Tap into the world's best dividend payers via Artemis Global Income

This applies to income investors as much as growth investors, so a good option could be Artemis Global Income Fund (GB00B5N99561). It only has 1.6 per cent of its assets in UK-listed companies, so it has little exposure to any share price declines these might experience. And for investors who already hold UK equity income funds or shares, Artemis Global Income provides diversity because it is unlikely to duplicate any of their UK holdings.

The fund aims for a good, steady and rising income, as well as prospects for capital gain, by investing in dividend-paying companies. It invests in medium-sized companies as well as larger ones – unlike some equity income funds that focus on the latter. This means Artemis Global Income has greater potential for yield and capital growth. It invests in around 90 shares out of a universe of about 5,000, meaning it has a select basket of companies its investment team think have better prospects. And they adapt to changing economic conditions by shifting its investments between high-yielding quality, cyclical and value stocks.

The fund's investment team also looks for income in underappreciated and undervalued areas.

The fund has underperformed MSCI AC World index over one, three and five years, and the Investment Association (IA) Global Equity Income sector average over one and three years. Its exposure to medium-sized companies, which account for around a third of its assets according to Morningstar, can make it more volatile than equity income funds focused on stable large-caps. And it is not among the top yielders in its sector, with a 12-month yield of 3.3 per cent. 

However, this under performance is largely because the fund did relatively badly in the fourth quarter of 2018 due to not being invested in the most defensive parts of markets. This affected its return for 2018 when it fell 12.5 per cent, and had a knock-on effect on its three- and five-year cumulative figures. But the fund usually outperforms its sector average, and often outperforms growth focused MSCI AC World index so has made strong long-term total returns. Between its launch in 2010 and 31 January this year, the fund has made a return of 167 per cent, against 142 per cent for MSCI AC World index and the IA Global Equity Income sector average of 114 per cent.

And so far this year performance has bounced back. The fund rallied by 5.7 per cent in January and outperformed its benchmark. The fund’s investment team says this is because the Federal Reserve, the US central bank, appears to be offering support to the global economy so the cyclical holdings bounced back strongly. Micron Technology (MU:NSQ), Western Digital (WDC:NSQ), Hess (HES:NYQ) and Synchrony (SYF:NYQ) were among the biggest detractors from the fund's returns in 2018, but in January they went up between 25 per cent and 35 per cent.

In the meantime, the fund continues to pay an attractive income. Its investment team expects the distribution to unit holders on 31 March to be approximately 10 per cent to 12 per cent higher than it was a year ago. This is partly due to sterling weakness, but also because of healthy dividend payments from the fund’s holdings.

So, if you want to tap into the best dividend-paying companies globally, get a good and growing income alongside long-term capital growth, and diversify your UK exposure, Artemis Global Income looks like a good option. Buy.

Source: Morningstar, as at 20 February 2019

Performance