Income from equities continued The potential to rise over time can go up or down and unexpected factors can affect a An attractive feature of financially stable companies’ company’s ability to pay dividends. One approach is to dividends is that they tend to grow over time. Firms often spread risk by investing in many different companies at attach great importance to increasing their payout to once. For some people, the most efficient way of doing shareholders. This is known as a progressive dividend this is through investing in a fund. policy. If a company is able to grow its dividend over Investing for dividends time, there is potential for its shares to deliver a rising income stream, which may help offset the effects of If you hold company shares directly, any dividends will inflation. Furthermore, dividend growth is often viewed be paid to you as the shareholder, but if you’ve invested as a measure of a company’s long-term strength, which in equities through a fund, the dividends are paid to the is also an important consideration for those seeking fund. The fund may pass dividends on to investors in the capital growth. form of distributions. Before investing, you should find out whether a fund makes distribution payments and if they The risk of losing money do, how frequently they are paid. Making a call on the right companies to hold for capital The value of investments will fluctuate, which will cause growth and income can be complicated and risky. Share fund prices to fall as well as rise and you may not get prices – and, therefore, the value of your investment – back the original amount you invested. 7