{"id":8432,"date":"2023-08-01T09:51:32","date_gmt":"2023-08-01T08:51:32","guid":{"rendered":"https:\/\/sarasinandpartners.com\/row\/?p=8432"},"modified":"2023-09-27T15:56:32","modified_gmt":"2023-09-27T14:56:32","slug":"research-and-development-pay-dividends","status":"publish","type":"post","link":"https:\/\/sarasinandpartners.com\/row\/think\/research-and-development-pay-dividends\/","title":{"rendered":"Research and development pay dividends"},"content":{"rendered":"

Three value-adding dividend payers that use R&D to power up profitability and dividend growth.<\/strong><\/h3>\n

Eschewing the siren call of businesses that pay high dividends today but lack enduring growth prospects should \u2013 in our opinion \u2013 be one of the fundamental tenets of equity income investing. A high dividend may look (and feel) good in the short term. But unless it is backed by a healthy and growing business, both dividend and capital investment are liable to evaporate over time.<\/p>\n

Suffice to say that we look for companies that are more likely to produce recurring dividends, and also have the potential to increase their profits, provide a growing dividend stream and thus offset or beat inflation. Some companies, however, stand out as true \u2018value-adders\u2019 for income investors.<\/p>\n

Three of our global equity income favourites \u2013 Siemens, Cisco and Merck & Co. \u2013 hail from the technology and healthcare sectors. For traditional equity income investors this may be a world away from the dividend stalwarts of consumer staples, commodities and utilities, but it is a logical outcome of our investment approach.<\/p>\n

As global thematic investors, we spread our net as widely as possible when looking for potential investments. We are also focused on finding companies that should benefit from long-term trends such as climate change, ageing populations, digitalisation and automation.<\/p>\n

A rule of thumb for gauging how much added value a business can deliver is to see whether they stand out in terms of the amount of research and development (R&D) they conduct. After all, the entire purpose of R&D is to develop new products that can be sold at attractive margins \u2013 which may also help offset inflation.<\/p>\n

Siemens: far more than trains <\/strong><\/h3>\n

The most visible part of European industrial giant Siemens\u2019 business is almost certainly its trains, which are helping shift goods and people towards lower-carbon, more environmentally-friendly modes of transport. In fact, Siemens is more like a collection of diverse businesses within one company. These include Siemens Healthineers, a medical devices company focusing on radiology, oncology and MRI scanning.<\/p>\n

Siemens is also a global leader in factory and warehouse automation<\/a>, an area where there is huge potential for growth as companies invest to increase operational efficiency and reduce labour costs.<\/p>\n

In addition, Siemens is a leader in creating and developing \u2018digital twins\u2019, virtual models of physical objects, such as aircraft engines or bridges. An object being twinned is fitted with sensors that monitor how the object is functioning. Data about aspects such as performance, energy output, vibration, temperature, weather conditions, etc. can then be added to the object\u2019s digital twin. This data can be used to study performance, run simulations and suggest improvements that can be applied to the physical object.<\/p>\n","protected":false},"excerpt":{"rendered":"

Three value-adding dividend payers that use R&D to power up profitability and dividend growth. Eschewing the siren call of businesses that pay high dividends today but lack enduring growth prospects should \u2013 in our opinion \u2013 be one of the fundamental tenets of equity income investing. A high dividend may look (and feel) good in...<\/p>\n","protected":false},"author":100,"featured_media":13943,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28,27],"tags":[],"coauthors":[113],"class_list":["post-8432","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","category-thematic"],"yoast_head":"\nResearch and development pay dividends - Sarasin & Partners Global<\/title>\n<meta name=\"description\" content=\"Neil Denman discusses thre value-adding dividend payers that use R&D to power up profitability and dividend growth.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/sarasinandpartners.com\/row\/think\/research-and-development-pay-dividends\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Research and development pay dividends - 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