Recent figures show that underlying dividend growth is slowing. Are fund managers worried about this? It appears not.
As with falling Chinese GDP in recent years, they point out that global dividend growth has come down from a high level, and so the latest figure of 4.6% growth is a “perfectly good outcome”, according to one manager (see pages 16-18).
In the past decade, dividend-paying shares have become a more popular source of income, albeit with complexities, drawbacks and risks not associated with bonds and savings accounts.
A high dividend yield, while seemingly a good thing, can be a sign of distress, and so it’s important to understand how the dividend is funded.
Fortunately, on a global basis, there are also new opportunities. The equity income sector appears to be highly focused on Japan, where companies have modernised their corporate governance and shareholder relations. This trend should pay dividends for everyone.
Nick Fitzpatrick, group editor, Funds Europe
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