Rhodes, manager of the £6.5bn M&G Global Dividend Fund, said many people believe the UK is the centre of dividend culture, but in his opinion the depth, breadth and liquidity of the US market makes it a “happy hunting ground” for dividend payers.
He added it was quite easy to envisage a scenario where the US presents more dividend opportunities than ever before, even though in aggregate it might look expensive.
Rhodes’ fund contains 45-50 stocks and has a 53.27% weighting to US equities which means identifying roughly 25 US names, but he insists this is not a challenge.
“I don’t have any challenges finding US names at the moment,” he said. “There are times when you look at the S&P and think it is a bit lofty, but overall you can still find lots of names because the market is deep and broad.”
Rhodes said the escalating price of US technology stocks such as Amazon, Microsoft and Google gives a distorted figure of the index and underneath there are actually plenty of cheap companies.
He also said the tech sector’s commitment to paying dividends has become more serious, despite the fact that big players such as Amazon, Google and Facebook still do not pay them.
“In 2008 when I launched the fund I would say dividends in tech stocks were limited, but it is the sector that has gone through the biggest change, so the approach to dividends is much more serious now and commitment is moving in the right direction.”
Rhodes said that in 2008 only about seven or eight names were viable investments for the portfolio and now that number is around 30.
He said Apple’s decision in 2012 to start paying a dividend for the first time since 1995 helped set a trend in the sector.
“It [tech] is having more of an impact in the fund than I ever imagined when I launched,” he added.
Speaking at an M&G event in London, Rhodes also admitted to having “a lot” of his own wealth invested in the fund.
“A significant proportion of my wealth is in the fund and how we get paid is also within the fund, so an awful lot of how I think and plan my life depends on the fund.”
