High-yield equities recommended
Manama, December 2, 2011
High-yielding equities are where investors should be putting their money in the current economic slowdown, said an industry expert.
Speaking at a presentation at the Ritz-Carlton Bahrain Hotel and Spa, investment management group BlackRock director Barbara Vintcent said global gross domestic product is expected to remain slow-paced and interest rates in developed countries are also expected to remain low whilst inflation rates may differ across countries and regions.
"In a low growth environment, history has shown high-yielding global equities outperform other asset classes," she said.
"Dividends are a vital element of return and as time horizons increase, returns generated by dividend yield and dividend growth play an increasing role."
She warned that rising inflation levels will further erode the ability of cash and bonds to offer sufficient income for people who are retiring in the future.
"The global middle class is growing and with it demand and by 2030 the world's middle class is expected to have grown by two billion, according to BlackRock's director of its natural resources team Malcolm Smith.
He said as people earned, their demand for commodities would increase and an estimated 350 million people would be added to China's urban population by 2025 which is in fact more than the current entire population of the US.
He said high commodity prices had boosted operating cash flows in the natural resources sector and dividends had the potential to grow strongly. – TradeArabia News Service