Swiss investors continue to face a challenging environment: rates have returned to zero, global growth remains patchy, and market volatility persists. Against this backdrop, dividends can provide a reliable source of income and stability – particularly valuable at a time when earnings growth is modest.
Valuations in the Swiss equity market are broadly in line with historical averages, but earnings growth has stalled this year as a result of foreign currency weakness, notably the dollar. That leaves dividend income as a steadying force while investors wait for a new expansion in earnings multiples. Earnings are expected to rebound by 6–8% in 2026. A “Goldilocks” scenario is possible: US interest rates drifting lower without tipping into recession, while Europe sees a mild growth acceleration. If this backdrop materialises, high-quality Swiss equities should be well placed to benefit.
Stock & sector divergences
In the Swiss market, like many others, stock selection is crucial. Companies with strong compounding characteristics – such as Partners Group, DKSH and SGS* – look well positioned. We also see potential in Nestlé*, which could be on the brink of a turnaround with its new CEO and new board chairman. Elsewhere, the pharmaceutical sector appears particularly under-owned relative to history. Pharma and manufacturing are both struggling today, but once policy noise around pricing and tariffs fades, we expect pharma to be a beneficiary of a broader recovery into 2026.
Tariffs: contained risks
Around 20% of total Swiss exports go to the US, with pharmaceuticals (largely exempt) making up the bulk of the trade. As a result, only a small portion of national exports, roughly 6%, is currently subject to the 39% tariffs, so the threat of recession is very manageable. An example of a tariff-exposed company is the life sciences name Tecan*, which is facing a margin impact of around 100 basis points. Yet with its strong balance sheet, attractive free cash flow, and a newly announced buyback programme, we think the dividend remains
secure. This underlines a broader point: even in the face of trade headwinds, the financial discipline of Swiss companies provides investors with confidence that dividends will continue to flow.
Earn while you wait, grow while you sleep
For Swiss investors, dividends remain a reassuring anchor: they provide income when
earnings growth is muted, discipline when markets are volatile, and potential for long-term
compounding once conditions improve. As we move towards 2026, the case for dividends –
steady today, and positioned for growth tomorrow – is as strong as ever.
* The companies referenced are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. The information provided is to illustrate our current investment approach only and should not be construed as offer, research or investment advice.
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