How Much Are You Willing to Pay for Income?

BlackRock Global Income team Stuart Reeve and Andrew Wheatley-Hubbard put a price on high-quality, reliable, income-paying stocks

Emma Wall 24 April, 2017 | 10:54AM

“This is not income at any price,” says Stuart Reeve, manager of the BlackRock Global Income fund of his investment philosophy. “But valuation is one of the last steps in our process, not the first. We’re looking for great businesses at a fair price. Great quality businesses are often not cheap.”

Instead, Reeve and his co-manager Andrew Wheatley-Hubbard prioritise cash flows, evaluating global stock markets the way that bond investors do – looking for stocks which they consider to be high quality, or the equity equivalent of an investment grade bond.

These are not bond proxies the team is quick to add – the much-maligned stocks which offer little growth but investors are willing to pay above the asking price for in return for a steady income flow. Investment grade equities are “cash generative, reinvest in their businesses, have growth prospects and good cash flows” says Reeve. “We are looking to capture a profit stream as companies grow.”

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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.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BlackRock Global Income A Acc180.60 GBP0.33
British American Tobacco PLC2,759.00 GBP0.00
Johnson & Johnson133.15 USD0.00
KONE Oyj Class B50.84 EUR0.00
Rogers Communications Inc Class B58.59 CAD0.00

About Author

Emma Wall  is former Senior International Editor for Morningstar

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