![]() ![]() There is evidence of dividends’ steady but meaningful return profile throughout the last century the average contribution to 10-year returns has been 40%, (although this decreased in recent decades as companies prioritised putting capital back into businesses and share buybacks over returning it to shareholders). The road to resilience begins with dividendsĬonventional wisdom suggests that value stocks and dividend payers appear well-suited to the current environment, given their heavy reliance on dividend reinvestment for return generation.ĭividends have typically been the more stable component of equity returns over the years, relative to earnings growth and multiple expansion, comparable to the fabled tortoise against the hare.ĭividend-focused strategies can complement growth-focused strategies Such solutions will require resilience in uncertain markets, an ability to select from a broad range of sectors, and long-term real return generation. This has given way to rising volatility and reduced earnings growth visibility, putting strain on widely held growth strategies.Īs investors contemplate which equity strategies might prevail, finding a complement to growth strategies will be key to achieving long-term investment objectives – even if growth comes back. With global economic growth expected to slow significantly in 2023 and beyond, the path towards policy normalisation could still mean further interest rate rises. Consequently, the traditional growth/value divide feels less relevant today. ![]() We are moving into a new environment – from deflation to inflation, quantitative easing to quantitative tightening, globalisation to de-globalisation, and affordability to cost of living crisis – and against that backdrop, we have seen equity market leadership change and valuations compress. Inflation continues to reach multi-decade highs and has become more widespread than many economists ever imagined. However, the macroeconomic forces that drove these stellar equity returns are being upended. Unsurprisingly, global growth strategies have largely overshadowed global dividend strategies. For global equity investors, investing in growth strategies proved a wise move over the past decade, particularly with the stellar performance of many technology companies.
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