Have dividends lost their power to impress?
IA is reinstating yield criteria for equity income sectors but they remain widely unloved
The Investment Association has just reinstated the yield criteria for the UK equity income and global equity income sectors. It is a sign of better health for the two sectors, as companies once again have the confidence to make distributions to shareholders. However, the sector remains widely unloved. Have dividends lost their power to impress?
The inclusion of equity income in a portfolio used to be a no-brainer for investors. There were impressive statistics on how dividends had contributed to total return – the Barclays Equity Gilt Study, for example, showed that £100 invested in equities in 1899 would now be worth £2.7m; strip out dividends and that falls to under £20,000.
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