A durable multi-asset approach to income

The power of dividends
A flexible approach
Focused on delivering income

The Income Fund of America®

INCEPTION DATE
December 1, 1973

IMPLEMENTATION
Consider for an equity-income allocation

OBJECTIVES
To provide you with current income while secondarily striving for capital growth. 

VEHICLE

The Income Fund of America

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The power of dividends

As a multi-asset approach that invests in dividend-paying equities and bonds, The Income Fund of America has navigated different market environments driven by its pursuit of income. 

A flexible investment approach

The fund's portfolio managers and investment analysts seek to identify innovative companies across a broad range of sectors.

The power of dividends

Income has been a driver of returns

Dividends have played a significant role in investors' returns over the years. While the share of dividends as a percentage of total returns has fluctuated, historically dividends have provided some downside cushion during difficult periods and have been a source of return in various market environments. 

DIVIDEND CONTRIBUTION TO TOTAL RETURN VARIES BY DECADE

Dividend contribution to total return varies by decade. The bar chart shows the dividend contribution percentage of the annualized total returns as it varies by decade. In the 1940s, the S&P 500 annualized total return was 9.1%, and dividends accounted for 66% of those returns; in the 1950s, dividends accounted for 27% of the index's 19.3% annualized total returns; in the 1960s, dividends contributed 42% of the 7.8% annualized total returns; in the 1970s, dividends contributed 72% of the annualized total returns of 5.9%; in the 1980s, dividends contributed 25% of the annualized total returns of 17.5%; in the 1990s, dividends contributed 14% of the annualized total returns of 18.2%; in the 2000s, the S&P 500 experienced negative annualized total returns of -0.9%, although dividends provided a 1.8% annualized return over the decade; in the 2010s, dividends contributed 16% of the annualized total returns of 13.5%; from 2020 through December 2023, dividends contributed 14% of the annualized total returns of 12%. Overall, from December 1925 through December 2023, dividends contributed 37.2% to the annualized total returns of 10.3%.

Source: FundStation.
*Total return for the S&P 500 Index was negative for the 2000s. Dividends provided a 1.8% annualized return over the decade. As of December 31, 2023. Past results are not predictive of results in future periods.

A FLEXIBLE APPROACH

A flexible investment approach to equity-income

For 50 years, The Income Fund of America has invested across sectors and industries in pursuit of its income objective while seeking to deliver competitive results for investors. The fund's investment professionals seek companies with sustainable business models, strong financial positions and durable current yield.

IDENTIFYING LONG-TERM LEADERS IN A BROAD RANGE OF REGIONS AND SECTORS

Examples of top holdings in the portfolios (as of December 31, 2023)1

Identifying long-term leaders in a broad range of regions and sectors. Table shows examples of top holdings in the portfolios. Companies shown are among the top holdings by weight in The Income Fund of America. Example 1: BAE Systems — Domicile: United Kingdom — Sector: Industrials — Market Cap ($US millions): 43,000 — Yield: 2.53; Example 2: Pfizer — Domicile: United States — Sector: Health care — Market cap ($US millions): 163,000 — Yield: 5.84; Example 3: Broadcom — Domicile: United States — Sector: Information technology — Market cap ($US millions): 523,000 — Yield: 1.88.

NUMBER OF COMPANIES WITH DIVIDEND YIELDS HIGHER THAN 3%

Largest dividend payers (as of December 31, 2023)

Number of companies with dividend yields higher than 3%. This chart shows three circles with number of companies with dividend yields higher than 3% as of December 31, 2023. In emerging markets, 500 companies had dividend yields higher than 3%. In the international market, 353 companies had dividend yields higher than 3%. In the United States, 135 companies had dividend yields higher than 3%.

Source: Capital Group, FactSet. Emerging markets reflects MSCI Emerging Markets Index. International reflects MSCI EAFE. U.S. reflects the S&P 500 Index.

