Another unexpected area of dividend strength: Japan. While Japanese firms have not historically been big dividend payers, corporate culture has become more income-investor friendly in recent years, said Shoemake, but are not yet being picked up by Henderson’s index because they’re “coming from such a low dividend base.”
Dividend indices can fail to identify growing dividend opportunities and may be prone to investing in value traps and at-risk yields, said Shoemake.
“An active stock picking approach is absolutely critical; it’s important to seek out these companies that are growing their dividends,” Shoemake said. “There are risks out there, some sectors and companies are finding life very challenging, but there are many opportunities to go get income and money for our clients.”
With the global population trending older and a pronounced lack of yield in fixed-income investments, investors are going to have to find income across a variety of asset classes as they approach retirement, instead of leaning on a bond-heavy portfolio, said Shoemake.
“As an investor, where do you put your money to find income?” Shoemake asked. “Our view is that equity remains incredibly attractive as a means of income generation.”