Ride the Volatility With High-Dividend Stocks: Analyst
Dividend income is a very important part of an investment portfolio's total returns, especially amidst the current market volatility, said Matthew Sherwood, head of investment market research at Perpetual.
"Markets are very volatile, they are going sideways...so incomes are a very important part of total returns now, (for) investors in this sort of environment," Sherwood said on CNBC's Protect Your Wealth.
Choosing stocks that provide high dividend income tend to be the better performers, he said, adding this could also help investors protect themselves against the volatility.
"Not only is it a positive part of returns, but it can offset a lot of the volatility, and the stocks which are performing best in the markets, are the ones which tend to have the higher income certainty and the higher income growth."
In this regard, Sherwood went on to say Australian banks tend to be good income providers, as they're "very cash-rich businesses", and they do have good payout ratios.
He also recommended investing in global resource companies because of their link to the Asian growth story, even though it may be slowing down.
"The growth in Asia itself, even though it's coming down... (is still showing) very strong growth rates. (We're) expecting China to slow from 12 percent to 9 percent, India to slow from around 10 percent down to 8 percent," he noted.
"That's still very good growth and so overall we do think there is a compelling reason to be invested in quality, global resource companies, because they will continue to rise from China's industrialization."
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