% Net Debt/Capital 37%

Becton, Dickinson and Company (Becton, Dickinson) develops, manufactures and sells medical devices, instrument systems and reagents used by healthcare institutions, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. Products include hypodermic needles, syringes and intravenous catheters for medication delivery, products for the safe collection and transportation of diagnostic specimens, instrument systems and reagents to detect infectious diseases, cancers, etc.

Many of Becton, Dickinson’s offerings are single-use, essential products that typically represent a small fraction of overall patient cost. The company expects to deliver sustainable growth by focusing on core products that deliver greater benefits to patients, healthcare workers, and researchers while also investing for future growth opportunities. There is strong demand for Becton, Dickinson’s safety, diabetes care and disease testing products globally. Becton, Dickinson has consistently grown its market share in international and emerging markets over the past 10 years.

Risks to Becton, Dickinson include decrease in spending by hospitals and large institutions, slower than anticipated recovery in some of the company’s segments of operation and foreign currency exchange impact. Physician office visits, hospital spending trends, and medical research spending are key influencers of demand for Becton, Dickinson Company products. There are regulatory and integration risks associated with a large acquisition such as C.R. Bard. Foreign economic conditions, economic policies, political uncertainties and exchange rate fluctuations impact its earnings. The Patient Protection and Affordable Care Act (the “PPACA”) enacted in 2013 directs medical device manufacturers, such as Becton, Dickinson to pay a 2.3% excise tax on U.S. sales of certain products devices which impacts margins.

Johnson & Johnson (JNJ) Price $161.97 Consensus NTM EPS Estimate $9.50 Dividend Per Share (DPS) $4.04 Consensus Long-Term Growth Estimate 6% DPS Yield 2.5% NTM PE 17.1x DPS Growth Estimate 6% NTM PE 5-yr Average 16.8x DPS Growth History 58 years S&P Credit Rating AAA DPS 5-yr Historical Annual Growth 6% Net Debt/Capital 11%

Johnson & Johnson (J&J) is the largest pharmaceutical company in the U.S. based on sales and market capitalization. The company develops, manufactures and sells personal care products, pharmaceuticals and surgical equipment worldwide.

J&J is the world's most comprehensive and broad-based manufacturer of health care products and is focused on building on the strong momentum in its pharmaceuticals business. The company’s brands, diverse portfolio, global reach, cost- effective supply of products and strategic acquisitions differentiate it from its peers. J&J is one of the fastest growing top- 10 pharmaceutical companies globally. Additionally, J&J is one of the few AAA-rated companies in the U.S. by Standard & Poor’s.

Key Risks: J&J’s markets are competitive, highly regulated and cost sensitive. Safety concerns may result in product withdrawals or regulatory action on the part of the FDA or other agencies. The company relies on global supply chains, which are complex, and disruptions in manufacturing and distribution networks may affect the availability of J&J products and services. J&J also faces research and development (R&D) risk.

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Medtronic Plc (MDT) Price $116.58 Consensus NTM EPS Estimate $5.61 Dividend Per Share (DPS) $2.32 Consensus Long-Term Growth Estimate 8% DPS Yield 2.0% NTM PE 20.7x DPS Growth Estimate 7% NTM PE 5-yr Average 18.8x DPS Growth History 43 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 12% Net Debt/Capital 19%

Medtronic plc was formed in 2015 with the merger of Medtronic, Inc. and Covidien plc. Today, Medtronic is one of the largest and most diverse medical device firms in the world. Key products include stents, catheters, pacemakers, defibrillators, valves, diabetes management systems, artificial cervical discs and surgical systems, among others. Medtronic is incorporated in Ireland with its main operational offices located in Minneapolis, Minnesota.

The combination of Medtronic and Covidien created a large, diverse medical products firm. These characteristics position Medtronic as a key supplier and partner to hospitals and physicians. The company’s dominant position in heart disease is the result of efficient scale and a strong culture of innovation. High switching costs and hands-on, sticky relationships with surgeons provide a competitive advantage in spinal products. Additionally, Medtronic offers the only FDA-approved integrated diabetes management system consisting of an insulin pump, continuous glucose monitor, and therapy management software. We believe a market leading position, continuous innovation, and strong relationships in relatively stable markets should allow Medtronic to continue its long history of dividend growth.

Risks to Medtronic include competitive pressures on all of its products in particular within the cardiovascular and restorative therapies segments; product recalls and legal risk due to defective products; pipeline risk, regulatory pressures, and the potential for a decrease in demand if future insurance policies result in a decrease of covered lives.

Stryker Corporation (SYK) Price $235.34 Consensus NTM EPS Estimate $9.07 Dividend Per Share (DPS) $2.52 Consensus Long-Term Growth Estimate 12% DPS Yield 1.1% NTM PE 26.2x DPS Growth Estimate 10% NTM PE 5-yr Average 23.6x DPS Growth History 30 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 11% Net Debt/Capital 41%

Stryker is one of the world’s leading medical technology companies. The company offers a wide variety of innovative medical technologies including replacement joints (knee, hip and shoulder), spinal implants, trauma related products used to repair fractures (nails, plates, pins and screws) and medical and surgical equipment (drills, saws, cameras, scopes, suction/irrigation devices and hospital beds). Most of the company’s products are marketed directly to doctors, hospitals and other healthcare facilities in the U.S. Internationally, its products are sold in more than 100 countries through company-owned sales subsidiaries and branches as well as third-party dealers and distributors.

Stryker is focused on growth through the internal development of new and innovative products, supplemented by complementary acquisitions of products and services. We believe U.S. demographics should provide a demand tailwind for Stryker’s products and emerging and underpenetrated international markets should also provide a runway for growth.

Stryker’s products are subject to regulation by multiple governmental authorities in the U.S. and internationally which increases its cost of compliance and makes the process of obtaining regulatory approvals time consuming and costly. Other risks faced by the company include the impact of health care reform, pricing pressure, exchange rate fluctuations, inability to develop and launch new products in a timely manner and unsuccessful integration of acquisitions. Many of Stryker’s products are used in discretionary procedures, which have been impacted by slow economic growth. The general level of healthcare availability and use could impact the volume of Stryker products sold.

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UnitedHealth Group Incorporated (UNH) Price $371.09 Consensus NTM EPS Estimate $18.21 Dividend Per Share (DPS) $5.00 Consensus Long-Term Growth Estimate 10% DPS Yield 1.3% NTM PE 20.4x DPS Growth Estimate 10% NTM PE 5-yr Average 18.4x DPS Growth History 11 years S&P Credit Rating A+ DPS 5-yr Historical Annual Growth 21% Net Debt/Capital 24%

UnitedHealth Group is a diversified managed health care company that offers health care services through two major divisions: UnitedHealthcare and Optum. The company provides health care benefits to an array of customers and markets through its United Healthcare division which ranges from large, multi-site national employers, public sector employers and individuals to the nation’s active and retired military and their families through the TRICARE program. Through its Optum division, the company provides health services through its OptumHealth, OptumInsight and OptumRx businesses.

We view UnitedHealth Group as one of the most diversified managed care companies. We believe the diversified platform is a benefit to UnitedHealth Group, which provides the company the ability to weather challenges in any one segment— including pressures from health care reform. As the leading managed care company, it has been able to grow its segments, translating into consistent earnings growth. We believe UnitedHealth Group shares offer a compelling dividend growth opportunity. We estimate dividend growth of 10% per year supported by double-digit earnings growth. We believe this growth trajectory is achievable given the company’s continued investment in its Optum division, which include higher margin businesses and opportunity to expand its Medicare Advantage business in the UnitedHealthcare division. The company anticipates attractive growth in Medicare and Medicaid driven revenue in 2018.

Risks to UnitedHealth Group include a lower profitability profile given health care reform changes, a sharp increase in medical costs and reimbursement risk—as the company is exposed to Medicare/Medicaid reimbursement changes, and exposure to contract renewals on the PBM (pharmacy benefit manager) side. Industrials 3M Company (MMM) Price $193.10 Consensus NTM EPS Estimate $9.60 Dividend Per Share (DPS) $5.92 Consensus Long-Term Growth Estimate 7% DPS Yield 3.1% NTM PE 20.1x DPS Growth Estimate 5% NTM PE 5-yr Average 19.7x DPS Growth History 63 years S&P Credit Rating A+ DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 45%

3M Company (3M) is a diversified global manufacturer of a diverse lineup of products which include tapes, adhesives, resins, abrasives, films, high-performance fluids, insulating materials, electronic packaging and interconnect devices, office supplies, dental, medical and surgical supplies, construction and home improvement products, safety and security products and commercial graphics.

3M has had a highly profitable market position in sectors like industrial, health care, consumer, office, safety, graphics, electronics and energy. The company’s fundamental technological strength in specialty chemical formulations, world-class manufacturing and engineering processes and global marketing reach differentiate it from its peers. Acquisitions, supported by a very strong balance sheet, are an important component of 3M’s growth strategy. 3M has been successfully expanding in developing markets, which present significant market share and organic sales growth opportunities as well. 3M several years ago outlined a more aggressive capital deployment strategy; materially increasing the dividend and payout ratio, raising expected share repurchases to a range of $17-$22 billion, and increasing funds targeted for acquisitions.

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Risks to 3M include various international market risks such as exchange rate fluctuations, government intervention, and regional economic or political turmoil. Other risks faced by 3M include integration of acquisitions, changing customer preferences, and movements in the prices of raw materials including oil, natural gas, and other components. One of the more critical headwinds the company is facing is related to Per- and Polyfluoroalkyl Substances (PFAS), a compound the company created decades ago. The material has been utilized in a number of everyday items, including non-stick pans, food packaging, stain-resistant carpet, and water repellant coatings, among others. 3M started to voluntarily phase out the use of these materials in the early 2000s.

Emerson Electric Co. (EMR) Price $89.19 Consensus NTM EPS Estimate $3.82 Dividend Per Share (DPS) $2.02 Consensus Long-Term Growth Estimate 9% DPS Yield 2.3% NTM PE 23.5x DPS Growth Estimate 4% NTM PE 5-yr Average 20.5x DPS Growth History 64 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 1% Net Debt/Capital 29%

Emerson Electric (Emerson) manufactures and develops process control systems, valves and analytical systems. Emerson products are used in myriad end markets including oil and gas production, power systems, heating and cooling systems, and motors.

