However, experts have warned that a high return can often be a sign that the stock market
doesn’t expect the payout to be sustained and thinks a drop in dividends is on the horizon.
“Forecast returns in the order of 10% may make investors a little wary, given the shocking record of companies that previously expected to generate such exceptional returns,” said Mold.
Nick Train of the Lindsell Train fund group pointed to consumer goods giant Unilever, which is only denied “dividend aristocrat” status by currency fluctuations. The company has increased its dividend for more than 50 years, but its payouts, reported in euros since 2000, declined in pounds sterling in 2014 and 2015.
Mr Train said the record was reflected in the performance of the company’s shares, which, excluding dividends, had increased 16-fold since 1988. mentioned.
Ken Wotton of investment manager Gresham House highlighted alternative investment market firm Bioventix. The research and development company went public in 2014 and has increased its dividend every year since. The shares have grown more than 11-fold during this period.
Mr Wotton said companies capable of steadily increasing their dividends are attractive investments.
“They are profitable and that fundamentally underpins investor returns,” he said. “It is a sign of a mature and financially disciplined company if it pays a dividend. This indicates that management is focused on shareholder value.
Mr Wotton said the company’s dividends alone, even without this increase in the share price, paid off his initial investment.