Solution focus
Newton's suite of income strategies seek to achieve income distributions and long-term capital growth. The philosophy behind the solutions in that the compounding of dividends is the dominant source of long-term real returns.
Why income stocks are attractive now
There are several reasons why we believe that income stocks could be an attractive option for investors in 2023:
1
Income prospects look attractive versus other income alternatives. Dividends may provide better inflation protection, and they are often more sustainable owing to many companies lowering payout ratios.
2
The potential for slower growth and lower capital returns from equity markets could make the income component of overall returns more significant.
3
Income stocks can provide diversification to any portfolio. Amid the global recovery from the pandemic, they have demonstrated an ability to decouple from growth stocks, tended to when the latter have come under pressure.
Value-orientated companies paying good dividend yields act differently to the rest of the market in a more inflationary environment
Dividend prospects to remain bright in 2023
Newton’s equity income team expects earnings and dividend growth to remain relatively healthy in companies with safe balance sheets and low payout ratios – those with a track record of successfully adapting to a changing world. These are often well-known brand names that have successfully transitioned over time, including through world wars, inflation and deflation.
Dividend Sustainability
Newton believes dividends look more sustainable today than in previous market downturns. This is because during the pandemic companies reduced payout ratios. Distributing a lower percentage of earnings to shareholders means dividend coverage looks high, creating a buffer.
Shift in the macro environment more favourable for income stocks
Dividends matter more in markets with higher inflation, volatility and lower returns. Income stocks have traditionally performed better relative to the broader equity market during periods of higher inflation, says Ilga Haubelt, equity income team leader at Newton.
Compounding of dividends is the dominant source of long-term returns
Impact of dividends, United States, 1900-201911
For illustrative purposes only.
Note: 1 Bespoke US stock index, Prof Robert Shiller, Yale University, August 2020
Source: Prof Robert Shiller, Yale University, August 2020.
Newton's Income Solutions
Newton offers a range of income solutions to meet investors’ unique mix of yield / risk appetite.
Source: evestment. 10 year data as aof 31 March 2023. Performance calculated as a total return gross of fees in USD. Fees and charges apply and can have a material impact on the performance of your investment.
WHY NEWTON INVESTMENT MANAGEMENT
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A global multi-specialist investment manager with a full spectrum of research-driven solutions.
Why Newton for Income Solutions
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Solution focus
Newton's suite of income strategies seek to achieve income distributions and long-term capital growth. The philosophy behind the solutions in that the compounding of dividends is the dominant source of long-term real returns.
Scale
£20.0 bn in income strategies across: Global, US, UK, Asian, Multi-Asset, Emerging and Infrastructure.*
Expertise recognised
Investing in income strategies for over 19 years, evidence of strong dividend growth and a strong track record across all income strategies.
Process
- Strict buy & sell discipline
- Focus on dividend sustainability
- Consideration of themes, fundamentals and ESG
- Valuation margin of safety
Experience
13 portfolio managers with average 22 years' investment experience and 16 years at Newton supported by a global research team with an average 14 years' investment experience and 8 years at firm.
Scale
Expertise recognised
Process
Experience
Solution focus
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*Source: Newton. 31 March 2023
Team
NEWTON EQUITY INCOME TEAM
13
Portfolio
managers1
managers1
22
Years' investment
experience2
experience2
16
Years
at firm2
at firm2
MANAGING 18% OF NEWTON AUM
1 Excludes UK Equity Income portfolio managers,
2Years’ investment experience and tenure at firm are team average numbers as at 31 March 2023 with years at firm relating to tenure at Newton and / or Mellon Investment Corporation. Source: Newton group of companies, 31 March 2023
Newton's Income Fund Range
The value of investments can fall. Investors may not get back the amount invested.
Resources
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Historical track record %
| YTD 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
| Newton Asian Equity Income strategy | 0.72 | 0.84 | 6.95 | 5.95 | 14.81 | 1.27 | 12.89 |
| FTSE Asia Pacific ex-Japan TR | -0.80 | -5.88 | -0.10 | 19.42 | 14.48 | -8.51 | 23.37 |
| Newton Global Equity Income strategy | 2.10 | 8.91 | -15.91 | 3.01 | 22.10 | 0.71 | 8.93 |
| FTSE World | 4.81 | 7.16 | 22.07 | 12.74 | 22.81 | -3.09 | 13.34 |
| Newton Global Infrastructure Dividend Focus Equity strategy | 4.94 | -7.39 | 16.29 | -12.56 | 21.22 | -6.03 | 17.48 |
| S&P Global Infrastructure | 3.94 | -0.17 | 11.87 | -5.76 | 26.99 | -9.50 | 20.13 |
| Newton Multi-Asset Income Strategy | 2.59 | -0.58 | 12.00 | 4.20 | 16.34 | -5.12 | 13.08 |
| Newton Income Stock Strategy | -0.32 | 4.62 | 31.02 | -1.83 | 29.30 | -7.94 | 16.11 |
| S&P 500 | 7.50 | -18.11 | 28.71 | 18.40 | 31.49 | -4.38 | 21.83 |
| Newton UK Income Strategy | 3.86 | 9.69 | 17.62 | -8.57 | 21.15 | -6.41 | 11.68 |
| FTSE All-Share | 3.08 | 0.34 | 18.32 | -9.82 | 19.17 | -9.47 | 13.10 |
Source: Newton, eVestment. Data as at 31 March 2023. Newton Global Equity Income strategy, Newton Asian Equity Income strategy, Newton UK Equity Income strategy and Newton Multi-Asset Income strategy performance calculated as a total return, income reinvested, gross of fees in GBP. Newton Global Infrastructure Dividend Focus Equity strategy and Newton Income Stock performance calculated as a total return, income reinvested, gross of fees in USD. Fees and charges apply and can have a material effect on the performance of your investment.
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Past performance is not a guide to future performance. The value of investments can fall. Investors may not get back the amount invested. Income from investments may vary and is not guaranteed.
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