We view Emerson as having a very well-diversified and broad product portfolio, a sterling reputation for delivering stable growth, peer-leading margins and returns, and a consistently strong financial structure. The company does considerable business and is a market share leader in all major geographies globally. We expect the currently ongoing portfolio restructuring to improve Emerson’s margin and growth profiles. We believe paring back the company’s product lineup and focusing on its historical strengths is a sound strategic decision.

Key Risks: Emerson faces stiff competition based on product performance, quality, service and price across the industries and markets it serves. The company generates a significant portion of its sales internationally, making it subject to foreign currency fluctuations. End market demand for Emerson's products can be volatile. The integration of acquisitions, an important growth driver for Emerson, may not realize expected benefits. Emerson is currently working on spinning off/selling multiple divisions. These divestitures could limit financial flexibility and dividend capacity in the future.

General Dynamics Corporation (GD) Price $180.06 Consensus NTM EPS Estimate $11.07 Dividend Per Share (DPS) $4.76 Consensus Long-Term Growth Estimate 7% DPS Yield 2.6% NTM PE 16.3x DPS Growth Estimate 8% NTM PE 5-yr Average 15.9x DPS Growth History 24 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 10% Net Debt/Capital 39%

General Dynamics, an aerospace and defense company, provides products and services for business aviation (Gulfstream business jets), combat vehicles (Abrams tanks), weapons systems, munitions, military and commercial shipbuilding (naval destroyers), communications and information technology.

General Dynamics’ growth strategy lies in its prudent approach to capital deployment, which includes internal investment, acquisitions, divestitures, share repurchases, and dividends. General Dynamics has built a reputation as one of the strongest defense contractors, consistently driving margin improvement and free cash flow generation. The company also now generates about a fifth of its revenues from the civil aerospace market (Gulfstream) and is committed to continuous investment in new product development. Many of General Dynamics’ products are sold along with long-tailed spares, parts and service components which provide a level of revenue visibility.

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Key Risks: General Dynamics competes with other large platform, system-integration contractors as well as smaller companies in both domestic and international markets to obtain government contracts. Declines in U.S. defense spending or changes in spending allocation could negatively impact its financial performance. Timing of foreign military orders is often unpredictable, swayed by political and budgetary issues. Poor contract execution, failure to win new contracts, and changes in business aviation expenditures are also risks.

Honeywell International Inc. (HON) Price $213.88 Consensus NTM EPS Estimate $7.87 Dividend Per Share (DPS) $3.72 Consensus Long-Term Growth Estimate 8% DPS Yield 1.7% NTM PE 27.3x DPS Growth Estimate 8% NTM PE 5-yr Average 20.0x DPS Growth History 11 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 11% Net Debt/Capital 20%

Honeywell International Inc. (Honeywell) is a diversified technology and manufacturing company serving customers worldwide across four segments – Aerospace, Building Technologies, Performance Materials & Technologies, and Safety & Productivity Solutions. As a leading software-industrial company, Honeywell blends software with physical products in an effort to take advantage of an increasingly connected world.

We believe Honeywell offers a diversified mix of industrial end market exposure with attractive growth potential overall. The company’s end markets include oil and gas, defense, construction, refrigerants, automation, and aviation, among others, with connectivity an overarching theme. While this degree of end market diversity may mute short-term growth in any one particular segment, it also reduces cyclicality of the company’s overall results and we believe provides excellent dividend support. Since the early-2000’s, management has proven adept at navigating market cycles, allocating capital and shaping the portfolio for long-term growth. We believe this track record will continue under the relatively new Chief Executive Officer (CEO) as evidenced by recently announced divestitures.

Key Risks: A portion of the market's positive outlook for Honeywell centers around an uptick in organic sales growth. If organic growth doesn't materialize, HON shares may react negatively. A slowdown in global GDP growth would potentially negatively impact Honeywell's growth trajectory as well. With approximately 40% of sales generated outside the United States, strength in the U.S. dollar relative to other currencies would negatively impact Honeywell's results. Honeywell's CEO is new to the role, having assumed the position in early 2017.

Illinois Tool Works Inc. (ITW) Price $222.78 Consensus NTM EPS Estimate $7.92 Dividend Per Share (DPS) $4.56 Consensus Long-Term Growth Estimate 11% DPS Yield 2.0% NTM PE 28.3x DPS Growth Estimate 7% NTM PE 5-yr Average 22.3x DPS Growth History 55 years S&P Credit Rating A+ DPS 5-yr Historical Annual Growth 16% Net Debt/Capital 50%

Illinois Tool Works manufactures specialty components, equipment, and consumable systems for the construction, transportation and industrial markets, including specialty fasteners, tools, plastics, adhesives, and chemicals.

Illinois Tool Works, long known for its strong operational focus, market share and profitability, is transforming the company through strategic initiatives in portfolio management and supply chain and business structure simplification which we expect to further improve focus, profitability and returns. We believe Illinois Tool Works’ diverse business mix helps smooth the peaks and valleys of its more cyclical businesses and, importantly, helps provide a consistently growing stream of cash flow to fund dividend increases.

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Key Risks: Assets to be divested may not generate estimated proceeds, and internal initiatives may not generate expected benefits. Illinois Tool Works generates a significant amount of revenues from outside the U.S., which exposes it to risks like fluctuating exchange rates, economic turmoil, local government intervention and political & social instability.

L3Harris Technologies Inc. (LHX) Price $198.61 Consensus NTM EPS Estimate $12.88 Dividend Per Share (DPS) $4.08 Consensus Long-Term Growth Estimate - DPS Yield 2.1% NTM PE 15.4x DPS Growth Estimate 8% NTM PE 5-yr Average 18.8x DPS Growth History 20 years S&P Credit Rating BBB DPS 5-yr Historical Annual Growth 12% Net Debt/Capital 23%

L3Harris Technologies (Harris) is an international communications and information technology (IT) company serving government and commercial markets in more than 125 countries. The company develops, manufactures and sells communications products, systems and services for global markets. Its products include secure tactical radio communications, embedded high-grade encryption solutions for military, government and commercial customers and other advanced communications and information systems that solve mission-critical challenges.

Harris’ aim is to be a best-in-class global provider of mission-critical assured communications by focusing on growing and sustaining its core markets, driving operational excellence and improving cash flow and optimizing capital deployment. Its operational excellence platform, Harris Business Excellence, is designed to leverage resources, transform the way the company does business and deliver improved customer satisfaction, leading to the expansion of its customer base. In the commercial segment, Harris is working towards leveraging its proven technologies for government applications into attractive commercial applications, and expanding in high-growth commercial markets including IT services supporting energy, maritime and healthcare networks.

Key Risks: Harris is highly dependent for its sales on the U.S. government and the loss of this relationship or a shift in U.S. government funding priorities could materially impact the company’s operations and financial results. The company is subject to cost overruns as it enters into fixed-price contracts. It is subject to unique risks like the failure of applications related to satellites, missile systems, air traffic control systems, homeland security and aircraft which may not be covered adequately by insurance or indemnity, forcing the company to potentially bear substantial costs from an accident.

Lockheed Martin Corporation (LMT) Price $361.22 Consensus NTM EPS Estimate $26.37 Dividend Per Share (DPS) $10.40 Consensus Long-Term Growth Estimate 6% DPS Yield 3.1% NTM PE 13.8x DPS Growth Estimate 7% NTM PE 5-yr Average 17.7x DPS Growth History 18 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 10% Net Debt/Capital 52%

Lockheed Martin is one of the world’s largest aerospace and defense companies. The company’s products and services have defense, civil and commercial applications with primary focus on defense, space, intelligence, homeland security and cybersecurity markets. In 2019, about 70% of Lockheed Martin’s total sales were to agencies of the U.S. government. Notable products include the F-35 (which represents nearly 30% of total sales), the THAAD air and missile defense system, and Black Hawk helicopters.

We are attracted to Lockheed Martin’s position within the defense industry, particularly as it relates to the F-35 and space programs, which we believe provide a long tail of initial as well as follow-up service and maintenance sales. Financially, Lockheed Martin has grown earnings, free cash flow and dividends per share double-digits over the past 1, 3, 5 and 10 years while maintaining a strong, investment grade balance sheet. At current earnings and dividend levels, we estimate

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Lockheed Martin’s payout ratio at about 40%, a rate we expect the company to maintain going forward. We conservatively estimate future dividend per share growth of 7%, below the company’s 5-year average of 10%.

Key Risks: Lockheed Martin depends heavily on U.S. government contracts. The company’s programs could be materially reduced, extended or terminated as a result of the government’s continuing assessment of priorities and/or changes in government purchasing policies. These matters and/or delays in the budget process, including a continuing resolution, could adversely affect Lockheed Martin's ability to grow or maintain sales, earnings and cash flow. Profitability and cash flow may vary based on the mix of contracts, programs, performance, and ability to control costs.

Raytheon Technologies Corporation (RTX) Price $77.53 Consensus NTM EPS Estimate $3.68 Dividend Per Share (DPS) $1.90 Consensus Long-Term Growth Estimate 14% DPS Yield 2.5% NTM PE 20.9x DPS Growth Estimate 6% NTM PE 5-yr Average 18.2x DPS Growth History 23 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth -3% Net Debt/Capital 24%

Raytheon Technologies was formed in April 2020 through a merger of equals between Raytheon Company and United Technologies, following the spin-off of the Carrier and Otis businesses by United Technologies. Raytheon Technologies is one of the world’s largest aerospace and defense companies, with 2019 pro forma net sales of roughly $74 billion. Raytheon is headquartered in Waltham, MA.

We view Raytheon Technologies as well positioned for growth given our positive long-term view of the aerospace and defense sectors. In our opinion, the two legacy United Technology business lines (Pratt & Whitney and Collins Aerospace) were both solid performers given their strong product offerings and generally favorable business trends. Additionally, as a stand-alone company Raytheon Technologies was considered an industry leader within defense and aerospace given its offerings in missiles, radar and missile defense systems, and various products utilized in space exploration. The combined Raytheon Technologies is projected to have diversified and balanced end market exposure, with approximately 54% of its sales to the defense sector and 46% to commercial aviation customers. The geographic breakdown of Raytheon Technologies’ pro-forma sales is also diversified with roughly 55% generated within the United States. While all larger mergers are subject to potential risks related to integration, we would note legacy United Technologies was able to successfully integrate several larger acquisitions while ultimately delivering a higher level of financial synergies than originally projected. This merger track record gives us a high degree of confidence that the Raytheon Technologies merger integration will proceed smoothly.

