Quilter Investors has raised its forecasted income for the Monthly Income portfolio range.
The portfolios, managed by Helen Bradshaw and CJ Cowan, are now expected to pay between 3.1p and 3.5p per share for the Monthly Income Portfolio, and 3p to 3.4p per share for the Monthly Income and Growth Portfolio.
Bradshaw said the company continues to see the UK market being a “key driver” of the portfolio’s income.
Quilter Investors income estimates (for the fiscal year to 30 April 2023)
Estimated income per share 2022-23
Estimated income per share 2021-22
Actual income per share 2021-22
Quilter Investors Monthly Income Portfolio
3.1p to 3.5p
3.0p to 3.4p
Quilter Investors Monthly Income and Growth Portfolio
3.0p to 3.4p
2.9p to 3.3p
Source: Quilter Investors. All income figures quoted in pence per share, based on the U1 (GBP) Income share class of the Quilters Investors Monthly Income and the Quilters Investors Monthly Income and Growth portfolios.
“The economic backdrop of elevated commodity prices and rising interest rates should provide some support for more value-oriented sectors such as energy, materials and financials – all key components of the UK market,” she said.
“Whether or not the political environment and windfall taxes puts a dampener on things remains to be seen, but we think the outlook for these companies remains bright.”
Bradshaw added that there are risks to the outlook for dividends, however.
“Firstly, companies will need to effectively manage inflationary pressures to avoid profits and margins coming under pressure.
“We’re also mindful of the threat posed by renewed coronavirus outbreaks in China, which could further clog up global supply chains, adding to inflationary pressures at a time when input and materials costs are already elevated.”
Bradshaw said there is also the “looming shadow” of a potential recession, especially in Europe.
The risk remains, she said, that in battling inflation, the central banks raise rates too far and too fast, which impacts corporate earnings, ultimately suppressing dividends.
“However, we think the environment will continue to favour dividend-paying stocks as they’re inherently less vulnerable to rising rates than their ‘growth’ stock counterparts.
“That said, the outlook is uncertain at best and it remains as important as ever to avoid chasing yield.”