The benefits of equity income are being missed by savers in this enduring period of record low interest rates of just 0.5 percent. According to Fidelity, around 60 percent of people still consider themselves as ‘savers’, but just a third of those are managing to save more than £1,000 a year. Therefore the case for equity income investing is strengthened in order for savers to gain a meaningful income and reinvesting dividends for long-term growth.
Tom Stevenson, Investment Director at Fidelity Worldwide Investments, comments: “Investing in dividend-paying stocks provides defensive qualities to a portfolio while the yields currently on offer are high by historical standards and compared to other assets. Equity income investing is also supported by historical evidence which suggests that dividends account for a large share of total returns. Consistent dividend-payers and growers also tend to be excellent stock market performers over time. All in all, this makes investing for equity income a compelling proposition in today’s market environment.”