Looking outside the box for income

In the UK, the contribution of reinvested dividends to total return is over 60%, highlighting how pivotal a role dividends play in total shareholder returns.

Total return in equities is evidently a mix of both capital growth and income, and investors can choose to get more from income and less from capital growth, or vice versa. The traditionally held view is the former approach is lower risk as income is deemed to be more of a certainty. The foundations of this long-held opinion are therefore shaken to their core when a major income constituent such as BP disappoints – as it has unavoidably done in the wake of the Deepwater Horizon disaster – however the basic premise remains sound. Hence, the mainstay of many income portfolios following ...