Key Risks: Raytheon Technologies results are dependent on demand from the commercial aerospace and defense industries. Factors influencing these industries, and therefore Raytheon Technologies' results, include the level of commercial air travel, aircraft replacement/aftermarket service schedules, and government budgets for military expenditures, among others.

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Union Pacific Corporation (UNP) Price $216.09 Consensus NTM EPS Estimate $9.54 Dividend Per Share (DPS) $3.88 Consensus Long-Term Growth Estimate 10% DPS Yield 1.8% NTM PE 22.8x DPS Growth Estimate 8% NTM PE 5-yr Average 19.2x DPS Growth History 13 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 12% Net Debt/Capital 58%

Union Pacific operates one of North America’s largest railroad networks as measured by track miles. The company’s extensive 32,000 route-mile network links 23 states in the western two-thirds of the U.S., operates from all major west coast and gulf coast ports to eastern gateways, connects with Canada’s rail system, and serves all six major Mexico gateways. Union Pacific’s primary product categories are Agriculture Products (22% of 2019 freight revenue; grains, fertilizer, food and beverage products), Energy (18%; coal, sand, petroleum), Industrial (29%; construction, industrial chemicals, plastics, forest products), and Premium (31%; intermodal, finished vehicles).

Union Pacific is in the early stages of implementing PSR (precision scheduled railroading), a railroad operating strategy that focuses on efficiency and simplicity to lower costs and improve profitability and service levels. Union Pacific’s internal PSR program is called Unified Plan 2020. We believe this program will deliver benefits to Union Pacific and shareholders over the next several years. Outside of the more intermediate-term nature of PSR benefits, we’re attracted to Union Pacific’s diverse traffic mix, strong balance sheet (debt rated A- by Standard & Poor’s), free cash flow generation and conversion (greater than $7 per share and near 90% in 2019), dividend growth track record (13 years) and comfortable dividend payout ratio (49% of earnings in 2019 and in line with management’s 40-45% target).

Key Risks: Volume through Union Pacific's network can be volatile as many of the products shipped are commodities (coal, grain, industrial chemicals, plastics, among others). Some of the end markets Union Pacific serves have been in decline (coal) and we expect these trends could continue in the future. Market impacts from climate change could affect Union Pacific's business as the company's operations produce greenhouse gas emissions (diesel exhaust) and coal is a notable product shipped. Another large, Class I railroad offers service through most of the same geographic footprint as Union Pacific.

United Parcel Service, Inc. Class B (UPS) Price $163.25 Consensus NTM EPS Estimate $8.95 Dividend Per Share (DPS) $4.08 Consensus Long-Term Growth Estimate 22% DPS Yield 2.5% NTM PE 18.5x DPS Growth Estimate 6% NTM PE 5-yr Average 16.6x DPS Growth History 12 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 75%

United Parcel Service (UPS) is the world’s largest package delivery company and a premier provider of worldwide supply chain management solutions. On a daily basis, the company serves more than 1.6 million shipping customers, delivering more than 1 million packages in more than 220 countries. Apart from the U.S., UPS has a significant presence in Europe, Asia and Latin America.

UPS has a strong global presence, industry-leading technology and competitive advantages in its markets. We expect cross-border trade will grow at a high rate as the U.S. and international economies become more interconnected, creating a potential increase in volume for the company. UPS continuously looks for expansion opportunities in the emerging economies by forming partnerships or alliances which act as a stimulus for growth. As supply chains become more complex and global, we believe UPS stands to benefit given its expertise in logistics and supply chain management. Rapid growth in e-commerce shipments fueled increased demand for UPS services.

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Risks to UPS include impacts from foreign currency fluctuations, economic uncertainty, and political unrest given UPS operates in approximately 220 countries. UPS generally faces strong competition in the markets it serves around the world. There are a number of regulations and laws that impact UPS, including aviation, transportation, environmental, and labor laws. Additionally, UPS can be impacted by increasing fuel prices or weaker global economic growth.

W.W. Grainger, Inc. (GWW) Price $397.59 Consensus NTM EPS Estimate $18.53 Dividend Per Share (DPS) $6.12 Consensus Long-Term Growth Estimate 13% DPS Yield 1.5% NTM PE 21.4x DPS Growth Estimate 6% NTM PE 5-yr Average 18.6x DPS Growth History 49 years S&P Credit Rating A+ DPS 5-yr Historical Annual Growth 5% Net Debt/Capital 46%

W.W. Grainger (Grainger) is a distributor of maintenance, repair and operating (MRO) supplies and other related products and services used by businesses and institutions. Grainger’s operations are primarily in the U.S. and Canada, with an expanding presence in Europe, Asia and Latin America. The company’s key products include material handling equipment, safety and security supplies, lighting and electrical products, power and hand tools, pumps and plumbing supplies, cleaning and maintenance supplies, forestry and agricultural equipment and other items primarily focused on the facilities maintenance market.

Grainger’s growth strategy leverages its geographic diversity and multichannel business model, providing customers with a range of options for finding and purchasing products through direct marketing materials and e-commerce solutions. We expect Grainger to continue to make investments to enhance its sales force and distribution network, expand its product lines, e-commerce solutions and inventory management services, and grow its international presence. It is one of the leading companies in the North American MRO market (roughly $130 billion). Grainger’s catalog contains roughly 900,000 products, while its website offers approximately 1.4 million products in total.

Key Risks: The facilities maintenance (MRO) industry is very large, but also highly fragmented and there is strong competition from both small and large players. Sales are highly correlated to GDP growth, and deteriorating economic conditions may lead customers to shut down or idle facilities. Other risks include fluctuation in currency exchange rates and acquisition integration risk.

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Xylem Inc. (XYL) Price $101.93 Consensus NTM EPS Estimate $2.56 Dividend Per Share (DPS) $1.12 Consensus Long-Term Growth Estimate 15% DPS Yield 1.1% NTM PE 40.1x DPS Growth Estimate 10% NTM PE 5-yr Average 27.1x DPS Growth History 10 years S&P Credit Rating BBB DPS 5-yr Historical Annual Growth 13% Net Debt/Capital 24%

Xylem is a global leader in water technology. The company provides solutions across the water cycle – transportation, processing, utilization, metering, and return. Xylem’s end markets include utility (about 50% of 2018 revenue), industrial (35%), commercial (10%), and residential (5%) customers with about half of revenue generated in the U.S., 25% in Western Europe, 20% in Emerging Markets, and the remaining bucketed as Rest of World. For the curious, xylem is the tissue in a plant that transports water and dissolved minerals from the roots to the rest of the plant.

We believe Xylem offers great exposure to the highly fragmented global water industry. In our view, Xylem will benefit from the long-term trends driving growth in the industry – regulation, demographics, and infrastructure needs. At a high level, water is a scarce and valuable commodity and according to Xylem, nearly one in six gallons of treated water in the U.S. is lost before reaching its end-user. Inefficiencies within the aged infrastructure system paired with increasing demand for fresh water (which is a very small portion of global water supply) and regulatory focus on quality and safety should drive steady, long-term investment in water infrastructure.

Key Risks: Xylem relies on acquisitions as part of its growth strategy. While we view it as unlikely, the company could choose to reduce or eliminate dividend growth for the sake of large scale M&A activity. If the company were to miss or reduce its 2020 financial targets, XYL shares could react negatively. Xylem's end markets are competitive with several notable firms vying for market share. With about 50% of sales going to utilities, Xylem is partially tied to the spending patterns of these customers, which can be cyclical. Information Technology Accenture Plc Class A (ACN) Price $268.61 Consensus NTM EPS Estimate $8.88 Dividend Per Share (DPS) $3.52 Consensus Long-Term Growth Estimate 9% DPS Yield 1.3% NTM PE 30.5x DPS Growth Estimate 8% NTM PE 5-yr Average 24.3x DPS Growth History 15 years S&P Credit Rating A+ DPS 5-yr Historical Annual Growth 9% Net Debt/Capital -25%

Accenture, formerly the consulting division of accounting firm Arthur Anderson, is one of the world’s leading management consulting, technology and outsourcing services organizations. The company serves clients in numerous industries including communications, media and technology, financial services, health and public services, energy, and manufacturing. From its headquarters in Dublin, Ireland, Accenture’s operations span 50+ countries across the U.S., Europe, the Middle East, Africa and the Asia-Pacific region.

Accenture’s diverse portfolio of businesses, strong client relationships, global reach, cost efficient delivery, and strong balance sheet are core strengths that we believe differentiate it in the marketplace and make it an attractive candidate for dividend growth. The company continues to invest in strategic initiatives including analytics, cloud computing, digital marketing and mobility, and also looks to expand its operations in emerging markets.

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Key Risks: Accenture operates in highly competitive industries against very strong competitors, some of whom may be able to offer better pricing or service. The company’s results are dependent upon IT and consulting spending at the client level, i.e. corporations, governments. Global economic conditions can cause spending to slow and subsequently lead to lower growth and profitability at Accenture.

Analog Devices, Inc. (ADI) Price $149.90 Consensus NTM EPS Estimate $6.15 Dividend Per Share (DPS) $2.76 Consensus Long-Term Growth Estimate 11% DPS Yield 1.8% NTM PE 24.7x DPS Growth Estimate 8% NTM PE 5-yr Average 20.2x DPS Growth History 17 years S&P Credit Rating BBB DPS 5-yr Historical Annual Growth 9% Net Debt/Capital 25%

Analog Devices is a world leader in the design, manufacture, and marketing of a broad portfolio of high-performance analog, mixed-signal, and digital signal processing integrated circuits (ICs) used in virtually all types of electronic equipment. The company’s range of innovative products include data converters, amplifiers and linear products, radio frequency ICs, power management products, and other sensors and processing products.

