Richard Sherry, Senior Portfolio Manager and Analyst for KAR’s Global Dividend Yield portfolio, looks back on the first half of 2021 as a bounce off the bottom for the economy. These bounces are generally led by lower-quality businesses that tend to be more negatively impacted by weak economics and therefore have more room to rebound with a return to normalcy.
However, economies started to normalize in the second half of the year, despite continuing post-pandemic supply chain disruptions. Additionally, the threat of higher inflation can prove to be a disadvantage for lower-quality companies that do not have the pricing power to pass higher operating costs to their customers, which can result in more balanced performance between low and high-quality companies. As the world continues to recover from the effects of the pandemic, higher-quality companies that were able to strengthen their competitive positions over the past year should continue to do well.
Key Contributors and Detractors in Global Dividend Yield
Listen to the podcast above to learn more about the top 5 contributors and detractors in KAR’s Global Dividend Yield strategy for Q3 2021.
Back to Normal?
Sherry believes the impact of the COVID-19 Delta variant is waning and that vaccines will continue to have a positive impact on the return of society to normal. On the other hand, supply chain disruptions are lasting longer than anticipated and are now expected to last well into next year.
“Overall, however, we expect economic activity to continue to return to normal. COVID created volatility in dividends, but we are continuing to look for businesses we believe are priced well and can pay stable dividends going forward.”
This information is being provided by Kayne Anderson Rudnick Investment Management, LLC (“KAR”) for illustrative purposes only. Information contained in this material is not intended by KAR to be interpreted as investment advice, a recommendation or solicitation to purchase securities, or a recommendation of a particular course of action and has not been updated since the date of the material, and KAR does not undertake to update the information presented should it change. This information is based on KAR’s opinions at the time of the recording of this material and are subject to change based on market activity. There is no guarantee that any forecasts made will come to pass. KAR makes no warranty as to the accuracy or reliability of the information contained herein.