In this video interview from FundCalibre, Tristan Purcell, co-manager of the Fidelity Global Dividend fund, shares the principles behind a dividend-focused investment strategy that aims to deliver both income and long-term capital growth. The discussion covers how to identify sustainable dividend payers, avoid dividend traps and assess risk through the lens of capital preservation.
The interview examines the importance of earnings resilience, valuation discipline and diversification across regions, sectors and business models. The conversation touches on current opportunities in global markets, the role of financial and industrial companies within portfolios and how investors can navigate changing interest rate and inflation environments while maintaining a long-term investment perspective.
Why you should listen to the interview: This interview offers valuable insights for those seeking a more disciplined approach to income investing.
“You’ll learn why dividend sustainability matters more than headline yields, how professional fund managers assess risk and where opportunities are emerging globally. It provides a practical framework for building a resilient portfolio for the long term.
This interview was recorded on 2 June 2026. Please note, answers are edited and condensed for clarity. To gain a fuller understanding and clearer context, please listen to the full interview.
Interview highlights:
The biggest mistake income investors make
“What we set out to achieve is a dividend-based total return. So what we mean by that is both the dividend and the capital growth have to be a part of the return that our clients get.
“We do aim to provide an attractive yield that’s substantially higher than the broader market, but we are not targeting yield over everything else.
“One of the most common mistakes you can make in income investing is allocating capital to the highest-yielding companies without giving due consideration to the sustainability of that distribution. Companies often have high dividend yields for a reason.
“The classic example is the mining sector 10 years ago, where you could get 8%, 9% or 10% dividend yields, only for those dividends to be cut in half.
“That leads into another key point for the fund, which is that we have a more conservative attitude to risk than most. You can define risk in lots of ways, but the bottom line for us is the potential for permanent capital loss, the peak-to-trough drawdown in a period of market stress.
“In those environments, we expect to lose significantly less than the broader market because it’s the compounded series of returns that matters. If you lose 50% of your capital, you don’t have to gain 50% to get back to breakeven, you’ve got to double to get back there.”
How to spot a dividend trap
“We are looking for companies that generate lots of cash now and can continue to do so, rather than hoping for cash to emerge at some point in the distant future.
“We are looking through the lens of earnings visibility, predictability and persistency, and the natural consequence of that is the company can afford the dividend commitment and predictably grow it every year.
“We’ve been able to grow the dividend from the fund every year since inception, including through 2020 during COVID. A lot of the companies I mentioned before, like the mining companies that have high yields, fall into that trap bucket.
They often have a dividend commitment from the past, when they were much more profitable than they are now, and they’re clinging onto it by paying out too much of the cash they generate as a dividend.
“If they’re paying out too much of their cash as a dividend, then there’s not enough left over to reinvest in the business, to buy new equipment, hire more people, develop more products and so on.
“When we’re trying to distinguish between the traps and the reliable payers, we look at the usual metrics, such as return on capital, margins, the level of debt compared to profits and so on. But we also take account of things that might not appear on the income statement.
“That includes pension liabilities, litigation risk and capital allocation, by which we mean where management are spending shareholders’ cash. The most time-consuming part is probably the qualitative side.
“Things like industry structure, what competitors might do over the next decade, whether new technology could disrupt the business model, and what management will do if the company gains market share.
“If you do that qualitative analysis correctly, it will surface risks to the predictability of earnings and dividends well before they show up in the numbers.”
The Ronseal test
“For those who weren’t watching UK television 20 years ago, the Ronseal slogan was: “It does what it says on the tin.”
“If you’re buying a global equity fund, you’re probably expecting global diversification across geopolitics, currencies, regulation and government policy.
“You probably don’t expect to buy a global fund and discover that 70-80% of your capital is invested in one country.
“The same is true for income investing. You might buy an income fund expecting it to do something different from the growth funds or passive trackers you already own.
“You probably don’t expect your income fund to own many of the same companies, particularly businesses that pay little or no dividend at all.
“The reason many income strategies own companies with very low yields, and many global strategies own so much in the US, is because the benchmarks they measure themselves against have become so concentrated.
“I see research in my inbox almost every day suggesting markets have only been this concentrated during periods like the dot-com bubble or the Nifty Fifty era.
“Japan is the second-largest country weight in the global index and that’s only around 5%, compared with roughly 70% in the US. Nvidia alone is also around 5%.
“For us, one of the key things we do is not begin with the benchmark and then move away from it. We start with a blank sheet of paper.
“To tie it back to the Ronseal test, the fund is called the Global Dividend fund. We think it’s important that we own companies across a range of geographies – hence the “global” and that everything in the portfolio pays a decent dividend, so investors are getting exactly what it says on the tin.”
Conclusion: The key message is that successful dividend investing is about quality, consistency and patience rather than simply pursuing the highest yields available.
Discover the true value of diversification and maintaining a long-term perspective, providing useful insights for anyone looking to build a portfolio capable of navigating changing market conditions.
You can watch the full video below or use this link: https://youtu.be/ZZbBKP0nIP0
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The writer’s views are their own and do not constitute financial advice.
This information should not be relied upon by retail clients or investment professionals. Reference to any particular investment does not constitute a recommendation to buy or sell the investment.
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