#581106
Postby OhNoNotimAgain » April 6th, 2023, 11:00 am
In real terms all prices, commodities, manufactured goods and services tend to decline because of competition so margins are always under pressure.
Unless companies can increase volumes cashflow, and hence dividends, will suffer.
But, one company's increase in volume, and probably market share is another company's loss of that market so, in aggregate, all companies cannot increase volume unless they invent a new product. But that too will have negative impacts on the products rendered obsolete.
In essence then what I am saying is that it is unreasonable to expect ever rising income investing across the whole market, in real terms, unless companies expand overseas. Which, fortunately, UK companies have been very good at. As we all know trying to pick stocks that beat the market in income terms is difficult and is probably not worth the effort.
Only 200 stocks pay dividends in the UK markets and the top 15 account for 60% of the income.
One other point. Anyone looking at distributions from collectives especially from ITs, needs to be aware of the lag from the fund receiving them to then paying them out. At least OEICS distribute as soon as they can.
The huge advantage of equities over fixed income is that the income is inflation proofed to some extent.