Analog Devices is one of the world's largest analog semiconductor manufacturers, with broad exposure to multiple end markets (low risk of excessive product or customer concentration), low capital requirements, and strong profitability and cash generation characteristics. The company’s business strategy involves internal new product development and the acquisition of businesses or technologies that allow it to expand its product offerings, market coverage and technical capabilities. Analog Devices’ analog and mixed signal IC technology has been the foundation of its business for over four decades and it is one of the world’s largest suppliers of high-performance analog ICs.

Key Risks: Analog Devices faces intense technological and pricing competition in the semiconductor industry. The company’s future success depends upon its ability to continue to innovate, improve and develop new products. The company relies on third-party suppliers, subcontractors and manufacturers for wafers, as it sources approximately 50% of its requirements from outside firms. Thus, any disruption to the supply chain could significantly affect Analog Devices' operations.

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Apple Inc. (AAPL) Price $120.59 Consensus NTM EPS Estimate $4.44 Dividend Per Share (DPS) $0.82 Consensus Long-Term Growth Estimate 14% DPS Yield 0.7% NTM PE 27.2x DPS Growth Estimate 8% NTM PE 5-yr Average 19.4x DPS Growth History 7 years S&P Credit Rating AA+ DPS 5-yr Historical Annual Growth 10% Net Debt/Capital 17%

Apple designs, manufactures and markets high-end smartphones (iPhone), tablets (iPad), watches (Apple Watch), and personal computers (Mac). The company also designs the software (iOS, macOS, etc.) that acts as the brains of its products and offers a robust lineup of integrated services (Apple Pay, iCloud) through various sales channels (iTunes Store, App Store, Apple Music, etc.).

Apple’s historically strong brand, record of successful innovation, and tightly integrated and proprietary ecosystem has given the company a powerful presence in the high-end markets it serves and we believe this should continue to allow the company to charge premium prices for its products. We believe this in turn should continue to lead to robust profit margins and free cash flow. Accounting for about 55% of fiscal 2019 sales, the iPhone is the core of Apple’s revenues but the company has been successfully leveraging its massive installed base in a move toward selling more services, which we view favorably. With industry-wide smartphone unit sales maturing, we believe Apple will continue to successfully build its services revenue base and thus elongate the company’s growth trajectory.

Key Risks: Short product life cycles and intense competition mean technology companies must always stay on their toes, making innovation a key component of their ongoing growth strategy. Apple has long relied on a premium pricing strategy which poses many risks including the reliance on subsidies provided by wireless carriers to make their devices more affordable (which may be changed), and their pricing may hinder growth in emerging markets relative to many rivals who are willing to sell devices at lower levels.

Automatic Data Processing, Inc. (ADP) Price $187.00 Consensus NTM EPS Estimate $6.14 Dividend Per Share (DPS) $3.72 Consensus Long-Term Growth Estimate 11% DPS Yield 2.0% NTM PE 30.8x DPS Growth Estimate 6% NTM PE 5-yr Average 27.3x DPS Growth History 46 years S&P Credit Rating AA DPS 5-yr Historical Annual Growth 13% Net Debt/Capital 7%

Automatic Data Processing (ADP) provides human capital management solutions to employers. It serves 600,000+ clients in more than 125 countries, offering products and services including integrated human capital management (HCM) solutions, payroll services, employment tax services, and human resources (HR) administration.

ADP’s high margin, low capital intensity business model has generated consistent and healthy free cash flow. ADP, like other firms in its industry, invests client cash balances during the period of time it has custody of the funds and intends to earn high-margin income on that cash. The company continuously looks to adopt new technology solutions to deliver convenient products and services, and at the same time match clients’ needs globally. It aims to grow its integrated suite of cloud-based HCM services in the U.S. and globally.

Key Risks: ADP relies heavily on technology in order to process high numbers of complex transactions on a daily basis. Any disruption in its systems could materially impact its business and reputation. The value and income produced by ADP’s investment portfolio fluctuates with changes in market interest rates. Other risks faced by the company include exchange rate fluctuation, economic uncertainty, and a potential inability to improve existing services and introduce new products.

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Broadridge Financial Solutions, Inc. (BR) Price $148.24 Consensus NTM EPS Estimate $5.52 Dividend Per Share (DPS) $2.30 Consensus Long-Term Growth Estimate - DPS Yield 1.6% NTM PE 26.9x DPS Growth Estimate 9% NTM PE 5-yr Average 24.0x DPS Growth History 14 years S&P Credit Rating BBB+ DPS 5-yr Historical Annual Growth 15% Net Debt/Capital 47%

Broadridge Financial Solutions (Broadridge) is a leading global provider of investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers. The company’s systems and services include investor communication solutions, securities processing, and business process outsourcing services. The company’s diverse client base includes more than 1,100 broker-dealers, 10,000 corporate issuers, and 800 mutual fund families. Broadridge has been a public company since 2007, the year it was spun out of fellow DSIP List-company Automatic Data Processing (ADP).

Broadridge is the market share leader in investor communication services, anchored by its core proxy processing and distribution business. The company has generated significant levels of recurring revenue which has provided revenue visibility and stability. Due to switching costs and scale advantages, Broadridge’s industry has high barriers to entry. In addition, the business model does not require significant capital expenditures (capex) on an ongoing basis (capex has averaged just 3% of sales over the past five fiscal years). Most importantly for DSIP List purposes, Broadridge has historically produced significant free cash flow and has paid a reasonable percentage of that free cash flow as dividends (average five year payout ratio of 38%), leaving room for future growth potential. In short, we view a large portion of Broadridge revenue as recurring, costs low due to scale, free cash flow generation high, and returns have remained attractive.

Key Risks: Consolidation within the financial services industry could lead to lost client relationships if an acquirer is not a Broadridge client. Financial market volatility could cause swings in Broadridge's event driven revenue stream. A broad shift from Street name to beneficial owner registration in the U.S. could reduce demand for Broadridge's proxy services. A portion of Broadridge's revenue is based on fee rates set by regulation which could be reduced. Trade processing errors or delays could harm Broadridge's reputation and lead to lost revenues and business opportunities.

Cisco Systems, Inc. (CSCO) Price $50.51 Consensus NTM EPS Estimate $3.33 Dividend Per Share (DPS) $1.48 Consensus Long-Term Growth Estimate 6% DPS Yield 2.9% NTM PE 15.4x DPS Growth Estimate 5% NTM PE 5-yr Average 14.7x DPS Growth History 10 years S&P Credit Rating AA- DPS 5-yr Historical Annual Growth 12% Net Debt/Capital -26% Cisco Systems, Inc. (Cisco) is a broad line supplier of products and services for transporting data, voice, and video within buildings, across campuses, and around the world. Cisco products, including switches, routers, security solutions and servers, are installed in businesses, public institutions, telecommunications and other service providers, and personal residences.

Cisco is the leader in many markets it serves and has built a massive installed base of products across industries. Through acquisitions and internal product development, the company has targeted a number of rapidly growing segments in the networking space, including service provider video, collaboration, wireless, data center, security, and servers. The company is also successfully transitioning its business model to focus on subscription-based, cloud-delivered services. We view this transition favorably as it increases the predictability of Cisco’s cash flow and should support dividend growth going forward.

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Key Risks: Competition is fierce and technological change is rapid in the networking space. The “software defined network” of the future could erode price/margins of high-end Cisco hardware as commodity networking equipment grabs a larger share of the market. Cisco faces entrenched, price-sensitive competition in the faster growing Asian markets from Chinese vendors. Cloud computing is also viewed as a threat, as a more concentrated group of sophisticated customers potentially demand price concessions. Enterprise data center technologies are converging and companies that collaborate with Cisco in one area may be competing with the company in another. Cisco may be lagging smaller, more nimble competitors in certain critical emerging network technologies.

International Business Machines Corporation (IBM) Price $133.07 Consensus NTM EPS Estimate $11.11 Dividend Per Share (DPS) $6.52 Consensus Long-Term Growth Estimate 11% DPS Yield 4.9% NTM PE 12.1x DPS Growth Estimate 4% NTM PE 5-yr Average 10.8x DPS Growth History 25 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 5% Net Debt/Capital 60%

International Business Machines (IBM) is an IT company with operations in 170 countries providing integrated solutions that leverage its deep knowledge of business processes to solve problems and create value for its clients. The company provides an industry leading portfolio of consulting, delivery and implementation services; enterprise software and systems; and financing. Its services include business process outsourcing, IT outsourcing, product maintenance, cloud computing and business analytics.

IBM delivers innovation in technology and high value solutions to enterprise clients. The company’s global reach, sustained investment in R&D and industry expertise help it deliver value to clients. IBM is focused on growth initiatives including smarter planet (vision of a technology-enabled world), growth markets, business analytics and optimization and cloud computing. IBM has consistently delivered solid performance, with a steady track record of sustained cash generation despite periodic industry and economic turmoil. We believe the company has also proven its ability to evolve with technology trends – exiting businesses as they become commoditized (printers, personal computers (PCs), servers) and expanding into higher growth areas (consulting, software, and most recently data analytics and cloud computing).

Key Risks: IBM’s results are dependent upon corporate IT budgets which can fluctuate with economic prospects. With operations in over 170 countries, IBM is exposed to global economic trends and currency movements. IBM has traditionally been viewed as a defensive company with consistent growth. IBM is currently transitioning its business from legacy hardware-type products to software and services, which amplifies execution risk.

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Jack Henry & Associates, Inc. (JKHY) Price $152.78 Consensus NTM EPS Estimate $4.17 Dividend Per Share (DPS) $1.84 Consensus Long-Term Growth Estimate 10% DPS Yield 1.2% NTM PE 36.5x DPS Growth Estimate 8% NTM PE 5-yr Average 37.5x DPS Growth History 30 years S&P Credit Rating - DPS 5-yr Historical Annual Growth 12% Net Debt/Capital -

Jack Henry & Associates (Jack Henry) is a leading provider of core information processing solutions and ancillary products and services for banks and credit unions. Jack Henry’s products and services include financial transaction processing, online bill-pay, remote check capture, business process automation and information management for more than 11,000 financial institutions and corporate entities.

Jack Henry competes in the mission-critical application of financial institution back office information technology. Given the essential nature of the company’s services and high switching costs, Jack Henry’s client base tends to display very low turnover, creating a business model that generates a high level of recurring, predictable revenue. Jack Henry’s high margin, low capital intensity business model provides the firm with significant free cash flow to enhance its product offering through internal development or by acquisition.

