After the pandemic-induced and broad-based dividend cuts and suspensions of 2020, we witnessed a strong global dividend comeback over the last two years. But we believe there is more to come, and see a number of reasons why income-paying stocks should remain attractive for investors.
A compelling case
- Newton CEO Euan Munro believes that as we enter a new investment era likely to be defined by uncertainty and volatility, having an active, discerning approach to equity income could be key in helping investors achieve attractive outcomes.
Dividend income payouts look sustainable
Company balance sheets remain strong and payout ratios have declined, meaning that dividends are well covered.
A positive shift in the macroeconomic environment
With structurally persistent higher inflation, as interpreted through our ‘big government’ and ‘great power competition’ macro themes, the flexibility for central banks to pivot and cut interest rates is greatly reduced. Income stocks tend to perform well during inflationary periods as they can raise their dividends, which helps to protect investors from the impact of that inflation.
Income stocks remain inexpensive
We believe elevated valuations and more normalised earnings expectations should move the market focus back to dividends: a higher percentage of total return could come from dividends over the next decade.
Income stocks can provide diversification
During the post-pandemic recovery, income stocks demonstrated an ability to decouple from the lower-yielding growth stocks which had broadly driven markets, whenever the latter have come under pressure.
What Newton offers
STRICT ‘BUY AND SELL’ YIELD DISCIPLINE
The Newton Global Equity Income strategy has used the same consistent and disciplined approach to stock selection since inception in 2006.
MULTIDIMENSIONAL RESEARCH PLATFORM
Our team benefit from a toolkit like no other which combines fundamental security-specific research with other specialist insights including thematic, ESG-focused, quantitative and investigative research.
The Global Equity Income strategy is run by three highly experienced portfolio managers with more than 70 years of combined investment experience.
Find out more about our equity income strategies
Sustainable Global Equity Income strategy
A high-conviction global strategy which seeks to deliver an attractive long-term total return by harnessing the power of compounding and the insights of detailed environmental, social and governance (ESG) analysis.
Global Equity Income strategy
This strategy seeks to outperform the FTSE World Index by more than 2% per annum over rolling 5-year periods, by achieving income and capital growth from a portfolio comprised of companies that typically yield at least 25% greater than the FTSE W World index performance benchmark yield.
Meet the Global Equity Income team
James A Lydotes
Head of equity income and deputy chief investment officer, equity
Portfolio manager, global equity income
Portfolio manager, global equity income
If you are keen to learn more about our income capabilities, please get in touch.
Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.
Analysis of themes may vary depending on the type of security, investment rationale and investment strategy. Newton will make investment decisions that are not based on themes and may conclude that other attributes of an investment outweigh the thematic structure the security has been assigned to.
Newton manages a variety of investment strategies. Whether and how ESG considerations are assessed or integrated into Newton’s strategies depends on the asset classes and/or the particular strategy involved, as well as the research and investment approach of each Newton firm. ESG may not be considered for each individual investment and, where ESG is considered, other attributes of an investment may outweigh ESG considerations when making investment decisions.