ADVERTORIAL FEATURE
Why dividends matter now more than ever
To say that last year did not unfold as investors expected would be an understatement . For the last decade , one of the most discussed themes in the corporate world has been the disruption of industries and business models by technological innovation . And yet , over the last 12 months , the world has experienced disruptions of a very different kind . As a result , 2022 may be remembered as a year where a significant number of long-held assumptions were challenged and maybe changed forever . The war in Ukraine has shaken politicians ’ and investors ’ expectations that disagreements between major countries can be settled by diplomacy – Europe ’ s energy and defence policies have been upended in the process . In financial markets , persistent inflation challenged central bank orthodoxy that inflation would be muted and transitory due to longterm structural issues . As a result , central banks have been forced to unwind easy monetary policies despite slowing growth , leading to higher interest rates , unthinkable at the start of last year . All of this happened at a time when Covid continued to linger , particularly in China . Against such a backdrop , many of the investments that investors hoped might help them preserve capital proved to be more volatile than expected : inflation linked bonds and REITS sold off as interest rates increased , precious metals were volatile , and real assets such as property were richly priced coming into 2022 . In our view , investors continue to underestimate the inflation defence offered by dividends through the cycle , especially in inflationary periods .
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