Key Risks: Cyclical fluctuations in economic conditions affect profitability, and therefore technology spending at financial institutions, which could impact revenue and earnings of the company. The company’s products compete based upon functionality, price, operating flexibility, and customer support. Jack Henry deals with large volumes and dollar amounts of payment transactions and if continuity of operations or integrity of processing were compromised, it could result in financial as well as reputational loss for the company.

Microsoft Corporation (MSFT) Price $232.34 Consensus NTM EPS Estimate $7.55 Dividend Per Share (DPS) $2.24 Consensus Long-Term Growth Estimate 11% DPS Yield 1.0% NTM PE 30.9x DPS Growth Estimate 8% NTM PE 5-yr Average 26.8x DPS Growth History 17 years S&P Credit Rating AAA DPS 5-yr Historical Annual Growth 10% Net Debt/Capital -27%

Microsoft designs, develops and markets software, services and hardware for consumer and enterprise users worldwide. Microsoft products include Office, Windows and other enterprise and consumer software products, the Xbox 360 gaming and entertainment console, Surface tablets, and smartphones.

Microsoft’s growth strategy lies in its ability to create innovative and compelling products, services, and experiences for its users. Its vision involves the seamless integration of user experiences across multiple devices for applications from communications to productivity, e-commerce, and entertainment. It has a dominant market position in its core Windows operating system and its Office productivity software. We view the company as having strong growth opportunities; with Xbox, Bing, cloud-based services and continuously updated versions of Windows expected to add to its top line. We anticipate strong growth in systems software, boosted by growing interest in cloud computing and virtualization software, markets expected to grow more than 15% annually. Microsoft is also one of an elite few companies touting an AAA-rated balance sheet.

Key Risks: Investment risks include cannibalization of Microsoft’s core PC market by mobile tablet devices, limited success to date with the company’s online and smartphone strategies, threats from competitive cloud-based services, piracy of Microsoft's software, particularly in emerging markets, and ongoing antitrust and other litigation.

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Paychex, Inc. (PAYX) Price $98.31 Consensus NTM EPS Estimate $2.82 Dividend Per Share (DPS) $2.48 Consensus Long-Term Growth Estimate 7% DPS Yield 2.5% NTM PE 32.5x DPS Growth Estimate 5% NTM PE 5-yr Average 26.1x DPS Growth History 9 years S&P Credit Rating - DPS 5-yr Historical Annual Growth 10% Net Debt/Capital -1%

Paychex is a leading provider of payroll, human resource, insurance, and benefits outsourcing solutions for small to medium-sized businesses. The company delivers its services through a network of local and corporate offices servicing more than 100 of the largest markets in the U.S. and Germany. Paychex was founded in 1971 by Chairman B. Thomas Golisano and is headquartered in Rochester, New York.

Paychex is debt-free and operates a very high margin, low capital intensity business model that produces significant free cash flow. The company earns highly profitable income on its clients’ cash balances while awaiting distribution. Recent regulatory changes, primarily the Affordable Care Act, have provided a tailwind to Paychex due to the complexity involved in implementing the requirements by employers. Many of Paychex’s customers turn to Paychex to ensure compliant implementation and reporting.

Key Risks: Paychex pays out a significant portion of its earnings as dividends. Prolonged or severe downturns in net income could pressure dividend sustainability. The company invests client cash during the lag period between deposit and disbursement. Changes in market interest rates will affect the amount of income generated from these cash balances. The company caters largely to small and mid-sized companies and is impacted by the pace of new business formations and economic growth.

Texas Instruments Incorporated (TXN) Price $178.49 Consensus NTM EPS Estimate $6.74 Dividend Per Share (DPS) $4.08 Consensus Long-Term Growth Estimate 10% DPS Yield 2.3% NTM PE 26.9x DPS Growth Estimate 8% NTM PE 5-yr Average 23.2x DPS Growth History 17 years S&P Credit Rating A+ DPS 5-yr Historical Annual Growth 22% Net Debt/Capital 3%

Texas Instruments is the world’s largest analog chip manufacturer and maintains a leading position in embedded processing. The company generates roughly 95% of its revenue from semiconductors with nearly 90% coming from outside the United States.

Texas Instruments focuses on two segments of the semiconductor industry: analog and embedded processing. These segments are characterized by long product life cycles, diverse end markets and low capital spending requirements and generally provide a combination of stability, profitability and strong cash generation. Those characteristics provide the foundation for Texas Instrument’s capital management philosophy and strategy: free cash flow growth is important for maximizing shareholder value over the long term if that free cash flow is productively invested back into the business or returned to shareholders. Texas Instruments has historically generally returned all of its free cash flow back to shareholders, either in the form of dividends or share buybacks. In essence, management runs and invests in its steady, reliable chip business with the goal of growing free cash flow. A portion of that free cash flow stream is invested back into the business for future growth while the rest is returned to shareholders. While we’re initially attracted to the company’s steady business model and focus on free cash flow generation and return, we also see potential long-term growth via the company’s industrial and automotive end market exposure.

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Key Risks: Increased competition in some of Texas Instruments' strategic businesses including analog is a risk that could lead to market share losses or pricing compression negatively impacting gross margins. Lower end chips are commodity semiconductors and can be subject to intense pricing pressures. Pricing pressures represent a risk to revenue and gross margin leading to potential oversupply which could result in inventory unloading. Materials Air Products & Chemicals, Inc. (APD) Price $277.27 Consensus NTM EPS Estimate $9.43 Dividend Per Share (DPS) $6.00 Consensus Long-Term Growth Estimate 9% DPS Yield 2.2% NTM PE 30.0x DPS Growth Estimate 7% NTM PE 5-yr Average 23.9x DPS Growth History 39 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 10% Net Debt/Capital 10%

Air Products & Chemicals (Air Products) is a producer of industrial gases and specialty chemicals serving the energy, electronics, chemicals, steel, food processing, healthcare and general manufacturing industries globally. The company’s portfolio includes atmospheric gases, process and specialty gases, performance materials and related equipment and services. Air Products is the world’s largest supplier of hydrogen and helium and enjoys leading positions in growth markets such as semiconductor materials, refinery hydrogen, natural gas liquefaction, and advanced coatings and adhesives.

In the face of growing shareholder activism, Air Products has taken steps to optimize its global portfolio of businesses in order to better align its cost structure with current economic conditions and future growth opportunities. Air Products has also sharpened its focus on returns, profitability and cash flow under CEO Ghasemi. The company is executing on a large backlog of projects that we expect to drive earnings and cash flow growth in the near and long term.

Key Risks: Operation of Air Products' facilities, pipelines and delivery systems entail hazards such as pipeline leaks and ruptures, fire, toxic releases, and mechanical failures that could negatively impact the company’s ongoing operations. Any interruption in ordinary sources of supply or an inability to recover increases in energy and raw material costs from customers could result in lost sales and reduced profitability.

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Ecolab Inc. (ECL) Price $208.81 Consensus NTM EPS Estimate $5.16 Dividend Per Share (DPS) $1.92 Consensus Long-Term Growth Estimate 13% DPS Yield 0.9% NTM PE 40.6x DPS Growth Estimate 9% NTM PE 5-yr Average 31.3x DPS Growth History 29 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 44%

Ecolab is the global leader in water, hygiene, and energy technologies and services that protect people and vital resources. The company delivers programs and on-site services to ensure safe food, maintain clean environments, optimize water and energy use, and improve operational efficiencies for customers in the food, energy, healthcare, industrial, and hospitality markets in more than 170 countries.

We view Ecolab’s business model as very attractive. Significant scale, recurring revenue streams, moderate capital investment requirements, high-touch customer service, superior breadth of differentiated products, systems and services, and growing markets are core strengths that differentiate it from its peers. Recent acquisitions in the energy services sector further expanded the company’s opportunities, albeit in a more cyclical end market. The cleaning and sanitizing needs of Ecolab's core customer base - schools, restaurants, hotels and other institutions - tend to be less sensitive to economic cycles.

Key risks include unexpected activity losses in the hospitality, travel, food and foodservice industries, slower introduction of successful new products and services, and higher-than-projected raw material and delivery costs.

Linde plc (LIN) Price $273.38 Consensus NTM EPS Estimate $9.32 Dividend Per Share (DPS) $4.24 Consensus Long-Term Growth Estimate 8% DPS Yield 1.6% NTM PE 29.6x DPS Growth Estimate 7% NTM PE 5-yr Average 25.3x DPS Growth History 28 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 6% Net Debt/Capital 21%

Linde was created through the merger of U.S.-based Praxair Inc. and Germany’s Linde AG. Linde is headquartered in the United Kingdom. Linde is a leading global industrial gas company. The company designs, engineers, manufactures and operates industrial gas facilities. Praxair engineers, manufactures and operates facilities that produce and distribute industrial gases. Major products include oxygen, hydrogen, nitrogen, argon, carbon dioxide, helium, electronic gases and a wide range of specialty gases.

We believe Linde is well positioned within the global industrial gas market given its leading scale and geographic reach. Additionally, the company should be able to leverage core strengths of the legacy Praxair (operational excellence) and Linde (engineering and technology) and complementary geographic footprints (Praxair in the Americas and Linde Europe, Middle East, Africa, Asia/Pacific) to generate significant operational synergies and realize growth potential.

Key Risks: Cultural differences between legacy Linde and Praxair could limit realization of synergy targets. Despite end market and customer diversity, many of Linde's end markets are cyclical. Volatile energy input costs may not be fully passed through to customers on a timely basis, thus weighing on Linde's results. The company is subject to numerous environmental and safety laws and regulations across its operations.

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PPG Industries, Inc. (PPG) Price $152.34 Consensus NTM EPS Estimate $7.51 Dividend Per Share (DPS) $2.16 Consensus Long-Term Growth Estimate 9% DPS Yield 1.4% NTM PE 20.4x DPS Growth Estimate 6% NTM PE 5-yr Average 17.9x DPS Growth History 49 years S&P Credit Rating BBB+ DPS 5-yr Historical Annual Growth 8% Net Debt/Capital 38%

PPG Industries is the world’s largest producer of coatings (paints) as well as a broad range of specialty materials and glass products. The company’s coatings (paints) are used in a wide array of markets including architectural, automotive, aerospace, marine, and industrial. Some of the company’s major brands include PPG, Glidden, Olympic, Pittsburgh Paints, Flood and Liquid Nails. PPG Industries sells paint to cover everything from bathroom walls to commercial jetliners.

