Discover Income Solutions at Newton Investment Management
Why income stocks are attractive now
There are several reasons why we believe that income stocks could be an attractive option for investors in 2022:
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
Income stocks remain cheap compared to the overall market and growth stocks, despite the strong comeback in dividends that we have seen in 2021. Elevated valuations and more nomalised earnings expectations should move the market focus back to dividends: a higher percentage of total return could come from dividends.
3
Income stocks can provide diversification to any portfolio. Amid the global recovery from the pandemic, they have demonstrated an ability to decouple from the growth stocks, whenever 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
$12+ billion in
100+ clients worldwide
100+ clients worldwide
100+ clients worldwide
100+ clients worldwide
Dividend prospects to remain bright in 2022
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
Compounding of dividends is the dominant source of long-term returns
Impact dividends, United States, 1900-2019
For illustrative purposes only.
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 of December 31 2021. 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.Â
Brought to you by Newton Investment Management
A global multi-specialist investment manager with a full spectrum of research-driven solutions.
Why Newton for Income Solutions
focus
Solution focus
Newton's suite of sustainable strategies seek both positive investment returns and positive societal outcomes.
Team
NEWTON EQUITY INCOME TEAM
managers1
experience2
at firm2
MANAGING 18% OF NEWTON AUM
Newton's Income Fund Range
The value of investments can fall. Investors may not get back the amount invested.
Resources
Infrastructure income – key stats and drivers
Asian Income – key stats and drivers
Income investing for the times we are living in
Play it safe, buy cheaply?
Academic support for equity income
Avoiding the crowd to find dividends in Asia
Is 2022 the year for income stocks?
Dividend recovery boon for income investing
Historical track record %
2021 | 2020 | 2019 | 2018 | 2017 | |
Newton Global Equity Income strategy | 15.91 | 3.01 | 22.1 | 0.71 | 8.93 |
FTSE World | 22.07 | 12.74 | 22.79 | -3.09 | 13.34 |
Newton Global Infrastructure Dividend Focus Equity* strategy | 16.29 | -12.56 | 21.22 | -6.03 | 17.48 |
S&P Global Infrastructure | 11.05 | -6.49 | 25.75 | -10.37 | 19.07 |
Newton Asian Equity Income strategy | 6.95 | 5.95 | 14.81 | 1.27 | 12.89 |
FTSE Asia Pacific ex-Japan TR | -0.1 | 19.42 | 14.48 | -8.51 | 23.37 |
Newton US Equity Income strategy | 17.63 | -8.57 | 21.15 | -6.41 | 11.68 |
FTSE All-Share | 18.32 | -9.82 | 19.17 | -9.47 | 13.1 |
Newton US Equity Income RP | 30.85 | -1.56 | 29.65 | -7.84 | 16.33 |
S&P 500 | 28.71 | 18.4 | 31.46 | -7.84 | 16.33 |
Newton Multi-Asset Income Strategy | 11.53 | 4.07 | 15.61 | -6.11 | 12.12 |
MSCI AC World | 10.73 | 10.53 | 15.46 | -1.98 | 8.65 |
These synthetic returns were derived by synthetically removing the impact of hedging instruments from an actual Global Infrastructure Dividend Focus Equity mandate hedged to US Dollars. This unhedged performance stream includes the performance of client cash and investments managed in the Global Infrastructure Dividend Focus Equity strategy to present the performance results of what an unhedged mandate could have achieved over this time period.
Source: Newton 31 December 2021. 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 US Equity Income representative portfolio 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.
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. 945251
