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Interest winter! Dividend spring – Time for dividends 2.0

In this environment, where bonds tend to offer a less than a respectable yield, dividend equities and strategies can also be a worthwhile alternative. They provide investors with regular and relatively predictable returns. In this respect, over time, dividends represent a significant contribution to value and should be taken into account in investment strategies. However, a look behind the scenes is also advisable here. A high dividend is not necessarily a key quality feature of a share. Investors who are only interested in the dividend return can sometimes experience unpleasant surprises. For example, dividend continuity is much more suitable as an investment criterion for sustainably successful investments than a focused view of the dividend return. What's more, dividends should not be regarded as an absolute indicator, but rather as part of an overall view of valuation, sustainability, market positioning, and corporate strategy. A combination of factors that make up a successful dividend strategy. What are the characteristics of the MainFirst Global Dividend Stars?

The team around Fund Manager Thomas Meier follows a two-pronged approach. On the one hand, the fund invests in conservative, defensive core investments; on the other hand, there is a significant addition of high-growth, small and medium-sized capitalised companies (e.g. family-run, medium-sized companies, hidden champions). The focus here is on sub-sectors that the fund management believes should be revalued. Fund Manager, Meier, focuses primarily on the valuation discrepancy between value and growth stocks, as well as Europe and the US, in particular as many investors have focused one-sidedly on so-called growth stocks in recent years. As a result, this glaring valuation difference could still hold considerable value potential. An aspect to which investors should pay even more attention.  The portfolio is certainly concentrated, with the 10 largest positions currently accounting for more than a third of the volume. On the sector side, Meier and his team are currently focusing on industrial, financial and non-basic consumer goods, with a regional emphasis on Germany and the USA.

All in all, the current situation (a continuing low interest rate environment yet a stabilizing economy, in combination with the valuation discrepancy between value and growth stocks) paints a picture that makes the MainFirst Global Dividend Stars a very attractive investment opportunity.

You can find out more about this topic in Thomas Meier's lecture at this year's Fonds Kongress in Vienna on Wednesday, 26 February 2020 in Room 2 at 11:10 am. 

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