Income - Where to find the best dividends
Key Points:
- Income yield and dividend yield are basically dead
- Dividend investors realise they need to look to a long term strategy and forgo dividends in the short-term.
- Companies face complex decisions regarding dividends and are caught between supporting their balance sheet, returning cash to investors, or undertaking potentially risky ventures that don’t always pan out.
While the COVID-19 crisis has affected multiple areas of the economy, one noticeable impact has been the dividend payments made on Australian shares. With Westpac, Bank of Queensland, and Qantas deferring their dividend, along with Insurance Australia Group outlining the limited scope to make a September dividend payment, it may cause alarm for those relying on the income component of their investments.
This week on From the Bunker, we discussed Where to Find the Best Dividends.
What we found was given that most asset classes have been affected; there is no silver bullet. Just as our fellow Australians have been stood down or made unemployed during this crisis, some dividend investors may need to forgo their income and the likelihood of dividends for some time.
In this week’s From the Bunker, we were joined by special guest, Nathan Bell, Head of Research and Portfolio Management at Intelligent Investor. Part of Nathan’s role is to oversee and manage our listed Australian Equity Income fund (ASX:INIF), so it was an excellent opportunity to find out his views on income.
Watch the recording below:
Frequently Asked Questions about this Article…
Income yield and dividend yield are considered 'basically dead' because many companies are deferring or limiting dividend payments due to economic uncertainties, especially highlighted during the COVID-19 crisis.
Dividend investors should focus on a long-term strategy and be prepared to forgo dividends in the short-term, as companies may prioritize supporting their balance sheets over immediate cash returns to investors.
The COVID-19 crisis has led to several Australian companies, such as Westpac, Bank of Queensland, and Qantas, deferring their dividend payments, causing concern for investors relying on dividend income.
Companies face the challenge of balancing the need to support their balance sheets, returning cash to investors, and undertaking potentially risky ventures that may not always succeed.
There is no 'silver bullet' for finding the best dividends during economic downturns, as most asset classes are affected, and investors may need to adjust their expectations and strategies.
Nathan Bell is the Head of Research and Portfolio Management at Intelligent Investor, overseeing the listed Australian Equity Income fund (ASX:INIF), and provides insights on income strategies during challenging times.
The 'From the Bunker' discussion emphasized the importance of a long-term investment strategy and the need for dividend investors to adapt to the current economic climate, potentially foregoing short-term income.
Investors can stay informed by engaging with expert discussions, such as 'From the Bunker,' and following insights from industry leaders like Nathan Bell to navigate dividend opportunities during economic challenges.