Determining winners and losers downstream, with respect to businesses commercialising AI, is a little harder. For every industry where an incumbent harnesses this technology effectively, there will be one where a hungry new entrant uses AI to catapult itself to prominence. The eventual winners from prior technology adoption cycles are rarely obvious right at the start.
We believe a combination of proprietary data, sticky customer relationships and ambitious management teams make for the right recipe here. One company close to home that fits the bill is RELX, the digital publisher and data services business. Its new Lexis+ offering in its legal division enables lawyers to engage directly with millions of pages of case law precedent, in many cases documents laboriously scanned by hand from courtroom libraries across the US. Lexis+ enables huge savings for time-hungry lawyers and should drive accelerated high single digit dividend growth for RELX.
Meanwhile there are signs that the Magnificent Seven are growing up. Meta recently surprised markets with a dividend initiation. The yield is modest at just 0.45% but the nominal sum involved, c. $6 billion annually, is not and implies Meta is taking shareholder returns seriously. Peers should take note.
All the companies mentioned here are, or have been, owned in our award-winning Global Equity Income strategy. This is a strategy which seeks to find the optimal balance between dividend yield, dividend growth and dividend resilience. Holdings of businesses generating AI-related revenue streams today make up 25% of the current portfolio and are helping us build conviction in the next leg of portfolio dividend growth.
Authors
Sam Witherow – Portfolio Manager, International Equity Group, J.P. Morgan Asset Management
Michael Rossi – Portfolio Manager, International Equity Group, J.P. Morgan Asset Management
This is a marketing communication and as such the views contained herein are not to be taken as advice or a recommendation. The value of investments and the income from them may fluctuate in accordance with market conditions and investors may not get back the full amount invested. Past performance and yield are not a reliable indicator of current and future results. There is no guarantee that any forecast made will come to pass. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. This communication is issued in the UK by JPMorgan Asset Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority.
