UK Institutional Strategies Income strategies Global Equity Income

Background

After the pandemic-induced and broad-based dividend cuts and suspensions of 2020, we witnessed a strong global dividend comeback in 2021. But we believe there is more to come and see a number of reasons why income-paying stocks look attractive right now.

A look into dividend investing

Equity income portfolio manager Jon Bell talks to David Chambers, Academic Director at Cambridge Judge Business School, and Adam Reed, Professor of Finance at University of North Carolina Kenan-Flagler, about their academic research which challenges some of the misconceptions about equity-income investing over the long term.

Five reasons

Dividend income payouts look sustainable

Dividend income payouts look sustainable

Company balance sheets remain strong, and many have not relevered in 2021, meaning net debt-to-market capitalisations are at an historic low.

A positive shift in the macroeconomic environment

A positive shift in the macroeconomic environment

With mounting fears about higher inflation and interest rates, the valuation of growth stocks tends to comee under pressure and the relative attractiveness of income stocks increases.

Equity income looks attractive versus income alternatives

Equity income looks attractive versus income alternatives

Most fixed-income is currently offers historically low yields versus income-paying stocks, while the latter can also offer a measure of inflation protection in a rising interest-rate environment.

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 in 2022.

Income stocks can provide diversification

Income stocks can provide diversification

During the recovery, income stocks have demonstrated an ability to decouple from the lower-yielding growth stocks which had broadly driven markets, whenever the latter have come under pressure.

Find out more about our equity income strategies

Sustainable Global Equity Income strategy

A high-conviction strategy seeking to capture the growth premium associated with emerging markets.

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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.

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Our process

Disciplined long-term consistent approach to stock selection

  • The Newton Global Equity Income strategy has used the same consistent and disciplined approach since inception in 2006.
  • The team takes advantage of a strict ‘buy and sell’ yield discipline.
  • This enduring process prevents managers from ‘falling in love’ with stocks.

Engine room: supported by our 80 strong team of research analysts

  • The team benefits from the expertise of our industry, theme, ESG, quant and macro research analysts.
  • This ‘engine room’ of idea generation brings suitable stocks to the portfolio managers, who use their expertise in equity-income investing to debate and select those they deem to have the most attractive attributes.

Proof of long-term success

  • The process is tried and tested, which is why we are sticking with our time-honoured approach: a strict, disciplined process, backed by a strong team of analysts. The four portfolio managers complement the approach with deep equity income experience and expertise.

Meet the Global Equity Income team

  • Jon Bell
    Jon Bell

    Portfolio manager, global equity income

  • Robert Hay
    Robert Hay

    Portfolio manager, global equity income

  • Paul Flood
    Paul Flood

    Head of mixed assets investment

Resources

2021: better income outcomes?
Blog

Income stocks: economic recovery pays dividends

We discuss the outlook for income stocks.
01 October 2021
Global equity income
Solution

Global Equity Income

A global strategy with a proven track record, aiming to generate sustainable returns by harnessing equity income through a disciplined, repeatable process

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.

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.