07 Sep 2023
As odd as it might sound, forward-thinking investors may not necessarily choose an income strategy for income’s sake. Instead, they may focus on total return: potentially growing both income and capital over the long term.
The investment environment has changed. Although income has always made a meaningful contribution to total returns, its contribution has become particularly relevant in an uncertain environment of above-trend inflation and higher interest rates.
In this new environment, it’s not about looking for the companies that pay the highest dividends; it’s about finding the companies that can deliver a sustainable and growing income that will ultimately help fuel long-term total returns.
Income but not as we know it
To many investors, income investment might suggest mature, declining industries and poor-quality companies: a strategy in which the potential for tomorrow’s capital growth is sacrificed for today’s yield.
However, a long-term income strategy focuses on companies with the ability – or the potential – to distribute a sustainable income to their shareholders. Moreover, it offers a large and expanding investment universe of high-quality investment opportunities.
A proven, consistent approach with the potential to deliver
abrdn has an unparalleled[1] heritage in income investing, with a strong focus on total return. We have managed successful income mandates for well over a century. In fact, 2023 marks the 150th anniversary of the Dunedin Income Growth Investment Trust and the centenary of the Murray Income Trust.
abrdn’s income strategies are run by established managers with proven track records. They have a consistent, disciplined approach to company analysis, stock selection, and portfolio construction. Our investment teams are backed by robust infrastructure that supports them in delivering the outcomes that our clients expect.
A world of choice
At a time when investors must take an increasingly global view, abrdn offers a world of choice. We manage regional income mandates – including European, UK, and emerging market income strategies – and global income mandates, including global dividend and global infrastructure strategies.
Although the managers of abrdn’s income strategies have their own investment approach, they all believe in the power of income to deliver strong total returns. They focus on identifying attractively valued, cash-generative companies with pricing power that will help them to increase their payouts over time.
Income or growth? Discover the potential of both
In challenging markets, investors can benefit from taking a long-term, total return approach that focuses on growing both income and capital. Designed to be used as core components within your clients’ portfolios, abrdn’s income strategies are balanced to deliver through the investment cycle and to achieve the long-term outcomes you expect.
Perhaps it’s time to think again about income, its role within a portfolio, and – most importantly – its long-term contribution to the bottom line.
Risk warning
The value of investments, and the income from them, can go down as well as up and an investor may get back less than the amount invested. Past performance is not a guide to future results.