Break Free of Equity Income’s Dividend Handcuffs
Bryant Vancronkhite, co-head of our Special Global Equity team, explains the team’s view that too many equity investors have large allocations to equity income strategies, which generally have trailed the broad equity market.
Key takeaways
- During the 2009–2022 market cycle, when finding income in fixed income was difficult, many investors sought dividend-paying stocks and equity income strategies instead.
- With today’s higher interest rates, however, investors could shift from companies “handcuffed” by the requirement to pay high dividends to companies with more flexibility.
- Shifting into equities that don’t have dividend commitments may prove beneficial during periods when greater financial flexibility can potentially be highly rewarded.
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Insight
PM Spotlight: Wired for GrowthMike Smith is a senior portfolio manager and head of Allspring’s Growth Equity team. His team’s diversified approach focuses on stocks with robust, sustainable, and underappreciated growth across the market-cap spectrum.
Bryant VanCronkhite is a senior portfolio manager and co-head of Allspring’s Special Global Equity team. The team looks for market inefficiencies using a CPA’s knowledge and approach to analyzing financial statements.
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