Why equity income?
We believe a focus on dividends is valuable for all long-term investors, as dividends form an essential component of a stock’s return. Payment of a dividend can be evidence of a number of positive features of a company, such as cash-flow generation and alignment of company and shareholder interests. It also means that cash is less likely to remain idle on the balance sheet, or to be used for non-core expenditures.
A focus upon equity income also provides a level of protection during economic downturns. Once a company has started to pay a dividend, it is likely to strive to maintain payments even when corporate earnings fall, thereby lessening the loss to shareholders from a decline in share price. In combination with yield discipline, we believe these factors should help us to achieve attractive long-term returns for our investors in the strategy.
We believe that by gaining perspective on the investment landscape as a whole, investors should be well-equipped to compare risks and opportunities on a single, holistic basis. As economies of different countries become increasingly intertwined through trade and multi-national corporations, we think that a global mindset is both logical and invaluable for long-term investment. The ability to construct portfolios using the broadest possible investment universe and a transparent approach to balancing risks and rewards is, we believe, a powerful aspect of our equity income strategies.