PPG Industries is the only major coatings company to participate in the industry’s three main distribution channels – company owned stores, home centers and independent paint/hardware stores. Additionally, PPG Industries is the only coatings company with participation in each of the seven major coatings end-markets – architectural, general industrial, protective & marine, refinish/collision, automotive OEM, packaging and aerospace. Not only does PPG Industries participate in each segment, the company maintains a top three market position in each as of April 2019. From a revenue perspective, PPG Industries generated roughly 60% of sales from performance coatings as of April 2019, higher value products with more stable and customer-oriented characteristics than typical coatings. These products are typically developed jointly with the client and therefore provide a relatively “sticky” or long-term relationship with high switching costs from the client perspective. Outside of coatings, PPG Industries sees opportunities to grow within the sealants and adhesives markets as these products share similar underlying chemistry characteristics with coatings and are an asset- light manufacturing process, similar to PPG Industries’ overall model. Recently, PPG Industries has been paring back non- core businesses and redeploying capital to growth areas.

Key Risks: Weakness in PPG Industries' major markets, including housing and automotive which can be cyclical could reduce demand for the company's products and negatively impact financial results. Integrating recent acquisitions could be volatile and results may not meet expectations. PPG Industries' asbestos liabilities may be larger than expected/reserved for. Foreign currency exchange rates will affect PPG Industries' reported results. The Sherwin-Williams Co. (SHW) Price $739.21 Consensus NTM EPS Estimate $27.18 Dividend Per Share (DPS) $6.60 Consensus Long-Term Growth Estimate 9% DPS Yield 0.9% NTM PE 27.2x DPS Growth Estimate 8% NTM PE 5-yr Average 23.0x DPS Growth History 42 years S&P Credit Rating BBB- DPS 5-yr Historical Annual Growth 15% Net Debt/Capital 72%

Sherwin-Williams was founded in 1866 in Cleveland and is the world's largest paint and coatings company, selling its products to professional, industrial, commercial, and retail customers in over 120 countries. The firm's well-known brands include Sherwin-Williams, Valspar, Dutch Boy, HGTV HOME by Sherwin-Williams, Krylon, Minwax, Cabot, and Thompson’s Water Seal. Sherwin-Williams primarily serves the needs of architectural and industrial painting contractors and do-it- yourself homeowners through its network of nearly 5,000 stores, but it also sells industrial coatings, automotive finishes, and protective and marine coatings.

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We are attracted to Sherwin-Williams’ large network of stores, long operating history, strong brands, and direct in-store relationships with customers. It has built up number one brands in architectural paint, stain & protective finish, aerosol paint, auto specialty paint, painting tools, and wood sealers. In addition to strong pricing power, Sherwin-Williams’ margins also benefit from the company’s vertical integration. Big-box retailers must pay wholesale prices for their paint inventory, but Sherwin-Williams produces its own coatings, resulting in higher profits. The business also requires little capital, helping Sherwin-Williams consistently generate excellent free cash flow, some of which has gone toward the company’s generous dividend policy. Sherwin-Williams has raised its dividend 42 consecutive years, classifying the company as a dividend aristocrat. Our expectation for continued dividend growth is supported by healthy free cash flow generation and a payout ratio in the 25%-30% range (management targets 30%).

Key Risks: Sherwin-Williams has significant exposure to the U.S. housing market which can be cyclical. Raw materials prices can be volatile. The company's ability to pass through raw material cost inflation is often on a delayed basis and may not be effective. Sherwin-Williams is involved in numerous lead-based paint litigation cases which exposes to the company to financial penalty risks and headline risks. The global coatings business is very competitive with a handful of large, well- established players and numerous smaller, regional players. Real Estate American Tower Corporation (AMT) Price $227.22 Consensus NTM FFO Estimate $9.24 Dividend Per Share (DPS) $4.69 Consensus Long-Term Growth Estimate 14% DPS Yield 2.1% NTM P/FFO 24.6x DPS Growth Estimate 15% NTM P/FFO 5-yr Average 23.3x DPS Growth History 9 years S&P Credit Rating BBB- DPS 5-yr Historical Annual Growth 20% Net Debt/Capital 85%

American Tower is a leading independent owner, operator and developer of wireless and broadcast communications real estate. The company’s primary business is leasing antenna space on multi-tenant communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities. It has an international presence in Brazil, Chile, Colombia, Germany, Ghana, India, Mexico, Peru, South Africa and Uganda. The company is organized as a real estate investment trust (REIT).

American Tower’s strategy is to capitalize on the growth in the use of wireless communications services and the evolution of advanced wireless devices and the expanding infrastructure required to deploy current and future generations of wireless communications networks. The company’s primary focus is to increase the number of tenants per tower within its existing portfolio and to invest in and grow the portfolio both in the U.S. and internationally. International expansion is still in the early stages and provides an exciting growth opportunity for American Tower. More developed international markets are just beginning to roll out advanced (4G/LTE) networks, while many others are still developing earlier standards (2G/3G), providing a long runway for growth. In the U.S., the development and deployment of new technologies could provide a tailwind for tower companies as service providers increase the density of their networks to support increasing data traffic.

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Key Risks: Risks to American Tower include numerous national, state and local regulatory requirements that could hinder American Tower’s ability to manage and grow its portfolio, new technologies that enable American Tower’s tenants to increase their efficiency (and negatively impact American Tower’s growth), and various foreign macroeconomic and geopolitical risks given American Tower generates a significant amount of its revenue outside the U.S. Other risks include a lack of access to attractively priced capital for external growth, an unexpected common dividend reduction (which we view as unlikely), and significant increases in interest rates, which would make other yield-oriented investments relatively more attractive.

Crown Castle International Corp (CCI) Price $167.49 Consensus NTM FFO Estimate $6.73 Dividend Per Share (DPS) $5.32 Consensus Long-Term Growth Estimate 13% DPS Yield 3.2% NTM P/FFO 24.9x DPS Growth Estimate 7% NTM P/FFO 5-yr Average 21.7x DPS Growth History 6 years S&P Credit Rating BBB- DPS 5-yr Historical Annual Growth -8% Net Debt/Capital 72%

Crown Castle International (Crown Castle) is a leading U.S. provider of shared communications infrastructure. The company owns a comprehensive network of macro towers, small cells, and fiber. Crown Castle is organized as a REIT.

Crown Castle owns approximately 40,000 macro towers (the typical communications structures people envision when thinking of towers), about 60,000 small cells (as the name implies, these are smaller structures, often attached to utility poles, traffic signals, or some other public infrastructure), and about 60,000 route miles of fiber (the “wire” that connects a tower or small cell to the core of the network).

We are attracted to Crown Castle’s portfolio of macro towers, small cells, and fiber. We expect growth in U.S. data demand to remain robust for several years, driving continuous network investment by wireless carriers and supporting demand for the solutions provided by Crown Castle.

Key Risks: Reduced network investment by wireless telecom carriers could reduce demand for space on Crown Castle’s towers and also lower the company’s growth prospects. Customer concentration is significant as Crown Castle's three largest customers generate about 75% of Crown Castle's total revenue. New technologies or commercial arrangements could displace or reduce carriers’ need for additional or new tower space. As a REIT, Crown Castle shares could be sensitive to changes in interest rates.

Federal Realty Investment Trust (FRT) Price $102.59 Consensus NTM FFO Estimate $4.49 Dividend Per Share (DPS) $4.24 Consensus Long-Term Growth Estimate 0% DPS Yield 4.1% NTM P/FFO 22.9x DPS Growth Estimate 3% NTM P/FFO 5-yr Average 19.3x DPS Growth History 53 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 3% Net Debt/Capital 52%

Federal Realty Investment Trust (Federal Realty) specializes in the ownership, management and redevelopment of high quality retail and mixed-use properties in densely populated affluent communities, primarily on the east coast and California. In addition to being one of the oldest REITs in the U.S., Federal Realty also claims the longest record of consecutive dividend increases among its REIT peers at an astonishing 53 years.

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Federal Realty’s strategically located properties produce steadily growing cash flow that the firm uses to fund internal growth projects and increasing distributions to shareholders. Federal Realty’s properties range from regional, community and neighborhood shopping centers that are often anchored by grocery stores to mixed-use properties that are typically centered around a retail component but also include office, residential and/or hotel components. The company focuses on densely populated affluent areas of the country including core markets of Boston, New York, Philadelphia, Baltimore, Washington DC, South Florida, San Jose/San Francisco and Los Angeles. The density of these markets limits the potential for competing retail projects while the affluent nature of the residents provides strong demand for retail space.

Key Risks: As a REIT, Federal Realty is required to pay the majority of earnings out to shareholders which leaves the company reliant on capital market access to fund major projects. Recent development projects skew toward residential, hotel and office space, areas outside Federal Realty's historical expertise of retail shopping centers. Federal Realty's portfolio is concentrated in a relatively small number of metropolitan areas exposing the company to economic downturns in those regions.

Realty Income Corporation (O) Price $63.91 Consensus NTM FFO Estimate $3.36 Dividend Per Share (DPS) $2.82 Consensus Long-Term Growth Estimate 4% DPS Yield 4.4% NTM P/FFO 19.0x DPS Growth Estimate 3% NTM P/FFO 5-yr Average 18.6x DPS Growth History 26 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 4% Net Debt/Capital 41%

Realty Income, known as “The Monthly Dividend Company®,” is a REIT with diverse properties and tenants spread across the U.S. The company’s primary objective is to generate dependable monthly cash dividends from a consistent and predictable level of cash flow from operations. Realty Income’s portfolio spans 49 U.S. states (Hawaii being the lone state not represented) with no single tenant generating more than 6% of rental revenue. The company typically leases properties to regional and national commercial enterprises and acquires properties that are freestanding, commercially- zoned with a single tenant.

Realty Income’s portfolio of properties under long-term leases, coupled with the tenant’s responsibility for property expenses, generally produces a predictable income stream and also offers the potential for growth in rental income via built-in rent escalators. Since 1996, Realty Income’s occupancy rate at the end of each year has not been below 96%. Realty Income’s portfolio diversity, based on geography, tenants, and end-markets, provides a buffer against potential disruptions stemming from any single tenant or market. The company actively manages its exposure to individual tenants and industries and has recently been increasing its proportion of investment grade tenants.

