Earning a regular income from investments made simple

Did you know you can receive a regular payout from the companies you invest in? It’s called a dividend.

A dividend is a payment a company gives to its shareholders, usually from its profits.

Dividends are often seen as a hallmark of financial strength and discipline. They encourage management teams to spend wisely and stay focused on creating long-term value for shareholders. In short, they’re one of the most tangible ways a company can return cash to its investors.

A strong track record of paying and growing dividends can tell you a lot about a company’s quality and reliability. Also, history shows that dividends have been a major contributor to overall stock market return.

Dividends are more common among well-established businesses, which is why some investors chasing faster growth tend to overlook them. But that can be a mistake. The key isn’t choosing between growth or income, it’s finding sustainable, dependable companies that can do both.

How to assess dividends 

When it comes to income investing, it’s not just about chasing the biggest yield, it’s about choosing companies that you can rely on. Three measures help assess that:

• Concentration: how many companies account for most of the payout
• Dividend growth: the consistency and pace of increases
• Dividend cover: how easily a company can afford to pay its dividend from its profits.

Concentration is often overlooked. In the UK stock market, just ten companies are expected to generate more than half of all dividends in 2025, according to AJ Bell¹. If one or two of those firms cut their payouts, it can have a noticeable impact on overall income - as we saw during COVID-19. 

High yields can also be deceptive. Sometimes they reflect market stress or the risk of future cuts. For investors seeking dependable long-term income, steady, sustainable yields backed by strong profits and prudent management tend to be more resilient.

Dividend cover provides further confidence. Right now, UK companies are covering their dividends more than twice over, which is a healthy buffer, even if slightly lower than in 2022.

Can dividends help beat inflation? 

Dividends don’t just provide income, they’re proved to help investors keep up with inflation. Research shows that since the 1940s, S&P 500 dividends have risen about 4% a year on average, while inflation averaged roughly 2%².

Over time, companies that can raise prices and maintain profits tend to keep paying and growing dividends, helping protect your money from inflation.

The role of bonds in income investing

Investing in stocks is not the only way to generate a regular income. Bonds remain a cornerstone of reliable returns, offering regular interest payments that can help smooth performance when dividends fluctuate.

With yields now at more attractive levels, bonds are once again an appealing source of income and stability – something that had been missing for much of the past decade.

At Canaccord Wealth, we take an active approach to bond investing and place a greater emphasis on these assets than many other wealth managers. Our key objective is to generate attractive returns over a full market cycle while also protecting portfolios during downturns.

Bonds are unique because they offer contractual returns: you know exactly what you’ll receive, provided the issuer doesn’t default. When yields are high, as they are today, that can mean more attractive returns for income-focused investors.

Fixed income and the economic cycle

Understanding where we are in the economic cycle helps us decide what kind of bonds to hold. When interest rates rise and recession risks are low (typically during the expansion phase) we may reduce interest rate exposure and focus more on higher-yielding corporate bonds.

The graphic below shows the different phases of a full economic cycle. 

When growth slows and central banks cut rates, government and high-quality corporate bonds tend to perform better. During these phases, diversification and careful attention to how sensitive bonds are to interest rate changes (known as duration) become especially important.

Our fixed income specialists work closely with fund managers who follow disciplined, transparent processes, giving us a clear view of where client money is invested and helping us target the most promising opportunities.

For years, we’ve been helping clients generate steady income through tailored portfolios that balance opportunity with protection.

Canaccord Wealth’s income strategies

When investors seek income from their investments, they’re usually looking for more than just a payout. They want an income stream that is reliable yet flexible, able to adapt as their spending needs change.

They also want their money to keep pace with inflation, preserving its purchasing power over time – without giving up the chance for long-term growth.

At Canaccord Wealth, we prioritise consistency over chasing the highest yield. We focus on companies with dependable dividends and work closely with bond specialists to create portfolios that balance income, growth and protection against inflation. The goal is simple: steady, resilient returns that work for our clients, whatever the market brings.

If you’d like to see whether our approach to dividends and fixed income could suit your portfolio, we’d be happy to talk you through your options.

¹AJB Dividend Dashboard Q3 2025

²https://www.guinnessgi.com/insights/why-dividends-matter