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2016 Outlook

Sustainable income  |  Dividends  |  January 2016
Want Dividends? Go Global

Look to Overseas Markets for Dividend Payers and Growers

“For companies that are growing their dividends, that growth should overwhelm the interest rate cycle, not only over the longer term but the medium term. The trick is making sure you are invested in the dividend growers.”

James B. Lovelace Portfolio Manager Los Angeles office 34 years of experience (as of 12/31/15)

Many Non-U.S. Markets Offer Relatively Attractive Dividend Yields

Sources: FactSet, Capital Group. Yields calculated based on MSCI country indexes. Data as of December 31, 2015.

In many ways, globalization has made the world a much smaller place — but for dividend-focused investors, adopting a global perspective expands the possibilities. Today, companies and industries are increasingly global in terms of their markets, revenue, competitors and means of production. Likewise, the investment universe for blue chip, high-dividend equities is global.

The map shows that the current dividend yields of major equity indexes in Canada, Australia, the U.K., Singapore and Germany compare favorably with the yield in the U.S.

Of course, not all dividend opportunities are equal. Investors should look for companies with attractive competitive positions in their markets that have the ability to sustain dividends. What’s more, with the Fed raising rates in the U.S., investors may want to focus on companies that can grow their dividends, as they stand to fare better in a rising rate environment. While rates are likely to remain low in many other markets, dividends and dividends growth have traditionally been regarded as hallmarks of good corporate governance.

There are strong companies paying healthy — and often growing — dividends in a broad diversity of markets and industries around the world. Among these are Canadian banks Toronto-Dominion Bank and Royal Bank of Canada; U.K. utility company National Grid; and Asian telecom companies China Mobile and Singapore Telecommunications.

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Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses or the collective investment trust's Characteristics statement, which can be obtained from a financial professional, Capital or your relationship manager, and should be read carefully before investing. 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not to be comprehensive or to provide advice.