According to fund manager ING Investment Management, two-thirds of institutional investors believe that dividends will become even more important for total returns on equity investments.
ING IM said that for investors with a time horizon of five years or more, more than 70% of the total returns on equity investments come from dividend yield and dividend growth, with capital returns accounting for the remaining returns. According to the manager, 24% of investors have dramatically increased their exposure to high dividend investing in the last two years, with another 46% increasing their weighting slightly. 53% expect institutional investors to increase their exposure to high dividend investment strategies in the next two years.
ING IM head of equity value, Nicolas Simar, said: “Dividend investing is the preferred strategy for “value” investors. Studies indicate that value stocks on average earn higher returns on a risk-adjusted basis, and that a dividend-based value approach brings an additional quality bias and delivers a more attractive risk-return profile in the form of lower volatility and defensive characteristics.”