COVER STORY The future of income digital economy . What does this say about the income-paying potential of the tech giants that currently dominate the global market ?
Heads in the cloud Django Davidson , a founding partner at Hosking Partners , says it is difficult to work out which disruptive tech names will emerge victorious over the long term and which ones will be disrupted themselves . “ You only need a couple of players to disrupt a market , but you ’ ve got a lot of the world ’ s biggest capital pots , the big tech companies , all competing in the same field ,” he explains . “ For example , Microsoft , Amazon , Alibaba and Baidu are all allocating huge amounts of capital to building out their cloud infrastructure at the moment .” Jacob de Tusch-Lec , manager of the Artemis Global Income fund , says that income investors shouldn ’ t disregard the tech sector completely , as something will have to replace the “ melting ice cubes ” of the tobacco and oil & gas sectors , both of which are likely to shrink in size over the next 20 years .
10
of the UK ’ s top-15 dividend payers in 2007 were still on the list in 2022
Some of the tech giants such as Microsoft and Apple are already paying enormous dividends in absolute terms . While both are yielding less than 1 %, both have a record of consistently increasing payouts . So should investors who need an income stream to last for the long term consider buying into these companies now and waiting for the yields to grow to a level practical for an income portfolio ? De Tusch-Lec says it is not that simple . “ Tech companies often lose their share price when they raise their dividends because it sends a signal to the market that management has run out of ideas for reinvesting the money and growth prospects have declined ,” he explains .
/ 10 / trustnet . com