DIY Investor Magazine
| August 2017
41
As more growth companies are paying out
dividends to shareholders, so investors can enjoy
an increasingly diversified portfolio that offers
income and the potential for growth.
Studies indicate that dividends generate a
significant proportion of the total returns from
equities over time.
Being committed to financing a dividend on a
continued basis means that companies have to
be well-financed and capable of producing a
sustained cash flow.
Past performance is not a guide to future
performance. The value of an investment and the
income from it can fall as well as rise and you may
The combination of reinvested income along
with capital growth has led to the long-term out
performance of higher dividend-paying companies
when compared to the wider equity market, as
shown in the chart below.
HIGHER DIVIDEND-PAYING COMPANIES HAVE
HISTORICALLY OUTPERFORMED THE MARKET
Source: Thomson Reuters Datastream, 31 May 1997 to 31 May 2017, total return indices, in sterling terms, rebased to 100. Past performance is not a guide to future performance. Yields
may vary and are not guaranteed.
There is also evidence that this makes the
management team more disciplined when it
comes to decision making. *United Nations, World
Population Ageing report, 2015
not get back the amount originally invested.
The information in this article does not qualify as an
investment recommendation.
QUESTIONING THE MANAGER – JOHN PATTULLO
HENDERSON DIVERSIFIED INCOME TRUST
