Over the past year

In 2020, some companies halted dividend payments as global growth faltered with the onset of the global public health crisis. As illustrated in the chart², dividend stocks have underperformed growth stocks for most of the year, but we began to see a rotation on positive development of vaccine efficacy³.

2. Source: Bloomberg, J.P. Morgan Asset Management, as of 30.09.2021. All indices in local currency: MSCI World Index, MSCI World High Dividend Index, MSCI Europe High Dividend Index, MSCI Emerging Market High Dividend Index, S&P 500 Index. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not indicative of current or future results.

Currently, dividend stocks are still trading at a discount when compared to the broad markets, or in particular, relative to growth stocks. As illustrated in the chart⁴, the return dispersion within markets remains large, for example, between the MSCI World Index (blue) and the MSCI World High Dividend (dotted black). And we have been positioned to benefit from a shift in performance patterns.

4. Source: Bloomberg, J.P. Morgan Asset Management, as of 30.09.2021. All indices in local currency: MSCI World Index, MSCI World High Dividend Index, MSCI Europe High Dividend Index, MSCI Emerging Market High Dividend Index, S&P 500 Index. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not indicative of current or future results.

Dividend stocks from around the world

The global economic recovery continues and the bright spots are currently the US and Europe. This year, some US and European companies have also resumed dividend payouts.

The fundamental picture for global dividends look cyclically attractive as economies around the world reopen and pent-up consumer demand is materialising, supporting corporate earnings.

In the US, profit margins have remained resilient⁵. While supply chain disruptions continue to drag on some economic activities and support above-trend inflation, companies that seek to address these challenges through a combination of higher price and a focus on productivity should support margins through 2022.

Despite policy normalisation by select central banks including the US Federal Reserve, which is set to begin pulling back the stimulus provided, interest rates and government bond yields have remained low.

Quality equities could offer an attractive opportunities of dividend income, as illustrated in the chart⁶ below.

Number of companies yielding greater than 3% by region⁶

6. Source: FactSet, MSCI, J.P. Morgan Asset Management. EM refers to emerging markets. Past performance is not a reliable indicator of current and future results. Yield is not guaranteed. Positive yield does not imply positive return. Provided for information only to illustrate macro trends, not to be construed as research or investment advice. Investments involve risks. Not all investments are suitable for all investors. Data reflect most recently available as of 30.09.2021.

JPMorgan Multi Income Fund

Conclusion
 

Strong momentum of the global economic recovery continues to support corporate earnings. In an overall portfolio¹, quality dividend-paying companies with relatively attractive valuations and sound fundamentals may help diversify risks and achieve consistent income amid uncertain markets.

Provided for information only based on market conditions as of date of publication, not to be construed as investment recommendation or advice.

1. For illustrative purposes only based on current market conditions, subject to change from time to time. Not all investments are suitable for all investors. Exact allocation of portfolio depends on each individual’s circumstance and market conditions.
3. Source: “Pfizer and Biontech announce vaccine candidate against COVID-19 achieved success in first interim analysis from Phase 3 study”, Pfizer, 09.11.2020.
5. Source: J.P. Morgan Asset Management, “U.S. 3Q 2021 earnings: supply pains”, 09.11.2021.

Investment involves risk. Not all investments are suitable for all investors. Past performance is not a reliable indicator of current or future results. Please refer to the offering document(s) for details, including the risk factors. Investors should consult professional advice before investing. Investments are not similar to or comparable with fixed deposits. The opinions and views expressed here are as of the date of this publication, which are subject to change and are not to be taken as or construed as investment advice. Estimates, assumptions and projections are provided for information only and may or may not come to pass. This document has not been reviewed by the SFC. Issued by JPMorgan Funds (Asia) Limited.