Chasing the dividend is a Strategy used by many investors who strive for a secure income in this way. However, when selecting the companies, the experts keep in mind that it must be clear that the dividend that the company pays is constant and growing.
The mutual fund industry offers a wide range of products for those who prefer to diversify across these products but with dividends as a reference. There are two categories within dividend funds: distribution funds and accumulation funds.
In the first that dividends Amounts collected from the vehicle are regularly delivered to the owners of the fund so that they can earn a regular income. The disadvantage of this format is that the individual has to pay taxes for collecting this rent. Depending on the fund, this income can be paid out monthly, quarterly or annually. For accumulation funds, the vehicle uses the dividends collected to buy new shares.
Isabel Sánchez Burgos, portfolio manager at Arquia Gestión, explains that “in the current environment of uncertainty, characterized by high inflation, recession threats and high volatility, finding income has become a necessity for investors”. The expert comments that while these types of funds “are not immune to stock market crashes, they generally offer better resistance to stock market swings and have a more defensive approach.”
In fact, his behavior in this complicated year is much more positive than in other categories. Just look at the performance of the S&P 500 and the S&P 500 Dividend Aristocrats.
The generic performed twice as badly as the other. The first falls 18%, while the second returns 9% this year. Within funds, some using this strategy are even posting double-digit returns in 2022.
Some of the Schroders funds invest in companies with good dividends and those too Strategic dividend fund from JP Morgan Investment Funds Europe they generate attractive returns in all markets in times of stock market losses. JP Morgan’s vehicle yields 12% per year, but offers an annualized return of 4.9% over the past decade.
Apart from the most profitable, the portfolio manager of Archie management Make your own selection. “We like funds that invest in quality companies with attractive dividend yields from a global perspective, but above all that are sustainable over the long term.”
From this point of view, they put on BNY Mellon Global Equity Income. This product invests in around 70 stocks worldwide with a dividend yield that is 25% higher than its reference index. Look for companies with solid fundamentals and a cheap valuation. According to data from Morningstar, it returns 3% per year and has a 9% return over the last 10 years. Pepsi, BlackRock, British American Tobacco, Cisco Systems and RELX are the main positions.
Another of your choices is Guinness Global Equity Income Fund – which, also globally and with a more value approach, invests in about 30 equally weighted positions, favoring companies with a return per dModerate living, but with growth prospects. The product has a more defensive profile. AbbVie, Arthur J. Gallagher, Johnson & Johnson, Aflac, and Deutsche Boerse are some of the values in which the vehicle invests.
Finally, DWS top dividend is another recommendation. This fund invests globally in large capitalization companies which, although more concentrated in Europe and the US, are expected to offer a dividend yield above the market average, where it is fundamental for the management team that this profitability is reliable , stable and sustainable.