Income Portfolio: Hunting For Yield
With interest rates set to remain lower for longer, we certainly continue to believe that the merits of holding a basket of high quality income stocks are compelling.
As is evidenced by the income portfolio’s constituents, we continue to believe that the merits of holding a basket of high quality income stocks are compelling, particularly given the current low interest rate environment. As has been the case for a while now, the difference between the average market dividend yield and cash rate is now at a record level, with the dividend yield from the FTSE 100 around two times the highest current 12-month term deposit.
This, in combination with our belief that economic growth will remain sub-par until the risks and rewards of a Brexit become clearer, gives us confidence that investor demand for ‘income’ stocks will remain elevated despite the recent asset/sector rotations. While there remain a number of key risk factors for financial markets globally (i.e. destabilisation of the EU and rising tensions between the US and China), we think there is enough underlying momentum to absorb these challenges.
Download your copy of the income report now to discover the full list of constituents in the Income portfolio.