Ben Lofthouse, Head of Global Equity Income, provides an update on some of the dividend trends his team is seeing within the world of equity income.
The changes to social and working practices because of COVID-19 have benefited many companies – notably in the technology, pharmaceutical, utilities and telecommunication sectors – and the dividends they pay.
Economically sensitive areas of the market, such as leisure and airlines as well as oil and gas companies, have been most impacted by the slowdown, while regulators and central banks in some parts of the world have asked the banking sector to put a hold on paying dividends.
The uncertainty has left large parts of the market looking attractively valued from a historical perspective. A selective approach should allow for investment in leading companies that are able to fund their dividends while investing for the future.