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Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

wind turbine in the clouds

Perspectives

European dividend strategies should outperform in 2021

Author

By Shan Gnanendran, EMEA Investment Strategist

January 26, 2021Posted InFixed Income, Investment Strategy and Equities

While dividend strategies have historically performed well during periods of market volatility, they underperformed in 2020, hindered by widespread dividend cancellations, reductions, and suspensions. We believe long-term income investors should revisit dividend strategies in 2021, focusing on sectors and companies with strong balance sheets and reliable cashflows that are able to sustain dividends and preferably also grow dividends. 

Rates staying lower for lower (highlighted in Outlook 2021 – Overcoming Financial Repression), presents investors with continued challenges in finding yield opportunities. In that context, Europe and the UK markets have some of the most attractive dividend stories globally, supported by the largest yield gaps to sovereign bonds. 

While there is now improved broad appeal in European dividend strategies, selectivity can further enhance the opportunity. Divergences exist at both the sector and company levels. Consumer staples, healthcare, utilities and technology dividends have remained relatively stable, while dividends in the financials, materials, and energy sector are showing upside potential following a challenging 2020. At the company level, we are focused on those with strong balance sheets and cashflows. 

Dividend grower strategies have proven their outperformance characteristics over the long-term. Since early 2003, dividend growers in Europe have provided annualised total returns of 6.9%, versus broader Europe which has returned only 4.2%. Furthermore, the long-term effects of compounding should also not be underestimated. Since 1995, reinvested dividends have accounted for over 50% of total returns in both Europe and the UK. 

Read European Strategy