AIM stocks can diversify UK investors' income sources

The sustainability of UK equity income streams has been called into question, with underlying dividends across the market falling by almost 3% on a constant currency basis during Q3 – the worst quarterly performance for three years.

While the latest Link Group UK Dividend Monitor revealed overall UK dividend growth of 6.9% over the third quarter, this was driven by unpredictable special dividends and exchange rate gains due to the depreciation of sterling. In fact, 2019 is likely to be the second highest year of special dividends on record.  With more than half the FTSE 100's dividends coming from just ten companies, most UK equity income strategies are disproportionately invested in a relatively small number of mega-cap stocks.  Mega-cap dividends can be volatile, as highlighted by the 40% dividend cut for Vo...