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Why dividends are important in times of uncertainty

The importance of dividend yield in times of uncertainty

Dividend yields are important at the best of times, although in times of uncertainty they are even more important to investors. The market volatility is hard to weather but can create buying opportunities for astute investors. And when markets get negative, there are ways to continue to have a positive outcome from stocks. One way to do this is via dividends. 

Those stocks with a higher dividend yield can provide a buffer for investors as the dividend can act as a cushion to the share price. As dividends have already been locked in and paid for many companies for this financial year, they [dividends] are reasonably steady. eInvest Income Generator Fund (Managed Fund) ASX:EIGA investors will continue to be a beneficiary of this outcome for the remainder of the financial year. 

Also to note, those companies paying out a dividend, generally (although not always) also offer more robust balance sheets. It is in times of stress that companies with strong balances sheets come in handy for investors.

As you can see, dividend yields are important at all times of the economic cycle including in exogenous shock such as the one we are experiencing at the moment. eInvest Income Generator Fund (Managed Fund) ASX:EIGA is ‘true to label’ and continues to provide investors an ongoing monthly dividend. To find out more visit, the Fund page here.

Disclaimer: Please note that these are the views of Camilla Love, Managing Director, eInvest and is not financial advice.

To find out how to invest in our active ETFs, visit here. The product disclosure statement and more can be found at www.einvest.com.au