Quilter Investors ups income forecast for Monthly Income range as portfolios beat estimates for third year running

03 July 2023

Quilter Investors has raised the forecasted income for its Monthly Income range of portfolios for the third year running as the management team sees a more attractive environment for cash and fixed income investments.

Managed by Helen Bradshaw and CJ Cowan, for the 2023/24 fiscal year both the Quilter Investors Monthly Income and the Quilter Investors Monthly Income and Growth portfolios are forecast to pay between 3.25p to 3.65p per share.* This would equate to estimated yields of between 3.5% to 3.9% for the Monthly Income Portfolio, and 3.2% to 3.6% for the Monthly Income and Growth Portfolio based on share prices on 28^th April 2023.

This forecast follows a successful previous year for the range where income delivered came in ahead of estimates. Both portfolios in the range delivered an income of 3.75p per share, 6% higher than the previous year for the Monthly Income Portfolio and 10% higher for the Monthly Income and Growth Portfolio.

As the post-pandemic environment played out, yields on fixed income and cash increased as interest rates were raised globally, enabling the portfolios to deliver more income than originally projected. The growth in dividends was also stronger than anticipated as energy companies benefited from rising gas prices and banks took advantage of higher interest rates.

Looking ahead, the team note that equity dividends are now expected to be more aligned with corporate earnings, where growth is expected to be challenged. However, the overall environment for cash and fixed-income holdings is more attractive than it’s been for some time and this has enabled the increase in forecasts compared to last year.

To generate the forecasts, Bradshaw and Cowan combine several inputs and use an in-house forecasting tool to estimate in granular detail the amount of income that may be expected from the portfolios throughout the financial year. 

Source: Quilter Investors. All income figures quoted in pence per share, based on the U1 (GBP) Income share class of the Quilters Investors Monthly Income and the Quilters Investors Monthly Income and Growth portfolios.

Helen Bradshaw, portfolio manager at Quilter Investors, said: “I am delighted we have managed to beat our forecasts for the third straight year and once again upgrade our forecasts for the next financial year. The past 18 months has been a really challenging investing environment, but within that there have been great opportunities as an income investor as interest rate rises feed into cash and bond yields.

“It has been a very rapid change too and very much unlike previous years where equity dividends have been the key driver of growth. With the pace of rate hikes slowing and corporate earnings increasingly under threat, we see fixed income and cash investments as much more attractive asset classes compared to previous years.”

CJ Cowan, portfolio manager at Quilter Investors, added: “There is a lag between the interest rate rises we have seen feeding into distributions from bond funds, so we expect this portion of the portfolio to continue to help bolster the income over the year ahead.

“And while dividend growth may not be as exciting as it was in the early part of the Covid economic recovery, the tightening of monetary conditions is no bad thing for the value part of the market where many dividend paying stocks sit. Clearly in an era of market uncertainty, having a diverse range of income paying investments is crucial as you never know when one sector or asset class may become more challenged than another.

“Maintaining a level of adaptability ensures we can act quickly so if we do see a shift from central banks we can take advantage in a short space of time, without going out to chase the yield.”

*This forecast is an estimate and relates to the U1 (GBP) Income share class for both portfolios.