Markets are stretched. Recent market gyrations (including volatility in Bitcoin) and hot momentum stocks (such as the FAANGs) underline the risks involved in growth/momentum strategies that disregard valuation.
The beauty of income investing, done properly, is that there is always an anchor that holds in the storms. That anchor is cashflow, which underpins dividends. This is relevant for UK income investing because the market's obsession with growth/momentum has resulted in a divergence in valuations between stocks and sectors. This ultimately creates the raw material for performance as solid cash-generative businesses have tended to become overlooked and undervalued. We have identified several attractively valued sectors that offer improving cashflows and dividends. UK financials have t...
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