Don't chase dividends

Sunday papers often contain articles suggesting that investors look for high dividend paying stocks or 'income' funds to provide an income. Chasing 'natural yield' is not a free lunch. Dividends paid out cannot be put to use to by the company to improve future earnings. Being driven by dividends tends to result in often ill-considered risks, not least stock concentration, sector 'bets', skewed country allocations and style impacts. On the other hand, a total return approach helps to maintain portfolio structure integrity.

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