JOHCM UK Equity Income fund highlights value in UK dividend stocks
Managers Clive Beagles and James Lowen point to an undervalued UK market after nearly 21 years of strong dividend growth
Clive Beagles and James Lowen, managers of the JOHCM UK Equity Income fund, said they continue to find attractive dividend-paying companies in the United Kingdom despite long-term headwinds for the domestic market. The pair have managed the fund together since late 2004 and have steered it through cycles that included the global financial crisis and the COVID-19 lockdowns.
The £1.8 billion fund aims to deliver a mix of long-term capital appreciation and income growth. Since its launch, the fund has produced average annual dividend growth of about 9 percent, with notable disruptions to that trend occurring in 2008 and 2020 when many UK companies were hit by the financial crisis and pandemic restrictions.
JO Hambro Capital Management, the investment house overseeing the strategy, manages around £18 billion in assets. The JOHCM UK Equity Income fund has outperformed the FTSE All-Share Index and the average UK equity income fund over the past five years, according to reporting on the managers' track record.
Beagles and Lowen began their partnership at Newton before moving to JO Hambro, and have maintained a consistent focus on dividend-bearing stocks even as the UK market has experienced a steady stream of listed companies leaving through takeovers or private transactions. That structural shrinkage of the domestic market has been cited by market participants as a factor contributing to a valuation gap between UK equities and many overseas markets.
The managers have said their process focuses on identifying companies with resilient cash flows and sustainable payout policies, allowing the fund to deliver both income and potential capital growth for investors. Over its near-21-year life, the fund has generally maintained dividend increases, reverting to cuts or freezes only in periods of severe market stress.
Portfolio performance has benefited from selecting stocks that, in the managers' view, combine attractive yields with balance-sheet strength. That positioning has helped the fund weather sector-specific shocks and broader economic downturns that have weighed on dividend payments in certain industries.
The persistence of a valuation discount in the UK relative to international peers remains a backdrop for the managers' approach. Market observers attribute the discount to factors including the composition of the UK market, the movement of companies to private ownership, and macroeconomic uncertainty. Fund managers who emphasize dividend income often view such conditions as opportunities to buy established companies at lower prices, while acknowledging the risks associated with concentrated sectors or legacy businesses.
Investors seeking income from equities often weigh a fund's dividend growth history, yield, and the sustainability of payouts. The JOHCM UK Equity Income fund's long record of dividend expansion, punctuated by downturn-related setbacks in 2008 and 2020, will be considered by income-focused investors alongside its recent outperformance versus the FTSE All-Share and peer funds.
JO Hambro continues to promote the strategy amid ongoing debate about the UK market's relative valuation. The fund's managers have emphasized stock selection and balance-sheet scrutiny as central to preserving income streams and capturing potential upside as companies recover or re-rate.
The fund's track record and the managers' longstanding partnership will be assessed by investors in the context of broader market trends, including corporate consolidation, changing investor appetite for UK equities, and the macroeconomic outlook that influences dividend policies across sectors.