The True Value of Investment Income

"It doesn’t matter what rates are or where the market is, if you can buy a stock with a sustainable yield, you’re more than halfway there to achieving a sustainable long term return."

Anton Tagliaferro, Investors Mutual Limited Investment Director

As we have seen in recent weeks, when investing in shares it is often easy to focus on noisy short-term price fluctuations. In the short-term, fickle investor sentiment can potentially cause wild swings in stock prices, but over the medium to long term quality companies will be recognised for their ability to deliver recurring and predictable earnings that grow overtime. These earnings underpin a growing dividend stream which we have always focused on as a key part of our investment philosophy.

Given the recent volatility, this timely retrospective analysis from one of our key fund managers, Investors Mutual, emphasises the importance of generating regular income in providing a consistent overall return.

This report demonstrates the value IML’s long-term investment philosophy, illustrating the importance of the income component of returns by comparing an investment of $100,000 invested in the IML Australian Share fund v Term Deposit over the past 17 years.