Why principles of dividend investing need rethink

INCOME

Kevin Troup, manager of the SLI Global Equity Income fund, reveals how a deteriorating income outlook for the telecoms and utilities industries means investors need to shift their approach when trying to capture income.

A crash course in income investing would quickly throw up a reference to large, established companies offering the highest dividend payouts. On a sector basis, this certainly appears to be the case with defensive sectors such as telecoms and utilities again expected to provide the highest average dividend yield in 2012. However, there are growing reasons to question the over-reliance on these traditional income stalwarts, with an approach based on the quality and sustainability of dividends likely to deliver stronger returns over the longer term. Challenges The challenges facing ...