Key Risks: The real estate market is highly competitive. Cash flow may be affected by factors such as lack of demand, inability to retain existing tenants and attract new ones, oversupply of space, changes in market rental rates, tenant financial health, etc. Lack of liquidity or access to capital markets could impact the company’s financial position and ability to pursue acquisitions. Bankruptcies or financial distress among the company’s tenant base could negatively impact the company’s financial results. O shares tend to be interest rate sensitive (with a negative correlation).

Page 43 of 51 DSIP List – Investment Rationales March 26, 2021 Utilities American Water Works Company, Inc. (AWK) Price $145.21 Consensus NTM EPS Estimate $4.21 Dividend Per Share (DPS) $2.20 Consensus Long-Term Growth Estimate 9% DPS Yield 1.5% NTM PE 34.2x DPS Growth Estimate 8% NTM PE 5-yr Average 29.8x DPS Growth History 12 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 10% Net Debt/Capital 60%

American Water Works Company (American Water) is the largest, and most geographically diverse, publicly-traded water utility in the U.S. by revenue and population served. The company provides both regulated and unregulated water and wastewater services as well as other ancillary services. American Water’s regulated utilities provide water and wastewater services to approximately 3.4 million customer connections across 16 states and represent the vast majority (about 85%) of American Water’s revenue. The company’s unregulated, or market-based, operations provide water and wastewater services to U.S. military bases and other large customers, warranty-type services primarily to homeowners and small industrial customers, and also supports natural gas exploration and gas companies’ water needs.

We believe American Water offers an attractive long-term growth profile based on robust capital spending needs to replace aged infrastructure and ample consolidation opportunities. The company’s 2018-2022 operating plan targets 7- 10% earnings per share growth driven by 5-7% regulated capex spending, 1-2% regulated acquisitions, and 1% market- based business growth. Capex is expected to top $8 billion, largely aimed at regulated pipe replacement and upgrading aged facilities. Positively, the vast majority of this spending is supported by favorable regulatory treatment.

Key Risks: American Water operates in a highly regulated industry across 16 different U.S. states, meaning the company is subject to 16 different regulatory bodies. While regulatory diversity is generally positive, it also exposes the company to nearly constant rate case risk. Like most utilities, AWK shares tend to show negative correlation to interest rates which have been on the rise recently. American Water's growth outlook is based largely on robust capital spending and ongoing acquisitions which may not come to fruition as planned and therefore lead to lower than expected growth.

Atmos Energy Corporation (ATO) Price $97.08 Consensus NTM EPS Estimate $5.08 Dividend Per Share (DPS) $2.50 Consensus Long-Term Growth Estimate 7% DPS Yield 2.6% NTM PE 19.0x DPS Growth Estimate 7% NTM PE 5-yr Average 22.0x DPS Growth History 37 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 8% Net Debt/Capital 41%

Atmos Energy Corporation (Atmos) is the largest pure-play natural gas utility in the United States, serving over 3 million customers in eight states. Texas, Atmos’ primary jurisdiction, represents about 70% of the company’s overall rate base with Louisiana, Mississippi, Kentucky, Tennessee, Kansas, Colorado and Virginia contributing the remaining 30%. Atmos’ business is 100% regulated and rate base driven with roughly 65% of net income derived from distribution and 35% from pipelines and storage. Notably, the company’s pipeline business sits primarily atop its Texas distribution footprint and spans multiple key shale gas formations.

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We are attracted to Atmos’ regulated natural gas business model that supports steady earnings and dividend growth potential over the next 5+ years. The company benefits from constructive rate mechanisms that reduce or eliminate regulatory lag. Management notes over 90% of annual capital spending generates earnings within six months and about 99% within 12 months. This is an important dynamic that increases the attractiveness of the company’s 2020-2024 capital spending budget of $10-11 billion. Roughly 80% of capital spending through 2024 is geared toward safety and reliability, which includes replacing 5,000-6,000 miles of distribution and transmission pipe, eliminating the remaining 400 miles of cast iron pipe, replacing 200,000-300,000 steel service lines, installing wireless meter reading systems, and reducing methane emissions.

Through 2024, Atmos management expects annual earnings per share growth of +6-8% and commensurate dividend per share growth to stay near the company’s long-term dividend payout ratio target of 50%. For DSIP List purposes, we estimate dividend growth of 7%, the mid-point of management’s forecast. We believe Atmos’ board of directors and management value the company’s dividend growth and sustainability as highlighted by numerous call-outs in the company’s analyst presentation posted on its website.

Key Risks: Accidents related to natural gas distribution systems can cause significant damage and can lead to fines or other penalties (in 2018 Atmos experienced a pipeline explosion in Dallas). Natural gas as an energy source has been under attack recently, primarily on the U.S. coasts. If successful on a broad basis, the attractiveness of a natural gas utility could be reduced dramatically. Atmos' robust spending expectation will likely be accompanied by equity issuances. Adverse regulatory developments in Atmos' jurisdictions could reduce the attractiveness of the company's current spending plans.

CMS Energy Corporation (CMS) Price $61.10 Consensus NTM EPS Estimate $2.86 Dividend Per Share (DPS) $1.74 Consensus Long-Term Growth Estimate 7% DPS Yield 2.8% NTM PE 21.2x DPS Growth Estimate 7% NTM PE 5-yr Average 21.4x DPS Growth History 15 years S&P Credit Rating A DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 73%

CMS Energy is a Michigan-based holding company. Consumers Energy, CMS Energy’s principal subsidiary, is a regulated electric and gas utility with operations spanning the majority of Michigan’s Lower Peninsula (a.k.a. the mitten). In addition to Consumers Energy, CMS Energy also owns a relatively small unregulated business that generates less than 5% of overall revenue.

We view CMS Energy as a high-quality, defensive utility with attractive, relatively low-risk, long-term growth potential. We are attracted to CMS Energy’s remarkable consistency, regulated growth outlook, and supportive regulatory oversight. CMS Energy’s management is focused on delivering reliable earnings growth with minimal impact on customer rates driven by robust cost control and flexible capex spending. Under its long-term plan (through 2022), CMS Energy expects to deliver adjusted EPS growth of +6-8% driven by 2-3% cost reduction, 1% from increased sales, and 2% from “other” including its unregulated business, CMS Enterprises, all the while limiting customer bill growth to “at or below inflation” of 2%. CMS Energy expects to maintain a dividend payout ratio of about 62% which implies dividend growth in line with EPS growth.

Key Risks: CMS Energy files rate cases almost annually, exposing the company to potentially adverse outcomes. While Michigan is currently a constructive regulatory jurisdiction, CMS Energy is a single-state utility so negative changes to the company's regulatory treatment could have an outsized impact. Like most utilities, CMS shares will likely show negative correlation to interest rates.

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Eversource Energy (ES) Price $86.03 Consensus NTM EPS Estimate $3.88 Dividend Per Share (DPS) $2.41 Consensus Long-Term Growth Estimate 7% DPS Yield 2.8% NTM PE 21.9x DPS Growth Estimate 6% NTM PE 5-yr Average 20.7x DPS Growth History 22 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 6% Net Debt/Capital 56%

Eversource Energy (Eversource) was founded in 1966 and is headquartered in Hartford, Connecticut and Boston, Massachusetts. Eversource operates New England’s largest utility system, serving more than 3.6 million electric and natural gas customers in Connecticut, Massachusetts and New Hampshire. Following the close of the merger with NSTAR in April 2012, Eversource is comprised of four electric distribution companies, two natural gas distribution companies, and one three-state electric transmission business. Eversource has virtually no generation assets, focusing solely on transmission and distribution.

Eversource enjoys generally favorable regulatory relationships throughout its operating territory at the state and federal levels. The company’s Federal Energy Regulatory Commission (FERC)-regulated transmission business provides attractive returns and long-term growth potential. Customer conversions to natural gas for heating are an incremental growth driver. We expect both EPS and dividends to grow faster than peers for the next several years, driven by high return, FERC- regulated transmission projects. The company’s regulatory calendar is light for the near term, and external equity financing needs are minimal.

Key Risks: The regulatory approval process, environmental and community concerns, and design and siting issues, could result in increased costs, delays or cancellation of important transmission projects. Successful challenges of Federal Energy Regulatory Commission-approved return on equity rates could reduce profitability and attractiveness of Eversource's current and future transmission projects. Recent focus on offshore wind projects increases Eversource's risk profile.

New Jersey Resources Corporation (NJR) Price $40.12 Consensus NTM EPS Estimate $1.87 Dividend Per Share (DPS) $1.33 Consensus Long-Term Growth Estimate 12% DPS Yield 3.3% NTM PE 21.5x DPS Growth Estimate 7% NTM PE 5-yr Average 22.0x DPS Growth History 25 years S&P Credit Rating - DPS 5-yr Historical Annual Growth 7% Net Debt/Capital 53%

New Jersey Resources, headquartered in Wall, New Jersey, provides regulated gas distribution service in central and northern New Jersey and also operates unregulated businesses including natural gas storage and transportation, distributed power, home services and midstream.

New Jersey Resources’ business is balanced between stable, regulated utility and pipeline operations (approximately 65% of earnings), and potentially higher growth, but more volatile unregulated opportunities (35% of earnings). The company is expected to invest significantly in its regulated gas utility infrastructure to enhance system reliability, but also to fund its renewables portfolio and grow other energy-related, non-utility businesses. New Jersey Resources has benefited from a supportive regulatory relationship in New Jersey, highlighted by an attractive program to increase solar energy installations in the state. Strong customer growth is expected to continue, driven by general regional growth and customer conversions from other sources.

