Why You Should Invest in Dividend Paying Shares

By investing over the long term in income-generating equities with attractive prospects, investors should enjoy real growth in income together with long-term capital growth

BNY Mellon 21 July, 2014 | 9:43AM
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This article is part of Morningstar's Guide to Investing for Income

In recent times, income levels on many assets have fallen, owing principally to collapsing interest rates and falling government bond yields. Elsewhere we observe that many sources of income have been shown to be of questionable provenance. In this environment we believe that an ungeared, transparent and understandable income yield, allied to the prospect of longer-term capital growth, has appeal as a core component of a sensible investment strategy.

By investing over the long term in income-generating equities with attractive prospects, we believe investors should enjoy real growth in income together with long-term capital growth. A focus upon companies that pay a regular cash dividend may lead investors to hold a portiflio that is comprised of companies that are reasonably valued, that generate cash flow in a sustainable manner, that are sensibly managed and financed and that allocate a shareholders’ funds with a view to long=term returns on capital.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

BNY Mellon  is a leading investment management and investment services company, uniquely focused to help clients manage and move their financial assets