Despite the economic turbulence of the past 12 months, dividend payments showed “notable” resilience, according to investment group Evenlode.
Evenlode’s annual Global Dividend Sustainability Report 2021 found that nine out of its top ten companies maintained or increased their dividends through the pandemic.
The index, compiled by Ben Peters and Chris Elliot, portfolio managers of the TB Evenlode Global Income Fund, aims to identify ten companies that have “market-leading” positions in their industries, attractive economies, good cash flow, strong barriers to entry and good potential for medium to long term growth.
This year’s list includes Bureau Veritas; Cisco; Johnson & Johnson; Nestle; Paychex; Relx; Roche; Western Union; Unilever and Wolters Kluwer.
While the companies’ performance is re-assessed on a yearly basis, just one company, PepsiCo was swapped for Nestle this year despite an “extraordinarily challenging” 12 months. Overall, the group of companies experienced a 4.3% fall in dividend growth during 2020, compared with an 8.8% decline for companies within the MSCI World Index in 2020.
Ben Peters, portfolio manager, TB Evenlode Global Income Fund, said: “The last year has proven to be quite unlike any other experienced by dividend-seeking investors Our list of companies aiming to deliver sustainable and growing dividends was not immune, with one of the ten companies, Bureau Veritas, cancelling its dividend.”
However, Peters said the index had been powered on by the “big winners of the pandemic”, specifically large technology companies that have benefitted from the accelerated trends towards digitisation, remote working and collaboration, and home shopping.
Peters added: “The recent past has been a reminder that no approach to investing works perfectly over shorter time periods, however our list has delivered positive returns in absolute terms over the last year. With good corporate fundamentals, we believe the overall risk profile for the sustainable dividend list is lower than for the market. Over the long run, the stability of the sustainable dividend list continues to provide superior and lower volatility returns.”
According to Chris Elliot, co-manager of the TB Evenlode Global Income Fund: “The stability of the sustainable dividend list will continue to provide superior and lower volatility returns in the long run. One of the benefits of a sustainable income stream is that one is ‘paid to wait’ for the underlying economics of a good business to do their work.”
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