Yield-Starved Investors Seek Dividend Income As Share Rally Falters

Global investors are hunting for reliable dividend payouts as they grapple with jittery equity markets and meagre bond yields, marking the revival of an investment style that has been shunned for the past two years. Dividend investing is back in vogue as lofty equity valuations, amid still sluggish economic growth, cap the potential for further share price gains while low bond yields limit the attraction of fixed-income assets.

The high-dividend index is comprised of companies which offer higher-than-average dividend yields and whose balance sheet and earnings can sustain future payouts. They include U.S. pharmaceutical and consumer goods company Johnson & Johnson, Swiss food maker Nestle and oil major Chevron. "The focus should be on capital preservation," said Andrew Lapthorne, head of quantitative equity research at Societe Generale. "You're not really looking for upside in the stock, you're looking for stocks which do best if there is a market wobble. For that, you always want to minimise your balance sheet risk and dividend payments that are covered by profitability."

Source: Reuters

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