Financial markets have been on edge lately. Rising geopolitical tensions in key energy‑producing regions have disrupted transport routes, increased volatility, and reignited worries about inflation and economic growth. While nobody yet knows how the situation will evolve, one thing is clear: markets have become highly reactive to headlines. For many everyday investors, this raises an important question: how can I keep my investments resilient while still aiming for long‑term growth?

One approach gaining renewed interest is income investing – strategies that focus on companies paying regular dividends. Unlike methods that rely mainly on rising share prices, income investing aims to provide a steadier stream of returns through regular dividend payments. These dividends tend to be more predictable than market swings, offering a helpful cushion when uncertainty rises.

Companies able to maintain (and even increase) their dividends over time often share a few key characteristics: solid business models, strong balance sheets, and the ability to pass on costs when inflation is high. These features can help them continue delivering stable returns even when the economic backdrop is challenging.

Income strategies also help reduce dependence on the narrow group of companies that have dominated market performance in recent years. By widening the opportunity set to proven dividend payers across different sectors, investors can add more balance to their portfolios, which are especially useful if the most expensive parts of the market start to cool down.

To complement this, some investors may also turn to absolute return strategies, which aim to deliver returns that do not depend on whether markets go up or down. These approaches often seek out opportunities with low correlation to traditional assets, building positions based on company‑specific insights rather than broad economic trends. In volatile periods, having a portion of a portfolio that behaves differently from the wider market can provide an additional layer of resilience without replacing more traditional holdings.

Identifying the right opportunities – whether in dividend‑paying companies or absolute return ideas – relies heavily on deep, on‑the‑ground research. At Fidelity, analysts based in major financial centers around the world study companies in detail: meeting management teams, reviewing financial health, analysing competitive advantages, and monitoring how businesses respond to changing conditions. This global perspective helps build well‑founded, long‑term investment views.

For income strategies in particular, research focuses on four essential questions:

– Is the business model robust and sustainable?

– Is the balance sheet strong?

– Are cash flows reliable and consistent?

– Is management disciplined in how it allocates capital?

Companies that score well across these areas are generally better positioned to deliver steady dividends across economic cycles.

Evaluating whether a company is fairly priced is just as important as analysing its business. One useful way to do this is by looking at the cash a company actually generates, rather than relying on short‑term accounting numbers. This helps investors avoid paying too much for companies whose growth may not last and ensures that any income—such as dividends—is backed by real, sustainable financial strength.

Good corporate governance also matters. How a company’s management chooses to use its cash – whether reinvesting in the business, paying dividends, or making acquisitions – reveals a lot about how committed they are to creating long‑term value for shareholders.

The same research principles apply to absolute return strategies, but with a different objective. Instead of trying to follow the overall direction of the market, these strategies look for opportunities where performance depends on specific company‑level insights. This might involve spotting mispriced assets in certain industries or regions and building positions that aim to capture potential gains while keeping risks under control.

For investors, the benefit is clear: these types of strategies can provide an additional, smoother source of returns that complements traditional investments and helps make a diversified portfolio more resilient through different market cycles.

Periods of uncertainty are nothing new, but they can be unsettling. Blending income‑generating investments with complementary absolute return strategies can help investors build portfolios that are both resilient and positioned for long‑term growth.

By focusing on high‑quality companies, consistent cash flows, and disciplined management teams, investors can approach volatility with more confidence—without losing sight of their long‑term financial goals.

Information on Risks

– All investments carry risk and may result in the loss of capital

– Investors should note that the views expressed may no longer be current

Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only.

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