FOCUSED ON DELIVERING INCOME

Pursuit of income across asset classes — high-yield representation

Driven by The Income Fund of America’s pursuit of above-average current income, the fund’s portfolio managers may invest up to 20% of fund assets in securities rated BB+/Ba1 or below. The fund balances its higher yielding debt investment with high-quality bonds, aiming to act as a stabilizer for the portfolio. The historically low correlation between dividend stocks and high yield debt can offer a ballast to help address investors’ concerns about equity market volatility.

Returns, risk and yield (%)

This graph compares the returns, risk and yield between the Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index (HY Index) and the S&P 500 Index as of December 31, 2023. Over the past 20 years, the HY Index saw annualized returns of 6.58% compared to 9.69% for the S&P 500. The 20-year volatility is 9.05% for the HY Index and 14.89% for the S&P 500. As of December 31, 2023, the yield to worst for the HY Index was 7.59% compared to a 1.44% dividend yield for the S&P 500.

Yield advantage (%)

Yield advantage: This chart shows the yield spread for the Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index compared to 10-year U.S. Treasuries as of December 31, 2023. On average, since June 2010, the spread has shown a roughly 4.33% advantage for high-yield bonds. This advantage peaked at 7.62% in September 2011, then fell to a trough of 2.38% in June 2014. The advantage rose to another peak of 6.47% in December 2015 before falling to a low of 3.12% in September 2017. The advantage peaked again in March 2020 at a high of 8.76% before falling to a new low of 2.31% in June 2021. The most recent peak was set in June 2022 at 5.93% before falling to 3.71% in December 2023.

“HY” is represented by Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index.

Sources: Bloomberg Index Services Limited, U.S. Treasury, Morningstar
As of 12/31/23. Volatility here refers to the standard deviation. Annualized standard deviation (based on monthly returns) is a common measure of absolute volatility that tells how returns over time have varied from the mean. A lower number signifies lower volatility. YTW (yield to worst) is the lowest yield that can be realized by either calling or putting on one of the available call/put dates, or holding a bond to maturity. Past results are not predictive of results in future periods.

The Income Fund of America

The Income Fund of America is offered in various share classes designed for retirement plans, nonprofits, and other institutional and individual investors.

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Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds.
The return of principal for bond portfolios and for portfolios with significant underlying bond holdings is not guaranteed. Investments are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings.
Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries.
There have been periods when the results lagged the index(es) and/or average(s). The indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.
MSCI has not approved, reviewed or produced this report, makes no express or implied warranties or representations and is not liable whatsoever for any data in the report. You may not redistribute the MSCI data or use it as a basis for other indices or investment products.
Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively "Bloomberg"). Bloomberg or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg's licensors approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.
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© 2024 Morningstar, Inc. All Rights Reserved. Some of the information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar, its content providers nor Capital Group are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Information is calculated by Morningstar. Due to differing calculation methods, the figures shown here may differ from those calculated by Capital Group.

1Companies shown are among the top 20 holdings by weight in The Income Fund of America as of 12/31/23: (Broadcom, Philip Morris International, Gilead Sciences, JPMorgan Chase, Microsoft, Comcast, Home Depot, CME Group, EOG Resources, BAE Systems, CVS, Taiwan Semiconductor Manufacturing Co, Lockheed Martin, AstraZeneca, Canadian Natural Resources, Restaurant Brands International, Chevron, Brookfield Infrastructure Partners, Darden Restaurants, Pfizer)

Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index covers the universe of fixed-rate, non-investment-grade debt. The index limits the maximum exposure of any one issuer to 2%. This index is unmanaged, and its results include reinvested distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes.

MSCI EAFE® (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization weighted index that is designed to measure developed equity market results, excluding the United States and Canada. Results reflect dividends net of withholding taxes. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes. MSCI Emerging Markets Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market results in the global emerging markets, consisting of more than 20 emerging market country indexes. Results reflect dividends gross of withholding taxes through December 31, 2000, and dividends net of withholding taxes thereafter. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes.

S&P 500 Index is a market capitalization-weighted index based on the results of approximately 500 widely held common stocks. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes.

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