What does the future hold for equity income?

JPM's James Glover says dividend yields will play a more significant role in driving real total returns than they have over the past 25 years.

It should come as no surprise that companies that have well covered dividends have historically performed well over the long term. Unlike other valuation metrics it is difficult for a company to consistently pay a dividend unless it has the cash flow to cover said dividend. From a shareholders perspective, it can be a better use of cash on the balance sheet than other possible uses for the money that may not be as value enhancing, such as mergers and acquisitions, and it is unusual for a management to cut a dividend, given the poor signal it sends to investors. The investment case ...