Diversify your dividends with Artemis Global Income

However, in the third quarter of 2014 the top five UK dividend payers - Vodafone (VOD), Royal Dutch Shell (RDSA), HSBC (HSBA), BP (BP.) and National Grid (NG.) - accounted for around a third of total dividends, according to figures from Capita. The cuts in bank dividends in 2009 and BP's dividend cut in 2010 following an oil spill have shown how investors can face unexpected dividend cuts from what seem like large and solid companies. And Capita's latest Dividend Monitor Report also found that UK dividends showed almost no growth in the third quarter, which is traditionally a very big one for dividend payments.

By contrast, investors who have gone global in their search for income will now be sitting on healthy payouts, as the latest Global Dividend Index from Henderson Global Investors shows. The report says this year looks set to deliver the fastest growth in global dividends since 2011, and this time most of that growth will come from increases in companies' payouts, rather than from swings in currencies.

We include a number of global equity rncome funds in our IC Top 100 Funds, and one of our most recent additions is Artemis Global Income (GB00B5VLFH80), which we first tipped as a 'buy' in April (read the tip).

IC TIP RATING

Tip style: INCOME

Risk rating: HIGH

Timescale: LONG TERM

Artemis Global Income is the top performer in the Investment Management Association (IMA) Global Equity Income sector over three years and second best over one year. The fund has beaten its benchmark, MSCI AC World NR Index, over one and three years, and since launch in 2010.

The fund has an attractive yield of 4.24 per cent. It is better diversified than many rival global equity income funds, which are US biased. While it has around a third of its assets in this area, it also has significant exposure to Europe.

Its manager, Jacob de Tusch-Lec, seeks well-run, well-capitalised and growing companies that offer investors sustainable and rising dividends. He screens for free cash flow yield rather than purely looking at dividend yield, as this affords him more flexibility and allows him to look at mid-cap ideas, which may be able to grow their dividends over time. The fund has a value bias, with Mr De Tusch-Lec identifying stocks or sectors that are out of fashion but where he believes there may be a catalyst for change. Income comes from three sources: quality, value or cyclical yield plays, and the manager can vary the proportion of these as the business cycle evolves.

Artemis Global Income has fund research company FundCalibre's 'Elite' rating, which it awards to the funds that it believes have managers who can consistently deliver positive value over time. "Mr De Tusch-Lec's atypical approach, whereby he tries to avoid the more stereotypical dividend-paying stocks in favour of less well known names has proved to be a successful strategy thus far," comments FundCalibre. "His process is well defined, but allows some flexibility for him to express his views. His slightly atypical approach to identifying stocks, namely by avoiding mega-caps, has served the fund well and is a distinguishing feature. We think this is one of the strongest funds in the global equity income sector."

The fund was only launched in July 2010 so whether it can continue to do well over longer periods remains to be seen.

But it has a proven investment approach and capable manager, so for investors looking to diversify and benefit from rising steady income without sacrificing capital growth, Artemis Global Income still looks like a good option. Buy.

Source: Morningstar

PERFORMANCE VS INDEX

Source: Morningstar as at 6 November 2014

Top 10 holdings (as at 30 September 2014)

Geographic breakdown (as at 30 September 2014)