Dividend income is expected to represent a much more important part of equity returns as compared to capital growth and market participants should build their portfolios and select their strategies accordingly, according to Fidelity Worldwide Investment global chief investment officer Dominic Rossi. Rossi said that the outlook for capital appreciation was restricted in several developed markets, and stock dividends will be a more serious part of total return as a result.
For that reason, Rossi said investors should keep their focus on income-generating stocks and strategies. He added that the past revealed that high-dividend stocks have a tendency to outperform other assets in periods of weak economic growth, which is exactly what we face now. For the past 20 years, investors have invested in the stock markets for capital growth, but now is the time to buy equities for income.
Source: Potential Trader
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