Background

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

Four reasons

Dividend income payouts look sustainable

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

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

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

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

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

Contact us

If you are keen to learn more about our income capabilities, please get in touch.

 

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.

Newton Global Equity Income strategy – key investment risks

  • Objective/Performance Risk: There is no guarantee that the strategy will achieve its objectives.
  • Currency Risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.
  • Derivatives Risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the strategy can lose significantly more than the amount it has invested in derivatives.
  • Emerging Markets Risk: Emerging markets have additional risks due to less-developed market practices.
  • Concentration Risk: A fall in the value of a single investment may have a significant impact on the value of the strategy because it typically invests in a limited number of investments.
  • Liquidity Risk: The strategy may not always find another party willing to purchase an asset that the strategy wants to sell which could impact the strategy’s ability to sell the asset or to sell the asset at its current value.
  • High Yield Companies Risk: Companies with high-dividend rates are at a greater risk of being able to meet these payments and are more sensitive to interest rate risk.
  • Counterparty Risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.