Income diversification: attractive income prospects from overseas

Given the volatility of stock markets, Aberdeen believes dividend income remains an essential ingredient in total return.

While share price movements cannot be forecasted accurately, dividend payments do provide some certainty and reward for investors in quoted companies.

Aberdeen Asset Management believes international equity markets offer some increasingly attractive prospects for income, as well as capital growth opportunities. Traditionally, those investment trusts with global portfolios have not been associated with providing investors with income. However, Murray International Trust PLC demonstrates that it is possible to gain exposure to global equity markets, and obtain a growing level of income at the same time. Companies in Europe, Asia and Emerging Markets are distributing income to investors in varying degrees, and even in the US, corporates are beginning to realise the importance of dividends to shareholders.

With its mandate to invest globally, Murray International finds in 2007 that attractive investment opportunities remain plentiful. Dividends used to be extremely low priority for most Asian and Emerging Market companies, but many corporates in these regions are increasingly returning value to shareholders in the form of higher dividends. Today 5 percent dividend yields are common and sustainable double-digit dividend growth increasingly the norm. One example by sector is in oil and gas. Energy companies such as Brazil’s Petrobras,and China’s PetroChina, have posted record profits and returned them to shareholders in the form of high and even growing dividends. These companies compare very favourably to the UK’s BP and Shell, which offer much lower yields.

Bruce Stout, Manager of Murray International Trust PLC, comments: “The prospects for total returns from investment in quality companies worldwide look increasingly attractive given rising income distribution. Murray International is exposed to a diverse range of countries including those in emerging markets, many of whose economies show sustainable domestic growth because of prudent fiscal policies, large foreign exchange reserves and substantial consumer savings. Thanks to superior dividend growth, the outlook for income from top emerging market companies in particular looks very encouraging.”