Reassuringly, customers are staying calm at this very difficult time for income investors.
Moira O’Neill, Head of Personal Finance, interactive investor, says:
“With the average withdrawal per individual little changed in Q1, investors are clearly sitting tight at what has been a very difficult time for income investors. It’s worth bearing in mind that to achieve the same level of benefits year on year given the recent market falls, more stock would have to be sold - which could easily be a disincentive to withdraw at this time. Among our own customer base, we have seen little movement in either regular or one-off withdrawals. Investors, reassuringly, are staying calm.”
This is echoed in a recent poll of 1,228 investors conducted between 21 April to the morning of 22 April 2020 by interactive investor. It found that more than half (53%) of investors reinvest dividends so don’t rely on an income and are leaving their portfolio unchanged.
With investors facing a severe dividend drought, one in five investors admit they do not know what to do, while 8% say they are feeling the squeeze as they take income from their investments.
However, most are keeping calm and carrying on. Just one in 10 (11%) investors say they are tinkering with their investment portfolio as a result of the dividend onslaught - with 5% looking overseas for dividend diversification, while 4% say they’re switching out of firms that have cut dividends to those still paying an income.
Only 2% said they are selling companies that have cut dividends and keeping the cash.
When it comes to investment risk, almost two thirds of respondents have maintained their risk profile despite the flurry of dividends cuts, but 23% said they’ve reassessed their stance. Of which, 12% said they are looking at investment trusts, 5% at alternative assets, 4% at higher risk emerging markets/Asian income and only 2% are exploring lower risk bonds.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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