Key Risks: New Jersey Resources risks include lower than expected economic growth, adverse weather, increases in labor and other cost inputs, and regulatory developments. The company’s operations are subject to all operating hazards and risks incidental to handling, storing, transporting, and distributing natural gas to customers. Volatility of natural gas and other commodity prices may have significant impacts on customer usage, affecting the company’s operating performance. Page 46 of 51 DSIP List – Investment Rationales March 26, 2021

NextEra Energy, Inc. (NEE) Price $73.45 Consensus NTM EPS Estimate $2.50 Dividend Per Share (DPS) $1.54 Consensus Long-Term Growth Estimate 8% DPS Yield 2.1% NTM PE 29.1x DPS Growth Estimate 10% NTM PE 5-yr Average 24.8x DPS Growth History 27 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 13% Net Debt/Capital 56%

NextEra Energy (NextEra) is one of the largest electric power companies in North America, with consolidated revenues of over $16 billion and more than 45,000 megawatts (MW) of generating capacity in 27 states and Canada. NextEra provides retail and wholesale electric services to nearly 5 million customers and owns generation, transmission, and distribution facilities to support its services. The company is also a major producer of electricity from renewable energy sources, primarily through its ownership stake in NextEra Energy Partners, LP. (NEP $68.08).

NextEra’s subsidiary, NextEra Energy Resources, is the largest renewable energy generator in North America, with substantially all its assets operating under long-term, fixed-price contracts that provide earnings and cash flow stability. We believe the company’s regulated operations are also well positioned for future growth through its continued investment in new, energy efficient generating stations that provide cost and operating efficiencies, higher reliability and a cleaner emissions profile. Customers of Florida Power & Light, NextEra’s regulated Florida utility, typically enjoy the lowest bills in the state and among the lowest in the nation.

NextEra's business operations are subject to federal, state, and other regulations that may impact its allowed returns. The company is subject to numerous environmental laws and regulations which may result in significant capital expenditures, increased operating costs, and various other liabilities. Weakening economic conditions, slower growth in customer accounts or in customer usage may directly influence the demand for electricity. Extreme weather conditions can cause power outages and property damage, reduce revenue, affect fuel supply, and require the company to incur additional costs which may not be immediately recoverable through rates.

WEC Energy Group Inc (WEC) Price $93.19 Consensus NTM EPS Estimate $4.02 Dividend Per Share (DPS) $2.71 Consensus Long-Term Growth Estimate 6% DPS Yield 2.9% NTM PE 23.0x DPS Growth Estimate 6% NTM PE 5-yr Average 22.9x DPS Growth History 18 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 8% Net Debt/Capital 58%

WEC Energy Group (WEC Energy), incorporated in 1981 and headquartered in Milwaukee, Wisconsin, is the largest utility in Wisconsin, with operations in southeastern, east central and northern Wisconsin, as well as the Upper Peninsula of Michigan. The company also owns a stake in American Transmission Company.

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WEC Energy is considered one of the highest quality regulated utilities, with a very straightforward and consistent strategy to strive to benefit all key stakeholders. It provides electric utility service to diverse industries such as mining, paper, foundry, food products, and machinery production, as well as commercial and residential customers. The company provides its customers with energy from plants using a diverse fuel mix, including both coal and natural-gas fired plants, which is expected to help maintain a stable, reliable and affordable supply of electricity. After completing a major, multi- year effort to modernize its generation fleet, the company, over the next five years, is expected to place a greater focus on its distribution infrastructure (e.g., pipes, poles, wires, transformers, substations, etc.). A constructive regulatory climate, high customer satisfaction levels, well-managed utility franchises with solid rate base growth, consistent earnings and dividend growth, and a proven management team are key WEC Energy highlights, in our opinion.

Key Risks: WEC Energy’s operations are subject to strict federal and state regulations and regulatory changes could affect WEC Energy's earnings and therefore dividend prospects. Other key risks include slower than anticipated customer growth and energy sales that can be impacted by abnormal weather. Integration of recently-acquired Integrys Energy Group may not meet expectations.

Xcel Energy Inc. (XEL) Price $66.00 Consensus NTM EPS Estimate $2.97 Dividend Per Share (DPS) $1.83 Consensus Long-Term Growth Estimate 7% DPS Yield 2.8% NTM PE 22.0x DPS Growth Estimate 6% NTM PE 5-yr Average 21.3x DPS Growth History 18 years S&P Credit Rating A- DPS 5-yr Historical Annual Growth 6% Net Debt/Capital 60%

Founded in 1909 and headquartered in Minneapolis, Minnesota, Xcel Energy is the holding company for utilities serving approximately 3.5 million electric and approximately 2.0 million natural gas customers: Northern States Power, Public Service Company of Colorado, and Southwest Public Service Company. Xcel Energy has operations in Minnesota, Colorado, Wisconsin, North and South Dakota, New Mexico, Texas, and Michigan.

We view Xcel Energy as a core regulated utility holding, with an attractive geographic mix, generally constructive regulatory oversight, above average dividend growth and strong financial condition. Xcel Energy has embarked on an aggressive capital investment program to update aging utility infrastructure and to build renewable energy facilities and meet other environmental requirements. We expect Xcel Energy’s capital investment plan is to drive relatively steady 4- 6% annual rate base growth for the next several years with commensurate EPS growth. Over the same time frame, management expects 5-7% annual dividend growth and targets a payout ratio of 60-70% (which was recently increased from 55-60%).

Key Risks: Like all regulated utilities, Xcel Energy's capital investment program, earnings and dividend growth, and return on equity (ROE) rely on fair and equitable treatment from its state and federal regulators, particularly with regard to its Minnesota and Colorado utilities. Important rate cases are currently underway in both states. Currently low long term interest rates put pressure on the ROE's uilities are allowed to earn. Labor and other input cost pressures, potential environmental hazards and regulations, project delays, etc. are also risks.

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Definitions Consensus Next-12 Months (NTM) earnings per share (EPS): Street consensus earnings per share estimate for the next 12 months. For REITs we use adjusted funds from operations (AFFO). For MLPs we use Distributed Cash Flow (DCF).

Next-12 Months (NTM) price-to-earnings (PE): Price to earnings ratio based on the next 12 months EPS. For REITs we use P/AFFO. For MLPs we use P/DCF.

Super-voting stock is a class of stock that provides its holders with larger than proportionate voting rights compared with another class of stock issued by the same company.

Disclaimers All prices are as of March 25, 2021 unless otherwise indicated.

You should be aware that investments can fluctuate in price, value and/or income, and you may get back less than you invested. We recommend that existing shareholders consider their objectives, their risk tolerance, and the size of their positions relative to their portfolios when evaluating their holdings.

Equity securities are subject to market risk which means their value may fluctuate in response to general economic and market conditions and the perception of individual issuers. Investments in equity securities are generally more volatile than other types of securities. There is no guarantee dividend-paying stocks will return more than the overall market. Dividends are not guaranteed and are subject to change or elimination.

The prices of small and mid-cap company stocks are generally more volatile than large company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions.

Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.

Sector investing can be more volatile than investments that are broadly diversified over numerous sectors of the economy and will increase a portfolio’s vulnerability to any single economic, political, or regulatory development affecting the sector. This can result in greater price volatility. Communication services companies are vulnerable to their products and services becoming outdated because of technological advancement and the innovation of competitors. Companies in the communication services sector may also be affected by rapid technology changes; pricing competition, large equipment upgrades, substantial capital requirements and government regulation and approval of products and services. In addition, companies within the industry may invest heavily in research and development which is not guaranteed to lead to successful implementation of the proposed product. Risks associated with the Consumer Discretionary sector include,

Page 49 of 51 DSIP List – Investment Rationales March 26, 2021 among others, apparel price deflation due to low-cost entries, high inventory levels and pressure from e-commerce players; reduction in traditional advertising dollars, increasing household debt levels that could limit consumer appetite for discretionary purchases, declining consumer acceptance of new product introductions, and geopolitical uncertainty that could affect consumer sentiment. Consumer Staples industries can be significantly affected by competitive pricing particularly with respect to the growth of low-cost emerging market production, government regulation, the performance of the overall economy, interest rates, and consumer confidence. The Energy sector may be adversely affected by changes in worldwide energy prices, exploration, production spending, government regulation, and changes in exchange rates, depletion of natural resources, and risks that arise from extreme weather conditions. Investing in the Financial services companies will subject an investment to adverse economic or regulatory occurrences affecting the sector. Some of the risks associated with investment in the Health Care sector include competition on branded products, sales erosion due to cheaper alternatives, research and development risk, government regulations and government approval of products anticipated to enter the market. There is increased risk investing in the Industrials sector. The industries within the sector can be significantly affected by general market and economic conditions, competition, technological innovation, legislation and government regulations, among other things, all of which can significantly affect a portfolio’s performance. Materials industries can be significantly affected by the volatility of commodity prices, the exchange rate between foreign currency and the dollar, export/import concerns, worldwide competition, procurement and manufacturing and cost containment issues. Real estate investments have special risks, including possible illiquidity of the underlying properties, credit risk, interest rate fluctuations, and the impact of varied economic conditions. Risks associated with the Technology sector include increased competition from domestic and international companies, unexpected changes in demand, regulatory actions, technical problems with key products, and the departure of key members of management. Technology and Internet-related stocks, especially smaller, less-seasoned companies, tend to be more volatile than the overall market. Utilities are sensitive to changes in interest rates, and the securities within the sector can be volatile and may underperform in a slow economy.

MLPs are not for all investors, and are particularly not usually appropriate for retirement-related accounts. Also, an MLP shareholder, i.e. a limited partner unit holder, receives a K-1 instead of a 1099. Investors should contact their tax accountant for further tax implications before investing in MLPs. Wells Fargo Advisors is not a legal or tax advisor.

Exposure to the commodities markets may subject an investment to greater share price volatility than an investment in traditional equity or debt securities. Investments in commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity. Products that invest in commodities may employ more complex strategies which may expose investors to additional risks.

Credit Ratings Credit quality Moody’s Rating Service Standard & Poors Fitch Prime Aaa AAA AAA Excellent Aa AA AA Upper medium A A A Lower medium Baa BBB BBB Speculative Ba BB BB Very Speculative B, Caa B, CCC, CC B, CCC, CC, C Default Ca, C D DDD, DD, D

Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Standard and Poor’s ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

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Wells Fargo Advisors publishes several theme-based lists of recommended equity securities. Each list is based on a specific investment objective and time horizon which may be different from the other lists. This may cause Wells Fargo Advisors to recommend an equity security to be added to one list and removed from another list. Thus, one list may contain different recommendations or conclusions that could result in short-term price movements contrary to the recommendations in another list.

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