Income and dividend portfolio aims to return regular payout to the investor. Investments within the portfolio usually consist of mainly dividend-yielding equities and bonds. The primary objective of an income and dividend portfolio is to provide a payout without a high regard to capital growth or appreciation.
Due to the nature and investment objectives of an income and dividend payout, long-term growth potential may be limited. The income and dividend payout is neither fixed nor guaranteed. The investor is still subjected to price and valuation swings during periods of market volatility.
The fund manager may choose to not distribute dividend or income during a period of extreme volatility in an effort to limit the decline in the fund pricing.
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An income and dividend portfolio may be suitable for investors seeking income during retirement or simply to supplement cash flow. However, during periods of high market growth, the fund price may not appreciate or go higher due to the nature of the underlying assets.
The sections below looks into Unit Trust Funds focusing on providing an income and dividend yield as the primary investment objective.
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