The Case for Global Income

A global multi-asset income strategy can combine dividends, sovereign bond coupons and equity-linked note income to diversify return sources and reduce concentration risk.

• Dividends contributed approximately 31% of the S&P 500's total return from 1926 to 2025, while dividend-paying stocks are more heavily represented in financials, industrials, utilities, telecoms and health care than in broad global indexes.
• The US market is concentrated in low- or non-dividend-paying technology and communication-services companies, whereas the authors identify Europe, the UK, Japan and selected emerging markets as offering attractive combinations of yield, valuation and dividend durability.
• ELNs generate coupons by exchanging some upside for income and can monetize high implied volatility, allowing investors to create synthetic income from technology stocks and other companies that pay little or no dividends.
• Sovereign bonds diversify equity risk because their returns are driven more by monetary policy, inflation and macroeconomic cycles; emerging-market sovereign bonds offer higher yields, but the authors prefer USD-denominated issues because local-currency bonds add currency risk.
• The 10 largest stocks account for roughly one-quarter of the MSCI All Country World Index, increasing the relevance of diversification across asset classes, income sources, geographies, currencies, sectors and issuers.

Takeaway: Investors seeking income and long-term total return may benefit from combining global equities, sovereign bonds and ELNs, but should accept dividend cuts, currency and emerging-market risks, ELN issuer risk and capped upside during strong equity rallies.