Income investing is back.

Not with a bang. With a cough. A clearing of the throat. A quiet look around the room to see if anyone else is thinking, “Uhhh, we’re doing this, right?”

After a decade of chasing growth, AI narratives, and the promise that every company is secretly a tech company now, fund selectors are once again talking about dividends. Cashflows. The boring things that actually turn up.

This isn’t because income suddenly got sexy (hell hasn’t frozen over, yet). It’s because parts of the market are feeling, well, fragile. Valuations are stretching, rates are wobbling, and confidence is waning. In other words, investors are reaching for the handrail. 

So when experts start backing UK equity income, high-yield bonds, and emerging markets for 2026, it’s a quiet admission that the party might be peaking.

Think less “Return of the King” and more “texting the ex your mom actually liked to say, baby, I fucked up, take me back?”.

Let’s open it up.

Income doesn’t magically come back when investors feel brave. It comes back when they start checking for the fire exits.

Growth has carried portfolios for years, but now, the cracks are showing. AI hype is loud, valuations are stretched, and rates are expected to fall rather than keep paying you to wait.

Suddenly, getting paid again feels… like a good thing?

The usual names resurface: cheap UK equities, bonds with real yields, emerging markets that don’t feel quite so feral.

Growth hasn’t disappeared, promise. It’s still slaving away in the kitchen, promising to feed you the best flan of your entire life if you just give it “five more minutes”. 

But, in the meantime, momma’s gotta eat.  

And income funds are the special on the menu.

The UK keeps getting written off. And then quietly rediscovered. Is it an island thing? HelloOoO! We’re over here!

Years of underperformance have left us cheap, unloved, and largely ignored, which, in investing, is usually when it starts to get interesting. While everyone else was busy chasing growth narratives overseas, UK companies kept doing something deeply unfashionable: generating cash and paying it out. 

In the words of Miranda Priestly…

That’s why income selectors keep circling back. 

Dividend-paying UK firms tend to be boring in the best possible way. Banks, energy, materials, and companies that don’t need a slide deck to explain how they make money.

The UK isn’t suddenly exciting again. It’s just stopped being delusional. And in a market that’s spent years pricing in perfection elsewhere, that counts for something.

It’s the dependable pub round after too many artisan cocktails. Sometimes you just want a bloody lager and not have the drunken remnants of an espresso martini staining your shirt sleeves.

Bonds were supposed to be dead.

Zero yields, long durations, no pizazz. For years, they were the beige chinos of portfolios: technically functional, social suicide.

Then rates went up. And suddenly, bonds started doing something they hadn’t done in a while: paying people. (There’s a theme here, have you noticed?)

High-yield in particular has crept back into favour, not because investors have rediscovered their inner thrill-seeker (ah, the glory days), but because the maths finally makes sense again.

When growth starts to wobble, and rate cuts loom, locking in income begins to look less like settling and more like planning. Especially when equities are priced for optimism and bonds are priced for realism.

Sure, it’s not thrilling. But you’ll sleep better.

Emerging markets weren’t meant to be sensible.

For years, they lived in the “growth but chaotic” box: exciting on paper, emotionally exhausting in practice. Strong stories, weak currencies, and a habit of unravelling at exactly the wrong moment.

That’s starting to change.

Fiscal discipline has quietly improved. And as the dollar’s grip loosens, the usual headwinds aren’t blowing quite as hard. Add in equity valuations that still look like they missed the last decade, and suddenly income starts to look… plausible.

Not safe, not boring: but paid. Sexy, right?

Income-focused EM strategies are less about chasing explosive growth and more about harvesting cash flows from companies that have survived multiple cycles already. Which, in 2026, is a more attractive quality than it sounds.

It’s the comeback tour nobody expected. 

The financial equivalent of crowd-surfing at a metal gig has lost out to Take That’s Gary Barlow singing his heart out at Wembley Stadium. And - confession time - we’re belting out each and every word.

This isn’t a sudden belief that income will crush growth in 2026.

We haven’t gone absolutely mad.

But - when investors start talking about dividends, cashflows, and yield again, it usually means confidence has softened, with a sense that the margin for error is shrinking.

That’s why the usual places are back in rotation: the UK, bonds, emerging markets. 

Income is what portfolios reach for when optimism stops compounding.

Think less bold prediction, more emotional hedge. A cup of tea, not a tequila shot. 

And right now, a lot of investors are quietly putting the kettle on.