Investing in companies that are continuing to issue dividends is what individuals looking for stability and long-term value in an environment of economic and political uncertainty should do, a global funds management firm has recommended.
“Companies with consistent, well-managed dividend policies signal financial health, disciplined capital allocation and a commitment to returning value to shareholders, even during uncertain periods,” Epoch Investment Partners portfolio manager Kera Van Halen suggested.
“History shows that companies with stable and growing dividends tend to outperform companies that either don’t pay a dividend or have an inconsistent dividend policy resulting in cuts or reductions to dividends.”
To this end, Van Halen pointed out a portfolio containing a variety of dividend investing styles and other components of shareholder yield is likely to deliver optimal results.
She acknowledged this approach will lead to better overall results as it will provide better downside protection even if it does not necessarily generate the highest short-term returns.
“This strategy puts investors in a much stronger position to gain long-term risk-adjusted returns, allowing them to weather volatility and have a smoother ride through the market cycle,” she noted.
With regard to specific stocks, she nominated Coca-Cola Europacific Partners (CCEP) and Deutsche Telekom (DTE) as two that fit the aforementioned dividend profile.
“CCEP sustains its cash flow by maintaining efficient product distribution and having a differentiated pricing architecture, giving consumers the ability to buy its products at different price points,” she said.
“DTE, on the other hand, is a good example of how debt reduction can be used to increase equity holders’ claims on company cash flows.”
She recognised the forecast for income from global investments was positive with the remainder of 2025 in mind.
“Regardless of the somewhat uncertain global economic outlook due to the obvious geopolitical factors, we believe the dividend outlook is strong and the current rate environment and strength in cash flows give corporates no reason to abandon sound capital allocation practices,” she noted.
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